:00:12. > :00:14.Tonight on Newsnight Scotland: As the country slides back into
:00:14. > :00:17.recession, the First Minister demands more investment from the
:00:18. > :00:22.British government. But is that just a recipe for making our
:00:22. > :00:25.economic problems worse? We'll be asking Alex Salmond what
:00:25. > :00:28.he intends to do with the new guarantee scheme launched by the
:00:28. > :00:30.Treasury today. And about gay marriage, NATO and what kind of
:00:30. > :00:33.independence referendum he really wants.
:00:34. > :00:36.Good evening. Official figures released today show that Scotland's
:00:36. > :00:39.economy slipped into technical recession at the beginning of the
:00:39. > :00:42.year. The Scottish government responded by demanding that the
:00:42. > :00:46.Treasury release money for public investment here. I'll be discussing
:00:46. > :00:54.that with the First Minister in a moment. But first, here's Jamie
:00:54. > :00:59.McIvor. Today saw a wave of what could look
:00:59. > :01:04.like contradictory economic figures of stock first the bad news. The
:01:04. > :01:10.Scottish economy is back in recession. The double-deck is a
:01:10. > :01:16.reality. The economy contracted by 0.1% in the first three months of
:01:16. > :01:21.the year -- the double-dip is a reality. The economy shrank by a
:01:21. > :01:26.very small amount having done the same at the back end of last year
:01:27. > :01:30.so technically Scotland is back in recession. Scotland's economy did
:01:30. > :01:36.not contract as much as the UK economy overall, and unemployment
:01:36. > :01:42.is still falling. The good news is that people are prepared to trade
:01:42. > :01:46.lower income has, because wages are still rising much more slowly than
:01:46. > :01:51.prices, to retain their jobs. The private sector looks as if it is
:01:51. > :01:57.creating more jobs quicker than the public sector is shedding them.
:01:57. > :02:02.now more bad news. While it is important not to judge the economy
:02:02. > :02:07.overall by any one sector alone, many retailers are still struggling.
:02:07. > :02:12.Figures released today said the growth in the value of sales in
:02:12. > :02:17.Scotland lacked behind the UK as a whole the 15th month in a row, but
:02:17. > :02:21.what can the Scottish government do? Is it credible to try to take
:02:21. > :02:28.credit for the good news and blame Westminster for its part in the
:02:28. > :02:33.bad? Many of the key levers for controlling the economy life in a
:02:33. > :02:39.key level. Control of interest rates, tax powers and the most
:02:39. > :02:43.significant public spending leavers. Today the UK government said it
:02:43. > :02:48.would underwrite up to �50 billion worth of infrastructure projects to
:02:48. > :02:52.help the economies. There are private sector projects that at the
:02:52. > :02:56.moment cannot go ahead because of problems in the banking system and
:02:56. > :03:00.the economy and we are using the good name the British Government
:03:00. > :03:05.has earned over the last two years thanks to the coalition government
:03:06. > :03:08.to guarantee and lent to projects that are there was no not go ahead.
:03:08. > :03:15.Even with independence, or would the Scottish government have much
:03:15. > :03:18.more control over the economy? Under the SMP's latest proposals,
:03:18. > :03:23.Scotland would remain in the sterling zone and interest rates
:03:23. > :03:29.would be the same as those in the UK, and even with full control over
:03:29. > :03:33.taxation, how radical might end independent government is to be? In
:03:33. > :03:39.the modern world, how much can any national government really control
:03:39. > :03:46.the economy? The chief secretary to the Treasury,
:03:46. > :03:49.Danny Alexander, was not available for this programme. But earlier
:03:49. > :03:52.this evening I met the First Minister in Bute House, and I began
:03:53. > :03:55.by asking him what could he do to generate more money for investment,
:03:55. > :04:00.in addition to complaining about the UK government and their
:04:00. > :04:06.austerity measures. I don't accept the premise. We have
:04:06. > :04:14.had seven new terms from the Chancellor since his Budget. -- 7 a
:04:14. > :04:16.U-turns. And it is possible. We have conceded the argument of the
:04:16. > :04:26.importance him investment in capital economy, that was the
:04:26. > :04:32.announcement today was about, and the figures demonstrate that the
:04:32. > :04:39.construction sector is dragging back growth in the UK, and Scotland.
:04:39. > :04:45.We need immediate public investment to get the economy moving. Can't we
:04:46. > :04:49.have a U-turn at number eight? Let's talk more about the guarantee
:04:49. > :04:52.scheme. The basic point they will make is that you are calling for
:04:52. > :04:59.something that would involve billions of pounds worth of extra
:04:59. > :05:04.money across the UK. They argue that you can't do that, it would
:05:04. > :05:11.put at risk their credibility, the credibility of the financial
:05:11. > :05:15.markets. It is all very well for you to call for things like this.
:05:16. > :05:20.The that is a long argument because �5 billion of capital investment
:05:20. > :05:25.would be broadly welcomed probably by the financial markets as well as
:05:25. > :05:31.the CBI because it is a fundamental difference between spending capital
:05:31. > :05:37.and spending in revenue on the perception of the financial markets.
:05:37. > :05:42.�5 billion is not even error in the blogging forecast. 5 billion for
:05:42. > :05:47.the UK, which is over 400 million Scotland, could make a profound
:05:47. > :05:50.difference to the construction industry immediately at this
:05:50. > :05:55.particular time and tackle the key question over the UK economy at the
:05:55. > :06:01.present moment, which is that it is bumping along the bottom at best,
:06:01. > :06:05.in fact it is going downwards, and there is no obvious sign of the
:06:05. > :06:13.media generation of growth. Growth is the thing to give stability to
:06:13. > :06:19.the economy. I am not quite sure 5 billion, and if you did want a
:06:19. > :06:24.fiscal stimulus, �5 billion in the context of the UK economy might
:06:24. > :06:29.create a few construction companies but it will not do more than that.
:06:29. > :06:33.Presumably you would want a full- scale Ed Balls style fiscal study.
:06:33. > :06:37.If you look at the figures of Scotland, let's say construction
:06:37. > :06:45.had been the same as the previous quarter. Then the Scottish economy
:06:45. > :06:51.would have been growing by 0.4%, a perfectly respectable figure. In
:06:51. > :06:56.the UK, instead of having a 0.4% decline, you would have a zero
:06:56. > :07:01.position. I don't know if any economic recovery in history,
:07:01. > :07:05.anywhere, at any time, that hasn't been led by a recovery in
:07:05. > :07:09.construction sector. And therefore it is of particular importance to
:07:09. > :07:14.get the shovel ready investment into the construction sector to get
:07:14. > :07:18.the economy moving. It would pay a very substantial dividends in terms
:07:18. > :07:28.of economic confidence as well as jobs creation. And they won't do
:07:28. > :07:32.that why? I would hope now we are into the era of the U-turns, the
:07:32. > :07:37.political consequences of another U-turn on modest compared to the
:07:37. > :07:40.economic benefits. It would actually complement the recent
:07:40. > :07:45.announcement of infrastructure projects in the future if you could
:07:45. > :07:49.have direct jobs in construction now. This guarantee scheme
:07:50. > :07:54.announced today, have you contacted be government in London and asked
:07:54. > :07:59.whether any projects in Scotland might be eligible? The civil
:07:59. > :08:04.service will be doing exactly that but we assume they will be eligible
:08:04. > :08:09.because it is a guarantee scheme. The Chief Secretary to the Treasury
:08:09. > :08:15.did not seem very short... There seems to be suggestions that this
:08:15. > :08:20.will be controlled by the Treasury and done on a case-by-case basis.
:08:20. > :08:26.Then it we will submit many projects up the two aspects are
:08:26. > :08:30.difficult. First of all, big projects take time. It might be a
:08:30. > :08:36.good thing in a couple of years' time if we can get a big project
:08:36. > :08:40.mobilised but it cannot help next month. The second problem is there
:08:41. > :08:44.is not a huge shortage of capital in major companies for major
:08:44. > :08:49.projects. There is a lack of confidence and inclination to
:08:49. > :08:56.invest. It is not the availability of capital that is the key.
:08:56. > :09:02.Companies are looking at the economy... You have to tackle both.
:09:02. > :09:06.I am not deprecating any scheme for investment in the economy. If it is
:09:06. > :09:10.going to be positive, let it be positive, but timing is of vital
:09:10. > :09:14.importance which is why a public investment initiative now would
:09:14. > :09:18.complement a private sector initiatives in the future. One of
:09:18. > :09:23.the effects of the Scotland Bill is they were going to bring forward
:09:23. > :09:31.borrowing powers that the Scottish government can have. What is the
:09:31. > :09:35.situation with that? We have passed legislation but getting that is a
:09:35. > :09:38.couple of years off so we do not have access to these borrowing
:09:38. > :09:44.powers at the moment. I would love the vesting date to be brought
:09:44. > :09:51.forward. Are you trying to negotiate? Absolutely! We suggest
:09:51. > :09:56.it should be as early as possible. If we had access to these borrowing
:09:56. > :10:01.powers, we would use them at the present. They are pretty modest,
:10:01. > :10:07.even in comparison to what Northern Ireland has at present. Changing
:10:07. > :10:13.the subject slightly. Quite a lot. Same-sex marriage. You have got
:10:13. > :10:23.this committee set up. Earlier today UWE reiterated that you
:10:23. > :10:27.passed it back -- you reiterated. Are you trying to work out details
:10:27. > :10:33.with the committee but that your Cabinet basically supports same-sex
:10:33. > :10:36.marriage or can you Cabinet not make up its mind? It is neither of
:10:36. > :10:42.those two. We are treating it respects the arguments that have
:10:42. > :10:48.been put to us and looking at them in great detail. The position, my
:10:48. > :10:52.own personal position as a matter of conscience, has not changed
:10:52. > :10:56.since last May. It is not just a question of what the First Minister
:10:56. > :11:01.thinks, it is a question of whether we can find a way forward that
:11:01. > :11:07.tries not to satisfy... A debate about Fage and conscience, you
:11:07. > :11:13.cannot do that, but... But you could get least tell me with the
:11:13. > :11:18.your government is in favour? coming to that. I feel that this
:11:18. > :11:23.issue, it is really important to conduct the debate in a way that
:11:23. > :11:27.respects people's views. What we are trying to do as a government is
:11:27. > :11:32.to answer some of the things that have been put to us in the
:11:32. > :11:36.consultation, Machrie answer the question about a call for a
:11:36. > :11:45.referendum at the Cabinet yesterday -- like we answered the question.
:11:45. > :11:48.We did not dismiss it out of hand. Other arguments have been put to us
:11:48. > :11:54.and we have always said incidentally that we would find a
:11:54. > :11:58.way to move forward by the end of this month and to explain what our
:11:58. > :12:04.position is and to publish a consultation document and if there
:12:04. > :12:07.is to be legislation, we would also explain how we would approach that.
:12:07. > :12:11.Apparently there is an e-mail between your government and the
:12:11. > :12:15.Home Office asking them to amend the equality bill in Westminster so
:12:15. > :12:21.that it would make it easier for you to pass same-sex marriage
:12:21. > :12:25.legislation, is that true? I am not familiar with the e-mail but
:12:25. > :12:30.certainly you would expect for us to look at all the possible
:12:30. > :12:36.scenarios. The basic point was that one suggestion was that you could
:12:36. > :12:40.say that you cannot pass a bill on same-sex marriage unless and until
:12:40. > :12:45.equality legislation in Britain is changed so that you would not be
:12:45. > :12:50.subject to legal challenge in the European Court. Well, let's allow
:12:50. > :12:54.us to consider the points that had been made to us, to examine the
:12:54. > :12:58.various implications of some of these points, and to outline our
:12:58. > :13:02.position by the end of this month. It is not a question of rushing out
:13:02. > :13:07.a press statement. It is trying to find a route forward which respects
:13:07. > :13:11.the views that have been put forward to us and put forward a
:13:11. > :13:16.fair and balanced position so that whatever the outcome, recognising
:13:16. > :13:20.you cannot satisfy everyone, everyone is entitled to see its
:13:20. > :13:25.government treating arguments seriously so the way in which you
:13:25. > :13:28.do things is seen to be detailed, Crocker, transparent, de tout and
:13:28. > :13:35.competent so you would expect the Scottish government to be analysing
:13:35. > :13:40.everything. Do you personally...? De you back this proposal to change
:13:40. > :13:50.your party's policy on that NATO? Are will be supporting the
:13:50. > :13:51.
:13:51. > :13:57.You support the resolution? Correct. At what would you say to members of
:13:57. > :14:04.your eye and party? You are abandoning it just to try to
:14:04. > :14:11.convince people to vote yes. defining issue for the SNP is
:14:11. > :14:17.independence. We are opposed to nuclear weapons and we continue to
:14:17. > :14:22.oppose nuclear weapons. The SNP have a pro NATO policy, and have
:14:22. > :14:30.had since the 1970s. This has not been a defining issue. The defining
:14:30. > :14:36.issue for the SNP is the opposition to nuclear weapons. Do you regret
:14:36. > :14:42.some of the comments you have made about NATO in the past? Times
:14:42. > :14:51.change and circumstances change. Which aspects and commence do you
:14:51. > :14:56.wish me to apologise for? The autumn and I was putting forward
:14:56. > :15:00.was that military action which was a unsanctioned by the United States
:15:00. > :15:09.was of dubious legality. Interestingly, if you in his --
:15:09. > :15:13.examine the resolution, a condition of our agreement to stay part of
:15:13. > :15:17.the alliance is the acceptance that we are entitled as a member to
:15:17. > :15:21.observe United Nations sanction action only. That is a right that
:15:21. > :15:26.other NATO members have as well. Take the legal war in Iraq. It was
:15:26. > :15:31.supported by the United States and a number of other NATO countries,
:15:31. > :15:35.but opposed by Germany, a key member country of NATO. I do not
:15:35. > :15:40.see the relevance of that. I do not regret opposing action and
:15:40. > :15:44.sanctioned by the United Nations. Are you personally in favour of
:15:44. > :15:51.having two questions on the referendum? The position, which I
:15:51. > :15:54.have outlined for a number of years, is that I would listen to the
:15:55. > :16:01.consultation document and the views that people have in society. The
:16:01. > :16:07.preference of the SNP is what we put forward in our white paper. As
:16:07. > :16:12.a government, we have got to listen to other voices in society and
:16:12. > :16:18.there is a substantial section of Scottish opinion which believes in
:16:18. > :16:22.economic powers, and it is not immediately clear to me why those
:16:23. > :16:26.people should have their opportunity to vote for at denied.
:16:26. > :16:31.What I require in terms of the referendum is that people have the
:16:31. > :16:35.opportunity to vote for Scottish independence, and that will happen.
:16:35. > :16:41.Are there any circumstances in which she would go ahead with a two
:16:41. > :16:51.question referendum if the Government in London said known. --
:16:51. > :16:51.
:16:51. > :17:01.said though? It would be simpler if the Government in London agreed to
:17:01. > :17:05.what they had initially said. The Secretary of State for Scotland
:17:05. > :17:08.said that the referendum had to be designed by Scotland, so why not
:17:08. > :17:11.let has designed a referendum? there any circumstances in which
:17:11. > :17:18.she would have a two question referendum without the legal
:17:18. > :17:22.powers? There may be circumstances in which I would say that is it
:17:22. > :17:28.acceptable to have Westminster oppose the democratic wishes of the
:17:28. > :17:32.Scottish people. Whether these are the circumstances you specify will
:17:32. > :17:38.be a matter for the consultation and negotiations with the UK
:17:38. > :17:41.Government. The anti- independence parties did not go to the Scottish
:17:41. > :17:46.people last year and said that they wanted a one question referendum.
:17:46. > :17:50.They want to the Scottish people and said they did not want a
:17:50. > :17:56.referendum atoll, and they were thrashed! The majority relies --
:17:56. > :18:00.lies within the Scottish Parliament. The parliamentary rebut it --
:18:00. > :18:04.majority must be respected. I will not have a Conservative government
:18:04. > :18:11.in London dictate the terms of Scottish democracy. If I did that,
:18:11. > :18:16.I would not be fit to be First Minister. Thank you very much.
:18:16. > :18:20.I am joined now by John McLaren, of the Centre for Public Policy for
:18:20. > :18:24.Regions. I'm not sure if what he said there puts him on the praise
:18:24. > :18:32.stimulus side of the equation. puts him on the probe stimulus side,
:18:32. > :18:36.but perhaps not as prone as he had appeared in the past. He mentioned
:18:36. > :18:40.the IMF in his press release today, saying that the figures they came
:18:40. > :18:44.back with this be downloaded -- downgraded the UK's growth.
:18:44. > :18:50.Actually, the IMF supported the UK's government current position.
:18:50. > :18:54.They said that if slope growth continued, then we should spend
:18:54. > :19:03.money on infrastructure. There is a timing issue between what some
:19:03. > :19:09.bodies like the IMF are saying and what he wants. The bigger picture
:19:10. > :19:17.is still, is it better to have a short-term fiscal stimulus to
:19:17. > :19:26.improve medium-term growth, or does that imperil future long-term
:19:26. > :19:30.growth? If you put Alex Salmond... You have got the coalition
:19:30. > :19:35.government on one side and Alex Salmond on the other, Ed Balls and
:19:35. > :19:39.Ed Miliband wanting fiscal stimulus, that is replicated in almost every
:19:39. > :19:44.country at the moment there is a debate between people who want more
:19:44. > :19:48.stimulus and others to say it would be dangerous. Why is that
:19:48. > :19:55.fundamental divide still there? Do we just not know enough to make a
:19:55. > :19:59.judgment? It is replicated almost - - also amongst economists. You have
:19:59. > :20:04.some people saying that the current Government's approaches the
:20:04. > :20:07.Government -- best one. Everyone agrees in the short term as the
:20:07. > :20:13.private sector rebalance is, the public sector needs to offset the
:20:13. > :20:20.decline in demand, and that is what has been happening. We have been
:20:20. > :20:23.doing this long enough now. Is the private sector dealing with it
:20:23. > :20:29.anyway? And a lot of countries it it has not been. How long do you
:20:29. > :20:34.keep doing it for? As well as the market confidence issue, the main
:20:34. > :20:40.economic issue is that some of the work has shown that above a certain
:20:40. > :20:46.level, if you have that for a number of years, that reduces
:20:46. > :20:50.future growth quite considerably and for a long time. The UK, the US
:20:50. > :20:56.and a number of other countries are already in that danger zone, so if
:20:56. > :21:00.you keep on going to hire, there is a danger, theoretically that things
:21:00. > :21:04.will be a lot worse. So the argument would be that even though
:21:04. > :21:08.some sort of job creation programme, pumping money into the economy,
:21:08. > :21:12.might be a good thing in the short term, it would make... Is the
:21:12. > :21:17.argument that it would make things worse in the long run chi that in
:21:17. > :21:20.itself wouldn't make things worse, but if you keep on having those
:21:20. > :21:27.things on and get seeds getting higher and higher, that has a
:21:27. > :21:36.correlation with low future growth, and some economists are concerned
:21:36. > :21:40.about increasing stimulus. It is a fundamental divide. Thank you very
:21:40. > :21:46.much. A look at the papers for tomorrow.
:21:46. > :21:52.The Scotsman says that the SNP's alcohol policy is being faced with
:21:52. > :21:56.a court battle. The Herald's says that cutbacks
:21:56. > :21:59.send some of childcare costs soaring. Some families are
:21:59. > :22:04.struggling to cope as fees jump by 20%.