:00:11. > :00:17.Tonight on Newsnight Scotland: Lloyds TSB sells all its Scottish
:00:17. > :00:20.branches to the Co-op. A bad deal for Lloyds and the taxpayers who
:00:20. > :00:26.part own it, but could it be good for banking customers?
:00:26. > :00:29.And the rising costs of childcare. How much of a deterrent is it to
:00:29. > :00:32.women returning to work? Good evening. The behemoth that is
:00:32. > :00:37.Lloyds, TSB, Halifax and Bank of Scotland will become just a little
:00:37. > :00:41.bit smaller. It's being forced to sell over 600 branches across the
:00:41. > :00:44.UK to the Co-operative Bank at a knock-down price. Here, that means
:00:44. > :00:48.that while it will retain all Bank of Scotland branches, those branded
:00:48. > :00:56.as Lloyds TSB will be handed to the Co-op along with all their accounts,
:00:57. > :01:04.staff, computer systems and the TSB brand.
:01:04. > :01:10.TSB, the bank that likes to say yes! Then name TSB will be above
:01:10. > :01:16.the doors of the branches. For some the return of the TSB to the
:01:16. > :01:19.Scottish high street will be a welcome down. It was started in
:01:19. > :01:25.Dumfriesshire in 1810 and did is not just nostalgia that will make
:01:25. > :01:29.that return welcome. Retail banking is dominated by five banks in
:01:29. > :01:33.England, in Scotland it is just three. Increased competition is
:01:33. > :01:39.seen as a good thing by the government. The British Government
:01:39. > :01:47.has worked very hard to make this deal, bout. We had been on the
:01:47. > :01:51.phone in recent months because we want new names on the high street,
:01:52. > :01:56.to make sure we have more banks offering good deals to people, so
:01:56. > :02:01.we think this is a good thing for the British economy. We will become
:02:01. > :02:06.a real challenger to the big five banks and we are different. We are
:02:06. > :02:11.owned and run by our customer members and that brings a whole new
:02:11. > :02:16.dynamic into the boardroom. It is good good dynamic because it means
:02:16. > :02:21.we don't take the kinds of risks that the other big banks have taken,
:02:21. > :02:26.and look at where that has got the banking sector. The man from the
:02:26. > :02:32.Co-op has a right to look pleased. This is a very good deal for them.
:02:32. > :02:38.They are paying up to �750 million for the branches, about half their
:02:38. > :02:43.original valuation, and all its is also handing over �1.5 billion
:02:43. > :02:49.worth of capital, meaning it faces a loss of at least �750 million on
:02:49. > :02:53.the sale. The Co-op Bang will operate using your its IT systems
:02:53. > :02:58.and Lloyd's is providing that the management. Lloyd's has even agreed
:02:58. > :03:04.to underwrite the debt to fund the deal. Why would Lloyds agree to
:03:04. > :03:10.this? They had no choice. When its new team to take over the failing
:03:10. > :03:14.HBOS in 2008, it was assured by the UK government that despite the
:03:14. > :03:18.creation of the super-sized bank it would not be referred to the
:03:18. > :03:28.competition authorities. However European regulators ruled that it
:03:28. > :03:29.
:03:29. > :03:38.has to sell off some branches. Saving pounds! These are free, at
:03:38. > :03:40.TSB! We are your bank to fix the loan, when you want a home!
:03:40. > :03:44.I'm joined from Edinburgh by the financial journalist and blogger,
:03:44. > :03:51.Ian Fraser, and by Ray Perman who has just finished a book on the
:03:51. > :04:01.rise and fall of the Bank of Scotland. Is this a good deal and
:04:01. > :04:04.
:04:04. > :04:11.who for? This is a deal with a tremendous opportunity involved. If
:04:11. > :04:16.Co-op manages this correctly, it could build a new challenger brand
:04:16. > :04:26.and catch the other banks on the back foot. They have rate rigging,
:04:26. > :04:30.interest rates, people you -- PPI, and very serious issues to address,
:04:30. > :04:35.so if Co-operative Bank can play this cleverly and skilfully, it
:04:35. > :04:38.could represent good news for the consumer because it could be a real
:04:39. > :04:42.challenger brand which offers something that the others are not
:04:42. > :04:48.provide him. The other big advantage, without getting too
:04:48. > :04:53.technical, as I understand it, the way this works is that the entire
:04:53. > :04:57.loan book that will be transferred is backed by deposits from real
:04:58. > :05:02.customers rather than short-term debt, which has been used by the
:05:02. > :05:08.other banks and which led to so many problems. They have got a
:05:08. > :05:11.terrific position. It is a great deal for the Co-op. They are
:05:12. > :05:17.getting this balance sheet, then number of deposits will equal the
:05:17. > :05:23.amount that is Lent. They are getting a branch network all across
:05:23. > :05:30.the UK. In Scotland the Co-op only had one branch. They were forced to
:05:30. > :05:34.rely on agency deals for building- society is. Suddenly they get 150.
:05:34. > :05:41.A terrific deal for them and it creates a new force in British
:05:41. > :05:47.banking. Just a brief nod to the taxpayer. It looks like a rotten
:05:47. > :05:55.deal from their point of view. deal is at 20% of book value...
:05:55. > :06:00.should remind ourselves that the taxpayer owns 40% of Lloyd's.
:06:00. > :06:06.The taxpayer owns 43% of Lloyds Banking Group. They haven't done to
:06:06. > :06:10.work out of this deal. The point was is that Co-op walked away from
:06:10. > :06:18.the talks late last year because the price that Lloyd's was
:06:18. > :06:25.demanding, which was 22.5 billion, the original asking price, was far
:06:25. > :06:30.too high for Co-op to make a deal worthwhile. The Treasury intervened
:06:31. > :06:34.and not a few heads together. From what I understand, this was not a
:06:34. > :06:39.commercial deal at all. The Treasury basically Engineer this
:06:39. > :06:43.deal and seems to have engineered the low-price, which is not
:06:43. > :06:49.particularly attractive for the taxpayer, in so far as the taxpayer
:06:49. > :06:56.owns 43% of Lloyd's. You have just written a book about the Bank of
:06:56. > :07:02.Scotland. This is not one of their most glorious days? Of Bank of
:07:02. > :07:06.Scotland? With hindsight, going into a marriage with Halifax was
:07:06. > :07:11.the thing that sunk the Bank of Scotland. It is interesting that
:07:11. > :07:15.Lloyd's had chosen to keep the Bank of Scotland branches and will
:07:15. > :07:20.continue to trade in Scotland under that name and to get rid of the TSB
:07:20. > :07:25.branches rather than the other way round, so they obviously see value
:07:25. > :07:30.in the traditional bank of Scotland Business, which was heavy in small
:07:30. > :07:34.business and commercial business as well, whereas TSB was almost
:07:34. > :07:38.entirely retail, so we are not seeing an emergence of an
:07:39. > :07:43.independent Bank of Scotland I'm afraid, but we are seeing the TSB
:07:43. > :07:49.name revived, which I think can only be good for competition on the
:07:49. > :07:54.high street. The TSB name is being revised but there seems to be
:07:54. > :07:58.suggestion that that is more technical, that that will happen
:07:58. > :08:04.until the businesses finally merge? One would have thought that given
:08:04. > :08:10.its policy as an ethical investor, the Co-op might be a better brand
:08:10. > :08:13.than the TSB? I think they are using it TSB as an interim stage. I
:08:13. > :08:18.think they eventually want to rename it as the Co-operative Bank.
:08:18. > :08:23.I don't quite understand why they have chosen to use this as an
:08:23. > :08:26.interim name. It does have some resonance maybe because it was a
:08:26. > :08:30.Scottish brand originally and it was a brand that was basically
:08:31. > :08:36.built around the needs of its customers, unlike what most banks
:08:36. > :08:43.are nowadays, so they probably believe it has some merit as a
:08:43. > :08:48.short tram stop gap. -- short-term stop-gap measure, but I don't quite
:08:48. > :08:55.understand the logic of doing that short-term and changing it to the
:08:55. > :09:01.Co-op. There is a disconnect as far as I can see. Scotland seems to be
:09:01. > :09:05.disadvantaged in terms of bank competition because of Barclays and
:09:05. > :09:11.HSBC, who do not have an extensive branch network here, although of
:09:11. > :09:17.course we have the Clydesdale. Do you think this is enough? We have
:09:17. > :09:20.already had RBS having to divest some branches. Or is this the first
:09:20. > :09:25.step in a big shake-up of British banking that affects some of these
:09:25. > :09:30.monster banks we still have left quotes a man I hope it is the first
:09:30. > :09:35.step in a much bigger shake-up. Over my banking lifetime, since I
:09:35. > :09:39.was at work and opened my first bank account, the number of banks
:09:39. > :09:45.in the UK has shrunk dramatically, so it shows that consumer has
:09:45. > :09:49.shrunk dramatically, too, and the banks have really got far too
:09:49. > :09:54.confident, far too arrogant. They have got themselves in all sorts of
:09:54. > :10:00.trouble. The rate rigging scandal and so on. We need much more
:10:00. > :10:04.competition and I hope that this is a step to reviving more competition,
:10:04. > :10:09.more names on the high street, more choice for the consumer, and we can
:10:09. > :10:15.get back to good, honest, basic banking that we had a couple of
:10:15. > :10:19.decades ago. We should stress, or we are talking about breaking up
:10:19. > :10:25.retail banks. The idea of separating casino banking from
:10:25. > :10:31.retail banks is a different issue. But realistically, this idea of
:10:31. > :10:39.encouraging new entrantss, is it really going to work or with it
:10:39. > :10:43.read huge organisations like RBS and Lloyd's to be split up further?
:10:43. > :10:48.I think there is a real danger to pinning your hopes on one
:10:48. > :10:52.challenger brand because we saw this in 2001 when HBOS was created
:10:52. > :10:59.and it positioned itself very much as a consumer champion, offering
:10:59. > :11:03.low interest rates on mortgages and higher rates on deposit accounts,
:11:03. > :11:06.but unfortunately what happened was the Bank basically were so
:11:06. > :11:11.desperate to grow its market share that it became totally out of
:11:11. > :11:16.control, became a sales obsessed organisation, which then became
:11:16. > :11:20.wholly unethical and destroyed itself. There is a danger that when
:11:20. > :11:26.you get a new challenger brand, as we are seeing with the Co-op,
:11:26. > :11:29.Cheltenham and Gloucester, Britannia, tsp combined, that at
:11:29. > :11:35.the end of the day they used their ethical value and start chasing
:11:35. > :11:39.market share for its own sake, -- they lose their ethical value. If
:11:39. > :11:44.they do that, it would be disastrous. But we need a massive
:11:44. > :11:48.cultural shift in the British banking industry. It has very
:11:48. > :11:53.definitely become corrupted and Al root-and-branch overhaul of every
:11:53. > :11:56.bank is needed, and I don't know quite how that will be achieved.
:11:56. > :12:00.Breaking them up might be one solution. Thank you.
:12:00. > :12:03.Now. It won't have escaped your notice that the summer holidays are
:12:03. > :12:07.well under way. Working parents across the country can be caught
:12:07. > :12:10.between a rock and a hard place. They can keep their jobs and pay
:12:10. > :12:14.spiralling costs to have the children looked after. Or stay at
:12:14. > :12:17.home, lose vital income and face the wrath of Iain Duncan Smith, who
:12:17. > :12:22.is determined to get parents back to work. Sally McNair reports on
:12:22. > :12:26.the parent trap. For an action-packed few weeks in
:12:26. > :12:33.the summer, this privately-run company in Glasgow has been a hit
:12:33. > :12:37.for kids and parents alike. �110 a week buys all their child care,
:12:37. > :12:42.meals and today the services of the British taekwondo champion. It was
:12:42. > :12:47.set up three years ago by a parent and teacher, who realised that kids
:12:47. > :12:53.get considerably but more holidays than their parents. We need more
:12:53. > :12:57.options for the kids. Seven weeks is a long time. For kids to be
:12:57. > :13:02.interested and active and learn new things in the summer holidays. It
:13:02. > :13:06.can be a very expensive time for parents to keep the kids active and
:13:06. > :13:12.enjoying themselves and to avoid sitting inside being bought and
:13:13. > :13:16.playing computer Games every day. Of a survey of local authorities by
:13:16. > :13:21.the day-care Trust has found that in Scotland it costs an average
:13:21. > :13:31.�100 a week to pay for a week's holiday childcare. Considerably
:13:31. > :13:34.
:13:34. > :13:40.Here, local authority funded or maintained childcare costs have
:13:40. > :13:45.risen by 22% and the last year. One in five council say that their
:13:45. > :13:53.budget has been cut. And it is even worse if you live in the country or
:13:53. > :13:59.your child as it disability. One perk of low income parents have
:13:59. > :14:05.had to turn down work because they cannot afford the chair care
:14:05. > :14:12.payments. -- one third. In the summer holidays that becomes
:14:12. > :14:17.exacerbated, has brought sharply into focus.
:14:17. > :14:20.Children's charities and organisations speak with one voice.
:14:20. > :14:24.With the consultation process on the Scottish Government's children
:14:24. > :14:28.and young people spell on going until December, there has never
:14:28. > :14:38.been a better opportunity to make provision for affordable quality
:14:38. > :14:41.kale chair. -- childcare. If the Government are serious about
:14:41. > :14:46.tackling child poverty in getting payments and to work they would
:14:46. > :14:54.prioritise this. Especially for families on are the lowest incomes.
:14:54. > :14:57.Target of the help of where it is needed most. So that they require
:14:57. > :15:05.less support in the longer term from the government but different
:15:06. > :15:09.types of public support. Today, as the Westminster
:15:09. > :15:12.government Child Care Commission follows on from ministers at
:15:12. > :15:16.Holyrood by launching a consultation on improving childcare,
:15:16. > :15:23.the Riverside museum was full of pay and taking time out to
:15:23. > :15:30.entertain at their youngsters. We do not get summer holidays. We
:15:30. > :15:37.just have to work it between us. If there were no grandparents there
:15:37. > :15:43.would be problems. You know what it is like nowadays, very tough to
:15:43. > :15:47.earn a living. I only work part-time. Child care
:15:47. > :15:52.is so expensive. If I worked full- time and pay for childcare I think
:15:52. > :15:57.I would come away with only �50 extra. I would rather spend the
:15:57. > :16:01.time with my kids. Child care is a problem for working
:16:01. > :16:06.parents the whole year round but it has brought more sharply into focus
:16:06. > :16:12.during the summer holidays. At juggling act is required, using
:16:12. > :16:19.extended family and friends to mind the kids. Or paying for expensive
:16:19. > :16:23.childcare if and when they can find it. Parents have to choose between
:16:24. > :16:27.paid work and staying at home to look after their children. Local
:16:27. > :16:32.authorities facing brother cuts are forced to make tough spending
:16:32. > :16:40.decisions. That UK and Scottish governments, who want to see
:16:40. > :16:45.parents contributing to the economy, and coming off benefits to, for
:16:45. > :16:50.them it is all a question of priorities.
:16:50. > :16:57.I enjoy now than a chief-executive of children in Scotland, an
:16:57. > :17:03.umbrella organisation. -- I am joined now. Can we get the facts
:17:03. > :17:10.Clear? There has been a rise in the charges local authorities make for
:17:10. > :17:16.childcare. But has there been a cut in the element of tax credits
:17:17. > :17:22.supposed to cover childcare? That is right. At double whammy. A
:17:22. > :17:28.cut of around 10% in which local authorities can subsidise out-of-
:17:28. > :17:36.school childcare. Similarly, the tax cuts that enable parents to
:17:36. > :17:43.receive support for childcare have also been dramatically cut.
:17:43. > :17:52.For an average family, what is that, �500 per year?
:17:52. > :17:57.At least that. Together with the cuts in subsidise care and the
:17:57. > :18:03.increased cost of out-of-school provision, holiday clubs, etc. That
:18:03. > :18:13.babies but as you will have seen in your report they are also
:18:13. > :18:21.
:18:21. > :18:23.increasing by an average of 10%. -- Iain Duncan Smith wants to get
:18:23. > :18:28.Iain Duncan Smith wants to get paint back to work. On the other
:18:28. > :18:35.hand, if they're being hit by a combination of benefit cuts and
:18:36. > :18:39.price increases, it makes it increasingly difficult.
:18:39. > :18:43.We want parents to be able to choose to move back into work and
:18:43. > :18:50.to be financially better off making that decision. That is what are all
:18:51. > :18:56.set of government reforms have been about. -- a whole set. You must
:18:56. > :19:03.also take into account the rising cost of childcare. That is a rising
:19:03. > :19:06.concern. -- major concern. One way of looking at it is the amount of
:19:06. > :19:10.money the government spends on subsidising the cost of childcare
:19:10. > :19:15.but you must also look fundamentally at why childcare
:19:15. > :19:24.costs so much in this country in the first place.
:19:24. > :19:28.Her why does it cost so much then? We spend more than any other
:19:28. > :19:31.country except extremely unsubsidised and child care. But
:19:31. > :19:35.the amount of parents having to pay out of their own pocket are well
:19:35. > :19:39.above the international average. If you look at those two facts it
:19:39. > :19:46.would suggest that there is some inefficiency in the system. You
:19:46. > :19:51.need to look at why the costs of childcare are so high.
:19:51. > :19:55.Why do you think that is? I have looked at some of the Packers and
:19:55. > :20:02.the cost of childcare is extremely high. -- looked at some of the
:20:02. > :20:09.figures. As was said, we do not seem to get more than other
:20:09. > :20:14.countries back out of it. It is a complex picture. Local
:20:14. > :20:19.authorities are extremely important. In Scotland a tremendous amount of
:20:19. > :20:29.childcare is subsidised by local authorities. Particularly in pre-
:20:29. > :20:31.
:20:31. > :20:35.school provision. On average, a local authority nursery place is
:20:35. > :20:39.�25 cheaper than in the private sector. Because of the scale of
:20:40. > :20:44.provision. But the point made was a more
:20:44. > :20:49.general one. We spend a fortune on childcare yet everybody is saying
:20:49. > :20:54.it is terrible because the costs are so high. If we spend a fortune
:20:54. > :20:58.on public subsidy why do not have a more efficient sector which would
:20:58. > :21:03.make the prices charged more comparable with other countries? I
:21:03. > :21:08.hope I am not misrepresenting, but the thing that was the point.
:21:08. > :21:16.K that is exactly why the Scottish Government consultation is so
:21:16. > :21:22.welcome. We are spending many millions on the cost of childcare.
:21:22. > :21:27.Both from central and local government. We have very good, high
:21:27. > :21:36.quality care in many areas, but it is ad-hoc Bentley is not flexible,
:21:36. > :21:44.not accessible to many parents. -- it is at hawk and it is not
:21:44. > :21:52.flexible. Some of the regulation around childcare simply is not good
:21:52. > :21:56.enough. There is an issue here. It would be
:21:56. > :22:00.unfair to say that you are Iain Duncan Smith's Institute but you
:22:00. > :22:07.where associated with him when you were set up. Are you thinking of
:22:07. > :22:11.doing more work in this regard? We are. The Government launched its
:22:11. > :22:15.affordable childcare Commission about a month ago. We're looking at
:22:15. > :22:21.answering that question, why is childcare so expensive? We are
:22:21. > :22:26.starting by asking questions about flexibility - if people are working
:22:26. > :22:30.flexible hours can they get access childcare at the right time? Can
:22:30. > :22:39.schools be open? What will happen to the extent schools programme we
:22:39. > :22:46.have from a new vox pop? -- that we heard from in the your fox pop?
:22:46. > :22:53.Should get the more schools doing that? If not, why not? What is the
:22:53. > :22:58.cost base of childminders? Their costs of looking after two or three
:22:58. > :23:03.children are still quite high and difficult for people to afford. Why
:23:03. > :23:07.are there not more childminders on a voluntary register? That is a
:23:07. > :23:11.particularly onerous way for people to register. We need to make sure
:23:11. > :23:15.there are more childminders available locally. That might
:23:15. > :23:23.improve flexibility and availability if not necessarily
:23:23. > :23:26.cost. Even if you do not agree with
:23:27. > :23:36.everything it appears that you do both do your research. Thank you
:23:37. > :23:42.
:23:42. > :23:51.very much. Tomorrow's front pages, starting with the Scotsman. The