:00:02. > :00:11.tuning may mean large-scale clinical trials are not always
:00:11. > :00:16.On Newsnight Scotland tonight, the stand-off between the arts
:00:16. > :00:18.community and the top arts administrator comes to a head. The
:00:18. > :00:23.chief executive of Creative Scotland falls on his sword after
:00:23. > :00:26.months of pressure. Also tonight, the former bosses of
:00:26. > :00:30.HBOS come under scrutiny at the parliamentary commission. Remember
:00:30. > :00:35.HBOS? And what is in store for Scotland
:00:35. > :00:38.in the chancellor's autumn statement this week?
:00:38. > :00:42.Good evening. The curtain has come down for the man in charge of
:00:42. > :00:44.Creative Scotland, the country's arts funding body. After months of
:00:44. > :00:49.intense criticism, much of it from some of Scotland's best-known
:00:49. > :00:58.artists, Andrew Dixon quit as chief executive. He says he is
:00:58. > :01:02.disappointed not to have gained their respect and support.
:01:02. > :01:06.The arts community just did not like what Creative Scotland did or
:01:06. > :01:12.how it was run. It did not like how it funded them and it did not like
:01:12. > :01:15.how it spoke to them. Andrew Dixon probably did not like some of
:01:15. > :01:22.Scotland's most high-profile writers and artists and what they
:01:22. > :01:31.have to say about Creative Scotland. Just pack their bags and go. We
:01:32. > :01:37.would be glad to see the back of them. Thankfully, I don't need any
:01:37. > :01:47.funding and have never asked for it. Enough was enough for Mr Dixon. In
:01:47. > :01:55.
:01:55. > :01:59.today's statement, he says he is Andrew Dixon had already conceded
:01:59. > :02:03.that Creative Scotland had to do better. We need to not just work
:02:03. > :02:08.through the intermediary agencies that we are funding to support
:02:08. > :02:14.artists, so we are putting in place measures to do that. We have had a
:02:14. > :02:20.very good dialogue over the theatre review. A lot of people are
:02:20. > :02:27.engaging without consultation process. We will do the same with
:02:27. > :02:31.dance, visual arts and crafts. too late. Who will now fill the
:02:31. > :02:34.Creative Scotland hot seat, and what a challenge as well they face?
:02:34. > :02:42.I am now joined in the studio by Phil Miller, the Herald's arts
:02:42. > :02:47.correspondent. What is going on here? There is a lot of talk of
:02:47. > :02:51.bureaucracy. What has been going on at Creative Scotland? It has been
:02:51. > :02:57.going on for more than a year and has finally reached a head. The
:02:57. > :03:00.decisive point was the letter sent by 100 artists to create of
:03:00. > :03:06.Scotland in October. Now the chief Executive has fallen on his sword.
:03:06. > :03:11.This week, we have an important board meeting. They will have to
:03:11. > :03:17.take measures to internally reform Creative Scotland to make sure that
:03:17. > :03:20.all the concerns that have been expressed over the year are somehow
:03:20. > :03:27.responded to satisfactorily. Otherwise, this will go on for
:03:27. > :03:31.months. Where did the criticism come from? Was in the change from a
:03:31. > :03:35.regular stream of funding to lottery funding which seemed to
:03:35. > :03:41.burden artists with complicated applications? That was part of it.
:03:41. > :03:45.That was sparked off earlier this year. But it is more than that, and
:03:46. > :03:51.it is just more than one man, Andrew Dixon, resigning. It is the
:03:51. > :03:55.structure and the body itself that people have problems with. It is a
:03:55. > :03:59.hybrid of the Scottish Arts Council and it was put together two years
:03:59. > :04:05.ago with other additional responsibilities for the creative
:04:05. > :04:09.industries. It has never felt or sounded right to many artists.
:04:09. > :04:14.say it is more than one man. Do you think other heads will have to
:04:14. > :04:19.roll? I would not want to name any. But this week, there has been an
:04:19. > :04:24.internal report by one of the board members, and I think they will look
:04:24. > :04:30.seriously at the structure of the body and there will be some
:04:30. > :04:38.personnel changes. You mentioned the chairman. Does the arts world
:04:38. > :04:43.have confidence in him? Many in the arts world distrust bankers anyway.
:04:43. > :04:48.The opinion on him is mixed so far. This is his first big job in the
:04:48. > :04:53.arts world. This week is the litmus test. If nothing convincing comes
:04:53. > :04:57.out of this board meeting, there will be more hours in the future.
:04:57. > :05:02.Are we always going to have tensions between the funder and the
:05:02. > :05:09.people looking for funds? There will always be tensions because
:05:09. > :05:12.there is a limited amount of money. But this year has been a disaster.
:05:12. > :05:17.The story has been of Creative Scotland and what a mess it has
:05:17. > :05:22.seemed to be making. The story should be about artists. In the
:05:22. > :05:26.future, you would hope the funding body would be in the background.
:05:26. > :05:30.The artists were complaining that they were not being listened to. Do
:05:30. > :05:38.you think the chairman will take that on board and try to make that
:05:38. > :05:43.change? You would hope so. It was a big thing happening today, with
:05:43. > :05:47.Andrew Dixon resigning. You would hope that all the controversies,
:05:47. > :05:55.particularly over that artists' letter, would lead to some change.
:05:55. > :05:58.If there is not change this week, the arguments will get greater.
:05:58. > :06:02.Four years on from the bruising banking crash, it seems that
:06:02. > :06:05.reparations are being made. Icelandic banks repaid large debts
:06:05. > :06:10.to Scottish councils in the past week and RBS could pay dividends
:06:10. > :06:12.soon. But some old wounds have been reopened. This afternoon, the
:06:12. > :06:14.parliamentary committee investigating the disastrous
:06:14. > :06:24.collapse of HBOS, Halifax Bank of Scotland, questioned the competency
:06:24. > :06:33.
:06:33. > :06:39.of two former chief executives. It is four years since the Bank of
:06:39. > :06:44.Scotland came close to being no more. HBOS, the group created by
:06:44. > :06:52.the merger or of the Halifax and the Bank of Scotland, once seemed
:06:52. > :06:55.like a marriage made in heaven, the fifth force in British banking.
:06:55. > :07:05.Instead, at the height of the banking crisis, HBOS was on the
:07:05. > :07:05.
:07:05. > :07:09.brink of collapse. Lloyds TSB, then the taxpayer, came to the rescue.
:07:09. > :07:16.Today, the two men who led HBOS were called to explain publicly
:07:16. > :07:23.what went wrong. First up, Sir James Crosby, in charge until 2006.
:07:23. > :07:29.He was not in for an easy ride. am very sorry for what happened at
:07:29. > :07:35.the bank. What are your apologising for exactly, the mistakes of the
:07:35. > :07:41.bank for which you were partly responsible? I am apologising for
:07:41. > :07:46.the fact that I played a major part in building a business that
:07:46. > :07:51.subsequently failed. I was not there for the last few years. But
:07:51. > :07:57.it would be wrong for me to do so associate myself from what happened
:07:57. > :08:01.in the end. HBOS stood accused of expanding too aggressively, and
:08:01. > :08:09.some of its corporate lending practices were criticised. With the
:08:09. > :08:12.benefit of hindsight, was this competent lending? If by competent
:08:12. > :08:18.lending, we are accepting the right balance with the benefit of
:08:18. > :08:24.hindsight between risk and reward, then no. So it was incompetent
:08:24. > :08:28.lending? By that definition. It is your definition. I would not
:08:28. > :08:31.describe it as incompetent, because it was done by individuals who were
:08:31. > :08:38.well-intentioned and acting in good faith at the time. With the benefit
:08:38. > :08:41.of hindsight, I would not use that language to describe it, but...
:08:41. > :08:46.Everybody watching this will be wondering whether you are clear
:08:46. > :08:53.that incompetent lending was made by your bank in this period. Do you
:08:53. > :08:56.want to have another go? I think it is self-evident that the level of
:08:56. > :09:00.impairments in the corporate bank could not be explained solely by
:09:00. > :09:05.the financial crisis. I was clear about that in my evidence. Then it
:09:05. > :09:12.was the turn of his successor and protege, Andy Hornby. The future
:09:12. > :09:20.Archbishop of Canterbury had a question. I dealt with the Bank of
:09:20. > :09:26.Scotland back in the '80s. They were not very prone to take in
:09:26. > :09:33.risks. It was getting blood out of a stone to get them to part with
:09:33. > :09:42.their precious money. What changed? Was that to do with bringing in a
:09:42. > :09:50.sales culture after the merger? don't think so, because HBOS was an
:09:50. > :09:55.amalgam of a very different cultures. The near collapse of HBOS
:09:55. > :09:59.is sometimes overshadowed now by the crisis which engulfed its
:09:59. > :10:03.Edinburgh rival, Royal Bank of Scotland, around the same time. The
:10:03. > :10:08.aim of this inquiry is to help a piece together what happened and
:10:08. > :10:11.see how to prevent a repeat in the future.
:10:11. > :10:14.I am joined now from our Edinburgh studio by Ray Perman, a financial
:10:14. > :10:22.journalist who this year wrote Hubris: How HBOS Wrecked the Best
:10:22. > :10:27.Bank in Britain. The Best Bank, of course, being the
:10:27. > :10:32.Bank of Scotland. Leicester got on the 20 macro the future Archbishop
:10:32. > :10:38.made that the Bank of Scotland was enjoyably boring, he said at one
:10:38. > :10:42.point. We tend to forget how secure an institution it was. We do. It
:10:42. > :10:46.was part of the firmament of Scotland for 300 years. During that
:10:46. > :10:51.period that the future Archbishop was talking about, the Bank of
:10:51. > :10:54.Scotland was described by the Financial Times in really
:10:55. > :10:59.congratulatory terms as the most boring bank in Britain. Boring
:11:00. > :11:05.because it did all the right things and produced record profits year
:11:05. > :11:09.after year, but at the same time was very prudent and solid.
:11:09. > :11:13.have followed this story closely over the years. Former Chief exec
:11:13. > :11:19.James Crosby apologised for the first time today. He stepped down a
:11:19. > :11:24.couple of years before the crash, but how responsible for it is he?
:11:24. > :11:29.James Crosby's departure from HBOS was a shock to everybody. He was
:11:29. > :11:34.not even 50 at the time, and he left at a time when it appeared to
:11:34. > :11:40.be doing well. Share price was at its peak, and he just went. Two
:11:40. > :11:48.years later, the whole thing was in tears. People wonder whether he got
:11:48. > :11:52.out in time. So far, he has escaped most of the scrutiny. He was not
:11:52. > :11:55.called in front of the select committee when it called in Sir
:11:55. > :12:02.Fred could win for some ritual humiliation. He was not named and
:12:02. > :12:04.shamed by the FSA. Today it really was his comeuppance. I was
:12:04. > :12:12.surprised at how aggressive the parliamentary commission was when
:12:12. > :12:15.it went for him. Andy Hornby was up as well. He said the group had been
:12:15. > :12:20.stressed tested. But he said there was no way they could predict what
:12:20. > :12:25.was going to happen. He said even the wholesale financial markets in
:12:25. > :12:29.the 1930s had not faced the same pressures. Yes, Hornby, like many
:12:29. > :12:34.of the other directors of the bank who had been before the commission
:12:34. > :12:39.before this, have clung to what Lord Turnbull, the chairman of the
:12:39. > :12:42.HBOS panel in the parliamentary commission has described as the
:12:42. > :12:46.innocent victim defence. It was not us, we were running a perfectly
:12:46. > :12:54.good bank and then the world crisis came and we were swept away. It is
:12:54. > :13:01.clear that the commission have no truck with that. HBOS ran up
:13:01. > :13:05.colossal loans, �45 billion had to be written off. That debt alone
:13:05. > :13:15.would have sunk the bank, regardless of the credit crunch. So
:13:15. > :13:17.
:13:17. > :13:24.Hornby is clinging to their defence Do you think there is a collective
:13:24. > :13:33.amnesia regarding HBOS? RBS seems to have been left carrying the can?
:13:33. > :13:40.They may have been an knee-jerk of people, but 40,000 people lost
:13:40. > :13:47.their jobs. Also, two million small shareholders lost their investments
:13:47. > :13:53.and many of those also employees and saving through the Bank's share
:13:53. > :13:57.ownership scheme. They lost their investment. The taxpayer paid 20
:13:57. > :14:02.billion to save this bank and we have not got it back yet. If you
:14:02. > :14:07.are in a pension scheme and they have invested in HBOS, you have
:14:07. > :14:11.lost part of your pension. This really matters and there hasn't
:14:11. > :14:15.been an adequate, official explanation for what went wrong.
:14:16. > :14:20.The whole point of the Commission is try to learn from our mistakes.
:14:20. > :14:24.Are we learning from mistakes, even as we speak now? The Commission has
:14:24. > :14:29.made it clear we are not learning enough. Bankers have not changed
:14:29. > :14:34.their ways in the fashion people had hoped. The Commission hopes to
:14:34. > :14:39.get its report out by Christmas. I would be surprised if it just
:14:39. > :14:45.rested there. I think the parliamentarians, particularly MPs,
:14:45. > :14:47.will be pushing hard for real changes to come from this, in the
:14:47. > :14:54.way banks behave and also for people to be brought to book over
:14:54. > :14:57.the HBOS collapse. Now, the Chancellor's autumn statement comes
:14:57. > :15:00.on Wednesday, so the usual string of special pleading, requests and
:15:00. > :15:03.warnings have been hitting the politicians' inboxes. This year
:15:03. > :15:06.there's a feeling Mr Osborne is going to be faced with some choices
:15:06. > :15:09.which are even harder than usual, as the economy stubbornly refuses
:15:09. > :15:18.to offer much response to the government's medicine. David
:15:18. > :15:25.Henderson reports. Then it is eight months since the Chancellor set out
:15:25. > :15:28.his Budget and amid austerity and recession, it wasn't easy.
:15:28. > :15:34.What was billed as a budget for working families is remembered best
:15:34. > :15:39.by some for the other headlines, the pasty tax and the granny tax.
:15:39. > :15:43.After the pain, there has been some game. The UK came out of a double-
:15:43. > :15:48.dip recession with growth at 1% from July to September.
:15:48. > :15:53.Unemployment began to fall. Are these the green shoots of recovery?
:15:53. > :15:58.Compared to the UK as a whole, Scotland's economy has had its ups
:15:58. > :16:02.and downs. Unemployment is on the rise, retail sales figures are
:16:02. > :16:08.disappointingly low. And the gross figures won't be confirmed until
:16:08. > :16:13.January, but it seems through most of this year, Scotland's economy
:16:13. > :16:18.has contracted. So what should the Chancellor do? He has been urged to
:16:18. > :16:22.find money for this sort of thing - investments in infrastructure as a
:16:22. > :16:28.way to kick-start the economy. believe that some methods need to
:16:28. > :16:34.be made at the moment to stimulate demand. That means ensuring we do
:16:34. > :16:37.have improved capital spend, both at a UK and Scottish level and also
:16:37. > :16:42.tackle some of the taxes that are having a negative impact on
:16:42. > :16:46.Scottish business. How can the Chancellor spent more or to borrow
:16:47. > :16:51.to boost growth when the markets are wanting to cut the deficit? He
:16:51. > :16:58.would want to ensure every penny counts since not all spending has
:16:58. > :17:01.the same impact. What are the top priorities? Broadband
:17:01. > :17:07.infrastructure, road and rail and airport infrastructure, improving
:17:07. > :17:15.productivity in Scotland. If we are going to increase the long stern --
:17:15. > :17:18.long-term growth of the economy, growth is another key element.
:17:18. > :17:25.changes to passenger duty could be on the cards as a way of giving
:17:25. > :17:29.business a lift. There is a more pressing issue for the Chancellor,
:17:29. > :17:35.for motorists the price of fuel is a constant irritant. In June,
:17:35. > :17:40.George Osborne, postponed A3 pence per litre rise in fuel duty until
:17:40. > :17:46.next month. With the deadline looming, will he use his Autumn
:17:46. > :17:50.Statement to delay it further? would like to see a continuation of
:17:50. > :17:55.these 3p Fuel cut for over a year. He has postponed it twice and we
:17:55. > :18:00.would like to see him postpone it a third time. At this time, three
:18:00. > :18:05.pence extra would be bad for the Scottish economy. So Chancellor
:18:05. > :18:11.also looks set to turn on the gas with a strategy that will give it a
:18:11. > :18:14.greater role in fulfilling our energy needs. This power station in
:18:14. > :18:19.East Lothian and runs on coal and is said to be replaced by gas
:18:19. > :18:23.turbines, something similar could happen elsewhere. But where does
:18:23. > :18:27.that leave renewable energy? place to invest money in the energy
:18:27. > :18:32.sector is in renewables, particularly in Scotland we have a
:18:32. > :18:36.bright future in renewables. Anything that challenges that by
:18:36. > :18:41.directing money somewhere else of giving companies incentive to go
:18:41. > :18:46.for gas instead of renewables, is to our detriment. It will mean
:18:46. > :18:50.increasing carbon emissions instead of reducing them. All in all, some
:18:50. > :18:56.tough choices for George Osborne, and if economic growth is projected
:18:56. > :19:00.to remain low, he might have to face more drastic measures, still.
:19:00. > :19:03.David Henderson reporting. And we'll have a full report and
:19:03. > :19:05.reactions to the autumn statement in an extended programme on
:19:05. > :19:15.Wednesday night. Now a quick look at tomorrow's
:19:15. > :19:17.