03/12/2012 Newsnight Scotland

tuning may mean large-scale clinical trials are not always

On Newsnight Scotland tonight, the stand-off between the arts

community and the top arts administrator comes to a head. The

chief executive of Creative Scotland falls on his sword after

months of pressure. Also tonight, the former bosses of

HBOS come under scrutiny at the parliamentary commission. Remember

HBOS? And what is in store for Scotland

in the chancellor's autumn statement this week?

Good evening. The curtain has come down for the man in charge of

Creative Scotland, the country's arts funding body. After months of

intense criticism, much of it from some of Scotland's best-known

artists, Andrew Dixon quit as chief executive. He says he is

disappointed not to have gained their respect and support.

The arts community just did not like what Creative Scotland did or

how it was run. It did not like how it funded them and it did not like

how it spoke to them. Andrew Dixon probably did not like some of

Scotland's most high-profile writers and artists and what they

have to say about Creative Scotland. Just pack their bags and go. We

would be glad to see the back of them. Thankfully, I don't need any

funding and have never asked for it. Enough was enough for Mr Dixon. In

today's statement, he says he is Andrew Dixon had already conceded

that Creative Scotland had to do better. We need to not just work

through the intermediary agencies that we are funding to support

artists, so we are putting in place measures to do that. We have had a

very good dialogue over the theatre review. A lot of people are

engaging without consultation process. We will do the same with

dance, visual arts and crafts. too late. Who will now fill the

Creative Scotland hot seat, and what a challenge as well they face?

I am now joined in the studio by Phil Miller, the Herald's arts

correspondent. What is going on here? There is a lot of talk of

bureaucracy. What has been going on at Creative Scotland? It has been

going on for more than a year and has finally reached a head. The

decisive point was the letter sent by 100 artists to create of

Scotland in October. Now the chief Executive has fallen on his sword.

This week, we have an important board meeting. They will have to

take measures to internally reform Creative Scotland to make sure that

all the concerns that have been expressed over the year are somehow

responded to satisfactorily. Otherwise, this will go on for

months. Where did the criticism come from? Was in the change from a

regular stream of funding to lottery funding which seemed to

burden artists with complicated applications? That was part of it.

That was sparked off earlier this year. But it is more than that, and

it is just more than one man, Andrew Dixon, resigning. It is the

structure and the body itself that people have problems with. It is a

hybrid of the Scottish Arts Council and it was put together two years

ago with other additional responsibilities for the creative

industries. It has never felt or sounded right to many artists.

say it is more than one man. Do you think other heads will have to

roll? I would not want to name any. But this week, there has been an

internal report by one of the board members, and I think they will look

seriously at the structure of the body and there will be some

personnel changes. You mentioned the chairman. Does the arts world

have confidence in him? Many in the arts world distrust bankers anyway.

The opinion on him is mixed so far. This is his first big job in the

arts world. This week is the litmus test. If nothing convincing comes

out of this board meeting, there will be more hours in the future.

Are we always going to have tensions between the funder and the

people looking for funds? There will always be tensions because

there is a limited amount of money. But this year has been a disaster.

The story has been of Creative Scotland and what a mess it has

seemed to be making. The story should be about artists. In the

future, you would hope the funding body would be in the background.

The artists were complaining that they were not being listened to. Do

you think the chairman will take that on board and try to make that

change? You would hope so. It was a big thing happening today, with

Andrew Dixon resigning. You would hope that all the controversies,

particularly over that artists' letter, would lead to some change.

If there is not change this week, the arguments will get greater.

Four years on from the bruising banking crash, it seems that

reparations are being made. Icelandic banks repaid large debts

to Scottish councils in the past week and RBS could pay dividends

soon. But some old wounds have been reopened. This afternoon, the

parliamentary committee investigating the disastrous

collapse of HBOS, Halifax Bank of Scotland, questioned the competency

of two former chief executives. It is four years since the Bank of

Scotland came close to being no more. HBOS, the group created by

the merger or of the Halifax and the Bank of Scotland, once seemed

like a marriage made in heaven, the fifth force in British banking.

Instead, at the height of the banking crisis, HBOS was on the

brink of collapse. Lloyds TSB, then the taxpayer, came to the rescue.

Today, the two men who led HBOS were called to explain publicly

what went wrong. First up, Sir James Crosby, in charge until 2006.

He was not in for an easy ride. am very sorry for what happened at

the bank. What are your apologising for exactly, the mistakes of the

bank for which you were partly responsible? I am apologising for

the fact that I played a major part in building a business that

subsequently failed. I was not there for the last few years. But

it would be wrong for me to do so associate myself from what happened

in the end. HBOS stood accused of expanding too aggressively, and

some of its corporate lending practices were criticised. With the

benefit of hindsight, was this competent lending? If by competent

lending, we are accepting the right balance with the benefit of

hindsight between risk and reward, then no. So it was incompetent

lending? By that definition. It is your definition. I would not

describe it as incompetent, because it was done by individuals who were

well-intentioned and acting in good faith at the time. With the benefit

of hindsight, I would not use that language to describe it, but...

Everybody watching this will be wondering whether you are clear

that incompetent lending was made by your bank in this period. Do you

want to have another go? I think it is self-evident that the level of

impairments in the corporate bank could not be explained solely by

the financial crisis. I was clear about that in my evidence. Then it

was the turn of his successor and protege, Andy Hornby. The future

Archbishop of Canterbury had a question. I dealt with the Bank of

Scotland back in the '80s. They were not very prone to take in

risks. It was getting blood out of a stone to get them to part with

their precious money. What changed? Was that to do with bringing in a

sales culture after the merger? don't think so, because HBOS was an

amalgam of a very different cultures. The near collapse of HBOS

is sometimes overshadowed now by the crisis which engulfed its

Edinburgh rival, Royal Bank of Scotland, around the same time. The

aim of this inquiry is to help a piece together what happened and

see how to prevent a repeat in the future.

I am joined now from our Edinburgh studio by Ray Perman, a financial

journalist who this year wrote Hubris: How HBOS Wrecked the Best

Bank in Britain. The Best Bank, of course, being the

Bank of Scotland. Leicester got on the 20 macro the future Archbishop

made that the Bank of Scotland was enjoyably boring, he said at one

point. We tend to forget how secure an institution it was. We do. It

was part of the firmament of Scotland for 300 years. During that

period that the future Archbishop was talking about, the Bank of

Scotland was described by the Financial Times in really

congratulatory terms as the most boring bank in Britain. Boring

because it did all the right things and produced record profits year

after year, but at the same time was very prudent and solid.

have followed this story closely over the years. Former Chief exec

James Crosby apologised for the first time today. He stepped down a

couple of years before the crash, but how responsible for it is he?

James Crosby's departure from HBOS was a shock to everybody. He was

not even 50 at the time, and he left at a time when it appeared to

be doing well. Share price was at its peak, and he just went. Two

years later, the whole thing was in tears. People wonder whether he got

out in time. So far, he has escaped most of the scrutiny. He was not

called in front of the select committee when it called in Sir

Fred could win for some ritual humiliation. He was not named and

shamed by the FSA. Today it really was his comeuppance. I was

surprised at how aggressive the parliamentary commission was when

it went for him. Andy Hornby was up as well. He said the group had been

stressed tested. But he said there was no way they could predict what

was going to happen. He said even the wholesale financial markets in

the 1930s had not faced the same pressures. Yes, Hornby, like many

of the other directors of the bank who had been before the commission

before this, have clung to what Lord Turnbull, the chairman of the

HBOS panel in the parliamentary commission has described as the

innocent victim defence. It was not us, we were running a perfectly

good bank and then the world crisis came and we were swept away. It is

clear that the commission have no truck with that. HBOS ran up

colossal loans, �45 billion had to be written off. That debt alone

would have sunk the bank, regardless of the credit crunch. So

Hornby is clinging to their defence Do you think there is a collective

amnesia regarding HBOS? RBS seems to have been left carrying the can?

They may have been an knee-jerk of people, but 40,000 people lost

their jobs. Also, two million small shareholders lost their investments

and many of those also employees and saving through the Bank's share

ownership scheme. They lost their investment. The taxpayer paid 20

billion to save this bank and we have not got it back yet. If you

are in a pension scheme and they have invested in HBOS, you have

lost part of your pension. This really matters and there hasn't

been an adequate, official explanation for what went wrong.

The whole point of the Commission is try to learn from our mistakes.

Are we learning from mistakes, even as we speak now? The Commission has

made it clear we are not learning enough. Bankers have not changed

their ways in the fashion people had hoped. The Commission hopes to

get its report out by Christmas. I would be surprised if it just

rested there. I think the parliamentarians, particularly MPs,

will be pushing hard for real changes to come from this, in the

way banks behave and also for people to be brought to book over

the HBOS collapse. Now, the Chancellor's autumn statement comes

on Wednesday, so the usual string of special pleading, requests and

warnings have been hitting the politicians' inboxes. This year

there's a feeling Mr Osborne is going to be faced with some choices

which are even harder than usual, as the economy stubbornly refuses

to offer much response to the government's medicine. David

Henderson reports. Then it is eight months since the Chancellor set out

his Budget and amid austerity and recession, it wasn't easy.

What was billed as a budget for working families is remembered best

by some for the other headlines, the pasty tax and the granny tax.

After the pain, there has been some game. The UK came out of a double-

dip recession with growth at 1% from July to September.

Unemployment began to fall. Are these the green shoots of recovery?

Compared to the UK as a whole, Scotland's economy has had its ups

and downs. Unemployment is on the rise, retail sales figures are

disappointingly low. And the gross figures won't be confirmed until

January, but it seems through most of this year, Scotland's economy

has contracted. So what should the Chancellor do? He has been urged to

find money for this sort of thing - investments in infrastructure as a

way to kick-start the economy. believe that some methods need to

be made at the moment to stimulate demand. That means ensuring we do

have improved capital spend, both at a UK and Scottish level and also

tackle some of the taxes that are having a negative impact on

Scottish business. How can the Chancellor spent more or to borrow

to boost growth when the markets are wanting to cut the deficit? He

would want to ensure every penny counts since not all spending has

the same impact. What are the top priorities? Broadband

infrastructure, road and rail and airport infrastructure, improving

productivity in Scotland. If we are going to increase the long stern --

long-term growth of the economy, growth is another key element.

changes to passenger duty could be on the cards as a way of giving

business a lift. There is a more pressing issue for the Chancellor,

for motorists the price of fuel is a constant irritant. In June,

George Osborne, postponed A3 pence per litre rise in fuel duty until

next month. With the deadline looming, will he use his Autumn

Statement to delay it further? would like to see a continuation of

these 3p Fuel cut for over a year. He has postponed it twice and we

would like to see him postpone it a third time. At this time, three

pence extra would be bad for the Scottish economy. So Chancellor

also looks set to turn on the gas with a strategy that will give it a

greater role in fulfilling our energy needs. This power station in

East Lothian and runs on coal and is said to be replaced by gas

turbines, something similar could happen elsewhere. But where does

that leave renewable energy? place to invest money in the energy

sector is in renewables, particularly in Scotland we have a

bright future in renewables. Anything that challenges that by

directing money somewhere else of giving companies incentive to go

for gas instead of renewables, is to our detriment. It will mean

increasing carbon emissions instead of reducing them. All in all, some

tough choices for George Osborne, and if economic growth is projected

to remain low, he might have to face more drastic measures, still.

David Henderson reporting. And we'll have a full report and

reactions to the autumn statement in an extended programme on

Wednesday night. Now a quick look at tomorrow's