:00:04. > :00:12.point whatsoever. A message from the Liberal Democrats on
:00:13. > :00:16.Tonight on Newsnight Scotland: How the Autumn Statement is playing out
:00:16. > :00:20.here. John Swinney is given the money for so-called shovel ready
:00:20. > :00:23.projects he has been demanding. And the rise in fuel duty has been
:00:23. > :00:26.cancelled. I'll be asking Scotland's Finance Secretary how
:00:26. > :00:30.getting what he wanted is supposed to advance his case for
:00:30. > :00:35.independence. And have Labour or the Tories come out better from
:00:35. > :00:38.today's statement? They will debate. Good evening. You will already have
:00:38. > :00:41.seen that the Chancellor's Autumn Statement took his political
:00:41. > :00:46.opponents by surprise, at least as far as the forecasts that public
:00:46. > :00:48.borrowing isn't going to be as bad as Ed Balls expected. He is also
:00:48. > :00:52.increasing public spending on capital projects in Scotland,
:00:52. > :00:55.granting the SNP government what it has been demanding for years. So
:00:55. > :01:05.has the Chancellor finally managed to make austerity look attractive?
:01:05. > :01:09.
:01:10. > :01:17.There is still an icy chill about the economy which no amount of
:01:17. > :01:21.festive cheer can disguise. public know there are no miracle
:01:21. > :01:28.cures, just the hard work of dealing with the deficit and
:01:29. > :01:33.ensuring Britain wins the global race. Still the UK government says
:01:33. > :01:39.there is plenty of good news for Scotland in the Autumn Statement.
:01:39. > :01:48.Even if nobody is quite pretending Santa has come early. 1 million
:01:48. > :01:53.Scottish pensioners receive their state pension rise. -- will see.
:01:53. > :02:03.21,000 low-pay it's God's will stop paying their income tax. -- low-
:02:03. > :02:03.
:02:03. > :02:08.paid Scots. And the rise in fuel duty has been cancelled. I think
:02:08. > :02:12.what people see are some very tough economic circumstances. A backdrop
:02:13. > :02:22.that shows us that challenges facing us in the economy in
:02:23. > :02:23.
:02:23. > :02:29.Scotland. What we are seeking to do is have targeted measures that will
:02:29. > :02:34.help Scotland get on the road to recovery. Unionists are unconvinced.
:02:34. > :02:41.The overall reaction to today is not only has the Chancellor missed
:02:41. > :02:46.an opportunity but he has left many people in the difficult situations
:02:46. > :02:50.they were in beforehand and as the festive season approaches, it will
:02:50. > :02:57.be a feeble time for comfort and be a feeble time for comfort and
:02:57. > :03:01.joy for many unemployed people in Scotland. The coalition argues
:03:01. > :03:06.Scottish businesses should benefit, too, with the cut in corporation
:03:06. > :03:12.tax and a rise in the annual investment allowance for small and
:03:12. > :03:18.medium-sized businesses. The fact fuel duty will not be rising will
:03:18. > :03:23.also be a boost to businesses, like this bakery. It is great for
:03:23. > :03:27.business. We have stopped the costs from rising to suppliers and it
:03:28. > :03:34.will give us an opportunity to possibly invest in other areas of
:03:34. > :03:38.the business. Of course, while most of the measures announced by the
:03:38. > :03:43.Chancellor today affect the whole of the UK, others do not affect
:03:43. > :03:48.Scotland directly. Rather it is about the knock-on effect of the
:03:48. > :03:53.Scottish government's own budget through the Barnet Formula. It is a
:03:53. > :04:00.complex calculation but on balance, the Scottish government's budget
:04:00. > :04:04.will be given an extra �331 million up to 2015. I welcome the fact that
:04:04. > :04:10.the Chancellor has accepted the argument put forward by the
:04:10. > :04:14.Scottish government that we need to invest in capital production to
:04:14. > :04:18.boost the economy, but this evidence has been steering the
:04:18. > :04:23.Chancellor in the face for two years and he should have been
:04:23. > :04:27.taking this decision a great deal Sue Nye. Whether or not the UK
:04:28. > :04:32.government has taken the right decision on tax and spending will
:04:32. > :04:39.be a matter for discussion. What is fact is that austerity measures
:04:39. > :04:44.will be extended until 28 team. believe most people in Scotland
:04:45. > :04:51.want a more equal society, closing the gap between rich and poor. I
:04:51. > :04:55.believe people in Scotland also want us to live within a political
:04:55. > :04:59.means. The UK government seems implacably opposed to this agenda.
:05:00. > :05:03.It will make poverty and inequality worse, it will make environmental
:05:03. > :05:09.destruction worse, and it will not even achieve their own economic
:05:09. > :05:13.targets. The economy north and south of the border is still
:05:13. > :05:19.struggling, so has the Chancellor done enough of the right thing to
:05:19. > :05:23.force a case of growth and with it a political pawn -- fortunes of its
:05:23. > :05:26.government? The man responsible for spending
:05:26. > :05:32.Scotland's block grant is Finance Secretary John Swinney. A short
:05:32. > :05:38.while ago he came into our Edinburgh studio. I asked him if he
:05:38. > :05:42.was happy he had got what he asked all. What we set out from the
:05:42. > :05:47.Chancellor was the importance of investing in capital infrastructure
:05:47. > :05:51.in Scotland. We support economic recovery. Now the Chancellor has
:05:51. > :05:55.had to face the reality of reduced growth forecasts, increased
:05:55. > :05:59.borrowing and a much longer period of austerity, he has eventually
:05:59. > :06:04.come to realise that we were right all along and that what we need is
:06:04. > :06:08.capital investment. You could be gracious about it. I am. I welcome
:06:08. > :06:13.the fact that Chancellor has acknowledged the failure of his
:06:13. > :06:18.economic strategy. My only regret is that a which she had realised
:06:18. > :06:23.this considerably longer ago when we were telling him. -- I wish he
:06:23. > :06:31.had realised this. You also got the abolition in fuel duty. That is
:06:31. > :06:35.beneficial. Council tax freezing is providing respite to households the
:06:35. > :06:40.length and breadth of the country event the certainty that at least
:06:40. > :06:47.one bill people have got to face will not be increased. The freeze
:06:47. > :06:52.on fuel duty is helpful to the Scottish economy. �330 million
:06:52. > :07:00.extra that you are getting. That will all be spent on capital
:07:01. > :07:06.spending? It has to be, yes. So you have no leeway on that. No, it has
:07:06. > :07:16.to be spent on capital projects, yes. Of the shop already projects
:07:16. > :07:17.
:07:17. > :07:22.that you have, which is the most shop already? -- shovel ready?
:07:22. > :07:27.There is a range of projects that can go forward right away, for
:07:27. > :07:33.example, project such as the expansion of health facility
:07:33. > :07:37.maintenance, the trunk road maintenance projects. These can
:07:37. > :07:41.swiftly precede if we decide they have the greatest degree of
:07:42. > :07:45.priority. There are also a number of other projects that have
:07:45. > :07:51.planning consent and they all need to go through that recruitment
:07:51. > :07:56.process. And they will start by when? The money will start from
:07:56. > :08:00.April 1st, 2013. They cannot start before that. Obviously we have to
:08:00. > :08:04.put in place the necessary preparations to make sure the money
:08:04. > :08:08.can be spent. We have been preparing for such a situation,
:08:08. > :08:13.where we might get additional resources because we could see the
:08:13. > :08:17.difficulties the economy was facing, and we will proceed to implement
:08:17. > :08:27.that programme. This is great for you. It does not advance your
:08:27. > :08:29.
:08:29. > :08:33.argument for independence very much, You have been saying how unfair it
:08:33. > :08:38.is for people in Scotland and fuel duty will go up, and he decided not
:08:38. > :08:43.to do that. It helps because it demonstrates economic damage has
:08:43. > :08:47.been done to the Scottish economy by the Chancellor's refusal to
:08:47. > :08:50.deliver an appropriate level of capital. There is no more damage
:08:50. > :08:55.here than anywhere else and you have been given the two main things
:08:55. > :09:01.you want. With independence, the people of Scotland would have a
:09:01. > :09:04.political choice of what approach to take to capital investment.
:09:04. > :09:08.notice that the Office for Budget Responsibility is forecasting oil
:09:08. > :09:15.revenues will fall from what you referred to in the statement
:09:15. > :09:21.earlier today as record levels last year of 11 billion to 4.5 billion
:09:21. > :09:27.in 2016 and 2017. Should their forecast be correct, your claims
:09:27. > :09:33.that Scotland's deficit would be less than the UK's if you have
:09:33. > :09:38.independence go up in smoke. crucial point is the report by the
:09:38. > :09:41.Institute for Fiscal Studies that says that Scotland pays its way
:09:41. > :09:45.within the United Kingdom and Scotland can afford to be an
:09:45. > :09:51.independent country. Do you say the forecast of the Office for Budget
:09:51. > :09:55.Responsibility is wrong? I am saying... You said if them report
:09:55. > :10:01.is correct. The Office for Budget Responsibility is using a lower
:10:01. > :10:08.level of oil price envisaged by most international experts,
:10:08. > :10:11.including the International Agency, who say the price of oil in 2016 is
:10:11. > :10:21.likely to be $120 a barrel. Office for Budget Responsibility is using
:10:21. > :10:26.$92. That is a significant difference in the estimation.
:10:26. > :10:31.prices are difficult to forecast, and that is one of the problems
:10:31. > :10:34.with relying on oil prices. The problem for year is that not only
:10:35. > :10:39.are the people in Scotland being asked to believe your promises on
:10:39. > :10:43.how much better things would be for the economy after independence,
:10:43. > :10:47.they are supposed to believe the Office for Budget Responsibility is
:10:47. > :10:53.wronged. You're asking people to believe a lot of things to take you
:10:53. > :10:58.seriously. I said the Institute for Fiscal Studies who demonstrated in
:10:58. > :11:08.a report a fair assessment of the public finances of Scotland,
:11:08. > :11:11.
:11:11. > :11:17.demonstrating Scotland pays its way in the United -- United Kingdom.
:11:17. > :11:22.There are 24 billion barrels of to be extracted still, it is said.
:11:22. > :11:30.There is a huge economic resource to be used there. The amount of oil
:11:30. > :11:33.in the North Sea is different from the Revenue can raise from it.
:11:33. > :11:37.report from the University of Aberdeen is a significant
:11:37. > :11:42.contribution to the debate about the long-term strength of the oil
:11:42. > :11:50.and gas resource. The opportunity of independence is to use that for
:11:51. > :11:55.the benefit of the people of Scotland. Banks. I am joined from
:11:55. > :12:02.London by David Mundell and the Labour Shadow Secretary of State's
:12:02. > :12:05.Margaret Curran. There is not much comfort for year in this. The
:12:05. > :12:09.Office for Budget Responsibility, which everybody is leaning on these
:12:09. > :12:14.days, concludes the main reason the Government got its forecast wrong
:12:14. > :12:18.have more to do with the world economy, particularly the eurozone,
:12:19. > :12:26.and government policy. I have to say I do not share the belief of
:12:26. > :12:30.John Swinney that George Osborne has been converted. I heard the
:12:30. > :12:39.Chancellor today, I think, recognise that the economy is
:12:39. > :12:43.shrinking and that is bad news for Scotland. Use their feet that
:12:43. > :12:49.comparison is with the eurozone make Britain look good, but growth
:12:49. > :12:51.is higher in Germany and America than Britain. I said that the
:12:51. > :12:56.Office for Budget Responsibility concluded the reason the Chancellor
:12:56. > :13:01.missed his growth forecast had more to do with the world economy and
:13:01. > :13:10.the eurozone than with his policies. I would argue strongly I think his
:13:10. > :13:16.policies have a great deal to do with it. We have a lack in
:13:16. > :13:19.confidence and suppressed demand. We spent approaching �14 billion of
:13:19. > :13:24.benefits to keep people unemployed rather than getting them to work.
:13:25. > :13:29.We do not get tax and business and of people working and so we are in
:13:29. > :13:33.a vicious cycle. That is the problem the economy is facing and I
:13:33. > :13:39.do not believe John Swinney and George Osborne thing that the
:13:39. > :13:49.prospects are good. We need to get people back to work. David Mundell,
:13:49. > :13:49.
:13:49. > :13:54.what are we gaining from this? We have had Cup's -- cuts and the
:13:54. > :14:00.deficit has dropped by half a per cent of GDP. What is the point of
:14:00. > :14:07.this? At the start of this process when Labour left office we had a
:14:07. > :14:13.deficit the equivalent of that of Greece or Spain. People see what is
:14:13. > :14:17.happening in these countries. It is chaos. We did not have a deficit
:14:17. > :14:21.like that and arguably part of the damage to the British economy has
:14:21. > :14:29.been caused by George Osborne saying we did have an economy like
:14:29. > :14:34.Greece. That is not correct. By the measures we have taken, we have
:14:34. > :14:44.international financial confidence in our economy. Rainey? We have low
:14:44. > :14:49.interest rates that affect mortgages -- really? We have
:14:49. > :14:54.managed despite the level of the deficit to bring stability to the
:14:54. > :15:04.economy. And what we have been able to do is to keep the deficit going
:15:04. > :15:05.
:15:05. > :15:10.down, which is good news. It will be a long road. It will be -- there
:15:10. > :15:17.will be painful decisions. serious do you think it would be if
:15:17. > :15:24.the UK lost its triple A credit rating? In it would be serious to
:15:24. > :15:34.have a credit change. More would it undermine the strategy of Judge --
:15:34. > :15:38.George Osborne? It would be worse if we would not take credible
:15:38. > :15:43.measures and we were returning to more spending, borrowing and debt,
:15:43. > :15:53.which has the answer of laboured to the situation we find ourselves in.
:15:53. > :15:58.
:15:58. > :16:03.-- the Labour Party. If you told us Labour won the next election, it
:16:03. > :16:07.was re impose the top rate of tax, which you are complaining that
:16:07. > :16:13.George Osborne has scrapped. I do not think that is true, I do not
:16:13. > :16:19.think it goes to the centre of a credibility. We will make our tax
:16:19. > :16:23.plans when the next of manifest error is due. That is standard
:16:23. > :16:30.practice for parties. You look at the economic conditions at that
:16:30. > :16:35.time. It is disgraceful to cut benefits while top rates taxes are
:16:36. > :16:43.being cut, says the Labour Party, but Labour will not say they will
:16:43. > :16:49.impose a top rate of tax on the richest. Giving �3 billion to the
:16:49. > :16:53.wealthiest is the wrong thing to do in principle and it is rank
:16:53. > :17:03.millionaires get �107,000 benefit when you are cutting tax rack --
:17:03. > :17:04.
:17:04. > :17:09.credits. That is not attacking people shirking work. We think the
:17:09. > :17:14.balance is wrong. What you need to do is to get a better balance
:17:14. > :17:19.between getting people back to work, getting the economy moving and
:17:19. > :17:24.getting demand going. That is how you get recovery. David is wrong,
:17:24. > :17:31.when Labour left government, we were beginning to see recovery and
:17:31. > :17:37.growth was back. It is the measures of this government that has sent us
:17:37. > :17:42.in the wrong direction. Every time George Osborne comes to the chamber,
:17:42. > :17:47.he has to revise his forecast. He had to drastically revise his
:17:47. > :17:52.forecast for growth and the economy is in serious trouble. The
:17:52. > :17:58.Government is telling us how good they are, rather than getting the
:17:58. > :18:03.economy moving again. We have just had the entertaining sight of Danny
:18:03. > :18:08.Alexander and Rachel Reeves telling us why they came into politics. Did
:18:08. > :18:12.you come into politics to cut benefit for the poorest people in
:18:12. > :18:18.society while simultaneously abolishing a 50 pence rate of tax
:18:18. > :18:22.on the rich? We just heard the ridiculous position Margaret Curran
:18:22. > :18:28.is advocating in terms of criticising the cut in a higher
:18:28. > :18:34.rate of tax and not saying what Labour would do about it. I came
:18:34. > :18:39.into politics to deal with the situation as we found it. It means
:18:39. > :18:45.taking hard decisions. Sir you did come into politics to cut the top
:18:45. > :18:49.rate while cutting benefits? I came into politics to ensure we had an
:18:50. > :18:55.economy that was stable and we had worked for people in my
:18:55. > :19:04.constituency and across Scotland and that Britain was a country that
:19:04. > :19:11.was competitive around the world. That is what the measures that the
:19:11. > :19:17.Government have taken have achieved. Our business and economy editor is
:19:17. > :19:23.Douglas Fraser. We have heard the bluster, what is your take on this?
:19:23. > :19:28.It is how it plays into politics and the fairness agenda, the fact
:19:28. > :19:38.that the bottom half of the pile in terms of income is taking a bigger
:19:38. > :19:40.
:19:40. > :19:50.hit from today's announcement, going into next year. The top 10%
:19:50. > :19:50.
:19:50. > :19:55.is because. But the bottom half takes the biggest. Yes, there is a
:19:55. > :19:59.lot of oil and gas left under UK waters, which could be Scottish
:19:59. > :20:05.waters in independent Scotland, but it will take tax incentives for
:20:05. > :20:09.these companies to drill and extract. We have differences of
:20:09. > :20:15.opinion on oil prices. In it is very hard to guess where they will
:20:15. > :20:23.go. Another interesting issue, corporation tax, heading down again.
:20:24. > :20:29.Five years ago it was at 30% and is now 24%. In a couple of years, it
:20:29. > :20:35.will be 21%. It blunts the argument of the SNP it was making in 2007
:20:35. > :20:41.that it could push to Irish levels, and create a Celtic tiger in
:20:41. > :20:50.Scotland with competitive levels. That gap is closing. The Irish
:20:50. > :20:56.level is looking unsustainable if not economically, them politically.
:20:56. > :21:01.There is a blunting of the attack and the ability of Scotland to set
:21:01. > :21:08.itself apart and be competitive on business rates. We will hear more
:21:08. > :21:12.from people like John Swinney on targeted tax cuts. The headline tax
:21:12. > :21:22.cut and how much they think they could bring it down is a harder
:21:22. > :21:24.
:21:24. > :21:29.argument to make. On oil and gas, I hate to mention the Government and
:21:29. > :21:34.expenditure revenues assist it. If you accept the figures the Office
:21:34. > :21:41.for Budget Responsibility are producing into that, you get a
:21:41. > :21:45.different forecast. A with higher oil prices and high production, the
:21:45. > :21:50.figures have not looked good and the deficit for Scotland has been
:21:50. > :21:53.smaller than for the UK. If you have a sharp cuts in production,
:21:53. > :22:00.and these projections coming through from the Office for Budget
:22:00. > :22:04.Responsibility, the ones being used by the Treasury, the notion of what
:22:04. > :22:09.deficit and -- an independent Scotland will face, that deficit
:22:09. > :22:16.gets much bigger. Thanks. On the gets much bigger. Thanks. On the
:22:16. > :22:24.front pages, this story on Brussels. The paper is claiming a letter has
:22:24. > :22:32.been sent to a House of Lords committee about existing treaties