05/12/2012 Newsnight Scotland

point whatsoever. A message from the Liberal Democrats on

Tonight on Newsnight Scotland: How the Autumn Statement is playing out

here. John Swinney is given the money for so-called shovel ready

projects he has been demanding. And the rise in fuel duty has been

cancelled. I'll be asking Scotland's Finance Secretary how

getting what he wanted is supposed to advance his case for

independence. And have Labour or the Tories come out better from

today's statement? They will debate. Good evening. You will already have

seen that the Chancellor's Autumn Statement took his political

opponents by surprise, at least as far as the forecasts that public

borrowing isn't going to be as bad as Ed Balls expected. He is also

increasing public spending on capital projects in Scotland,

granting the SNP government what it has been demanding for years. So

has the Chancellor finally managed to make austerity look attractive?

There is still an icy chill about the economy which no amount of

festive cheer can disguise. public know there are no miracle

cures, just the hard work of dealing with the deficit and

ensuring Britain wins the global race. Still the UK government says

there is plenty of good news for Scotland in the Autumn Statement.

Even if nobody is quite pretending Santa has come early. 1 million

Scottish pensioners receive their state pension rise. -- will see.

21,000 low-pay it's God's will stop paying their income tax. -- low-

paid Scots. And the rise in fuel duty has been cancelled. I think

what people see are some very tough economic circumstances. A backdrop

that shows us that challenges facing us in the economy in

Scotland. What we are seeking to do is have targeted measures that will

help Scotland get on the road to recovery. Unionists are unconvinced.

The overall reaction to today is not only has the Chancellor missed

an opportunity but he has left many people in the difficult situations

they were in beforehand and as the festive season approaches, it will

be a feeble time for comfort and be a feeble time for comfort and

joy for many unemployed people in Scotland. The coalition argues

Scottish businesses should benefit, too, with the cut in corporation

tax and a rise in the annual investment allowance for small and

medium-sized businesses. The fact fuel duty will not be rising will

also be a boost to businesses, like this bakery. It is great for

business. We have stopped the costs from rising to suppliers and it

will give us an opportunity to possibly invest in other areas of

the business. Of course, while most of the measures announced by the

Chancellor today affect the whole of the UK, others do not affect

Scotland directly. Rather it is about the knock-on effect of the

Scottish government's own budget through the Barnet Formula. It is a

complex calculation but on balance, the Scottish government's budget

will be given an extra �331 million up to 2015. I welcome the fact that

the Chancellor has accepted the argument put forward by the

Scottish government that we need to invest in capital production to

boost the economy, but this evidence has been steering the

Chancellor in the face for two years and he should have been

taking this decision a great deal Sue Nye. Whether or not the UK

government has taken the right decision on tax and spending will

be a matter for discussion. What is fact is that austerity measures

will be extended until 28 team. believe most people in Scotland

want a more equal society, closing the gap between rich and poor. I

believe people in Scotland also want us to live within a political

means. The UK government seems implacably opposed to this agenda.

It will make poverty and inequality worse, it will make environmental

destruction worse, and it will not even achieve their own economic

targets. The economy north and south of the border is still

struggling, so has the Chancellor done enough of the right thing to

force a case of growth and with it a political pawn -- fortunes of its

government? The man responsible for spending

Scotland's block grant is Finance Secretary John Swinney. A short

while ago he came into our Edinburgh studio. I asked him if he

was happy he had got what he asked all. What we set out from the

Chancellor was the importance of investing in capital infrastructure

in Scotland. We support economic recovery. Now the Chancellor has

had to face the reality of reduced growth forecasts, increased

borrowing and a much longer period of austerity, he has eventually

come to realise that we were right all along and that what we need is

capital investment. You could be gracious about it. I am. I welcome

the fact that Chancellor has acknowledged the failure of his

economic strategy. My only regret is that a which she had realised

this considerably longer ago when we were telling him. -- I wish he

had realised this. You also got the abolition in fuel duty. That is

beneficial. Council tax freezing is providing respite to households the

length and breadth of the country event the certainty that at least

one bill people have got to face will not be increased. The freeze

on fuel duty is helpful to the Scottish economy. �330 million

extra that you are getting. That will all be spent on capital

spending? It has to be, yes. So you have no leeway on that. No, it has

to be spent on capital projects, yes. Of the shop already projects

that you have, which is the most shop already? -- shovel ready?

There is a range of projects that can go forward right away, for

example, project such as the expansion of health facility

maintenance, the trunk road maintenance projects. These can

swiftly precede if we decide they have the greatest degree of

priority. There are also a number of other projects that have

planning consent and they all need to go through that recruitment

process. And they will start by when? The money will start from

April 1st, 2013. They cannot start before that. Obviously we have to

put in place the necessary preparations to make sure the money

can be spent. We have been preparing for such a situation,

where we might get additional resources because we could see the

difficulties the economy was facing, and we will proceed to implement

that programme. This is great for you. It does not advance your

argument for independence very much, You have been saying how unfair it

is for people in Scotland and fuel duty will go up, and he decided not

to do that. It helps because it demonstrates economic damage has

been done to the Scottish economy by the Chancellor's refusal to

deliver an appropriate level of capital. There is no more damage

here than anywhere else and you have been given the two main things

you want. With independence, the people of Scotland would have a

political choice of what approach to take to capital investment.

notice that the Office for Budget Responsibility is forecasting oil

revenues will fall from what you referred to in the statement

earlier today as record levels last year of 11 billion to 4.5 billion

in 2016 and 2017. Should their forecast be correct, your claims

that Scotland's deficit would be less than the UK's if you have

independence go up in smoke. crucial point is the report by the

Institute for Fiscal Studies that says that Scotland pays its way

within the United Kingdom and Scotland can afford to be an

independent country. Do you say the forecast of the Office for Budget

Responsibility is wrong? I am saying... You said if them report

is correct. The Office for Budget Responsibility is using a lower

level of oil price envisaged by most international experts,

including the International Agency, who say the price of oil in 2016 is

likely to be $120 a barrel. Office for Budget Responsibility is using

$92. That is a significant difference in the estimation.

prices are difficult to forecast, and that is one of the problems

with relying on oil prices. The problem for year is that not only

are the people in Scotland being asked to believe your promises on

how much better things would be for the economy after independence,

they are supposed to believe the Office for Budget Responsibility is

wronged. You're asking people to believe a lot of things to take you

seriously. I said the Institute for Fiscal Studies who demonstrated in

a report a fair assessment of the public finances of Scotland,

demonstrating Scotland pays its way in the United -- United Kingdom.

There are 24 billion barrels of to be extracted still, it is said.

There is a huge economic resource to be used there. The amount of oil

in the North Sea is different from the Revenue can raise from it.

report from the University of Aberdeen is a significant

contribution to the debate about the long-term strength of the oil

and gas resource. The opportunity of independence is to use that for

the benefit of the people of Scotland. Banks. I am joined from

London by David Mundell and the Labour Shadow Secretary of State's

Margaret Curran. There is not much comfort for year in this. The

Office for Budget Responsibility, which everybody is leaning on these

days, concludes the main reason the Government got its forecast wrong

have more to do with the world economy, particularly the eurozone,

and government policy. I have to say I do not share the belief of

John Swinney that George Osborne has been converted. I heard the

Chancellor today, I think, recognise that the economy is

shrinking and that is bad news for Scotland. Use their feet that

comparison is with the eurozone make Britain look good, but growth

is higher in Germany and America than Britain. I said that the

Office for Budget Responsibility concluded the reason the Chancellor

missed his growth forecast had more to do with the world economy and

the eurozone than with his policies. I would argue strongly I think his

policies have a great deal to do with it. We have a lack in

confidence and suppressed demand. We spent approaching �14 billion of

benefits to keep people unemployed rather than getting them to work.

We do not get tax and business and of people working and so we are in

a vicious cycle. That is the problem the economy is facing and I

do not believe John Swinney and George Osborne thing that the

prospects are good. We need to get people back to work. David Mundell,

what are we gaining from this? We have had Cup's -- cuts and the

deficit has dropped by half a per cent of GDP. What is the point of

this? At the start of this process when Labour left office we had a

deficit the equivalent of that of Greece or Spain. People see what is

happening in these countries. It is chaos. We did not have a deficit

like that and arguably part of the damage to the British economy has

been caused by George Osborne saying we did have an economy like

Greece. That is not correct. By the measures we have taken, we have

international financial confidence in our economy. Rainey? We have low

interest rates that affect mortgages -- really? We have

managed despite the level of the deficit to bring stability to the

economy. And what we have been able to do is to keep the deficit going

down, which is good news. It will be a long road. It will be -- there

will be painful decisions. serious do you think it would be if

the UK lost its triple A credit rating? In it would be serious to

have a credit change. More would it undermine the strategy of Judge --

George Osborne? It would be worse if we would not take credible

measures and we were returning to more spending, borrowing and debt,

which has the answer of laboured to the situation we find ourselves in.

-- the Labour Party. If you told us Labour won the next election, it

was re impose the top rate of tax, which you are complaining that

George Osborne has scrapped. I do not think that is true, I do not

think it goes to the centre of a credibility. We will make our tax

plans when the next of manifest error is due. That is standard

practice for parties. You look at the economic conditions at that

time. It is disgraceful to cut benefits while top rates taxes are

being cut, says the Labour Party, but Labour will not say they will

impose a top rate of tax on the richest. Giving �3 billion to the

wealthiest is the wrong thing to do in principle and it is rank

millionaires get �107,000 benefit when you are cutting tax rack --

credits. That is not attacking people shirking work. We think the

balance is wrong. What you need to do is to get a better balance

between getting people back to work, getting the economy moving and

getting demand going. That is how you get recovery. David is wrong,

when Labour left government, we were beginning to see recovery and

growth was back. It is the measures of this government that has sent us

in the wrong direction. Every time George Osborne comes to the chamber,

he has to revise his forecast. He had to drastically revise his

forecast for growth and the economy is in serious trouble. The

Government is telling us how good they are, rather than getting the

economy moving again. We have just had the entertaining sight of Danny

Alexander and Rachel Reeves telling us why they came into politics. Did

you come into politics to cut benefit for the poorest people in

society while simultaneously abolishing a 50 pence rate of tax

on the rich? We just heard the ridiculous position Margaret Curran

is advocating in terms of criticising the cut in a higher

rate of tax and not saying what Labour would do about it. I came

into politics to deal with the situation as we found it. It means

taking hard decisions. Sir you did come into politics to cut the top

rate while cutting benefits? I came into politics to ensure we had an

economy that was stable and we had worked for people in my

constituency and across Scotland and that Britain was a country that

was competitive around the world. That is what the measures that the

Government have taken have achieved. Our business and economy editor is

Douglas Fraser. We have heard the bluster, what is your take on this?

It is how it plays into politics and the fairness agenda, the fact

that the bottom half of the pile in terms of income is taking a bigger

hit from today's announcement, going into next year. The top 10%

is because. But the bottom half takes the biggest. Yes, there is a

lot of oil and gas left under UK waters, which could be Scottish

waters in independent Scotland, but it will take tax incentives for

these companies to drill and extract. We have differences of

opinion on oil prices. In it is very hard to guess where they will

go. Another interesting issue, corporation tax, heading down again.

Five years ago it was at 30% and is now 24%. In a couple of years, it

will be 21%. It blunts the argument of the SNP it was making in 2007

that it could push to Irish levels, and create a Celtic tiger in

Scotland with competitive levels. That gap is closing. The Irish

level is looking unsustainable if not economically, them politically.

There is a blunting of the attack and the ability of Scotland to set

itself apart and be competitive on business rates. We will hear more

from people like John Swinney on targeted tax cuts. The headline tax

cut and how much they think they could bring it down is a harder

argument to make. On oil and gas, I hate to mention the Government and

expenditure revenues assist it. If you accept the figures the Office

for Budget Responsibility are producing into that, you get a

different forecast. A with higher oil prices and high production, the

figures have not looked good and the deficit for Scotland has been

smaller than for the UK. If you have a sharp cuts in production,

and these projections coming through from the Office for Budget

Responsibility, the ones being used by the Treasury, the notion of what

deficit and -- an independent Scotland will face, that deficit

gets much bigger. Thanks. On the gets much bigger. Thanks. On the

front pages, this story on Brussels. The paper is claiming a letter has

been sent to a House of Lords committee about existing treaties