0:00:09 > 0:00:12Tonight on Newsnight Scotland: The Holyrood leaders have decided to
0:00:12 > 0:00:18back UK-wide press regulation. But will the Scottish newspapers be
0:00:18 > 0:00:23prepared to go along? The Co-op have said no to buying
0:00:23 > 0:00:33the TSB. Is it a problem that our choice of high street banks is so
0:00:33 > 0:00:33
0:00:33 > 0:00:35small? And what could be done about it? Good evening well if you
0:00:35 > 0:00:38thought press regulation was already confused following the
0:00:38 > 0:00:40Leveson Inquiry, it just got a lot more confused.
0:00:40 > 0:00:44Today, Scottish politicians decided to go along with West Minister's
0:00:44 > 0:00:46proposals for a new system based on a royal charter, just as the main
0:00:46 > 0:00:49London newspapers said they wanted nothing to do with the charter.
0:00:49 > 0:00:57We'll hear in a moment what the Scottish newspapers make of today's
0:00:57 > 0:01:01developments. If the economy could grow based on
0:01:01 > 0:01:07committees alone, the debate about press rich relation should have
0:01:07 > 0:01:10propelled us into an unsustainable boom by now. Alex Salmond set up a
0:01:10 > 0:01:14Commission to fashion a specifically Scottish solution to
0:01:14 > 0:01:18the issue. But none of the politicians liked what he said, so
0:01:18 > 0:01:23they decided to ignore him. The main parties agreed they would go
0:01:23 > 0:01:27along with whatever Westminster came up with instead. Now they have
0:01:27 > 0:01:32downgraded their own role to make sure what is agreed in London
0:01:32 > 0:01:35complies with the more here. Things are moving rapidly at Westminster.
0:01:35 > 0:01:41We have to make sure our responsibilities are dealt with and
0:01:41 > 0:01:44that is what we have been able to do. Down there, there has been a
0:01:44 > 0:01:48similar flourishing of committees and late-night meetings. The
0:01:48 > 0:01:53Government, with the agreement of the opposition, has published a
0:01:53 > 0:01:57Royal Charter which would govern a new system of policing for hacks.
0:01:57 > 0:02:03They worry it is state control of the press by the back door, and
0:02:03 > 0:02:08most of them said they won nothing to do with it. Now there is a love
0:02:08 > 0:02:14in between Holyrood and Westminster and a Mexican stand-off between the
0:02:14 > 0:02:17press and the politicians. As for clarity? We can forget about that.
0:02:17 > 0:02:21I'm joined from Edinburgh by the director of the Scottish Newspaper
0:02:21 > 0:02:26Society, Jim Raeburn. The politicians here and in
0:02:27 > 0:02:30Westminster may have agreed with each other, but to the newspapers
0:02:30 > 0:02:35in Scotland want any more to do with this new system than the
0:02:35 > 0:02:41newspapers in London want anything to do with it? We certainly don't
0:02:41 > 0:02:51want the Government sponsored Royal Charter that was published on 18th
0:02:51 > 0:02:51
0:02:51 > 0:02:56March. For that reason today, we have indicated and announced we are
0:02:56 > 0:03:02proposing a Royal Charter, an industry based one, which is based
0:03:02 > 0:03:10on essentially an agreement we reached with the UK Government
0:03:10 > 0:03:15ministers in February. But then it was suddenly changed as something
0:03:15 > 0:03:19considerably different. It is confusing, all of these things
0:03:19 > 0:03:25going on. Basically, when most of the newspapers, the Fleet Street
0:03:25 > 0:03:29papers are today, we do not want your Royal charter, we will have a
0:03:29 > 0:03:35charter of our own. The Scottish newspapers are signed up to what
0:03:35 > 0:03:41most of the newspapers in London have said today? Agreed, yes we are.
0:03:41 > 0:03:44The what is the difference? Succinctly, it he would come,
0:03:44 > 0:03:51between the Royal Charter you are proposing and the political parties
0:03:52 > 0:03:56in Westminster are proposing? The have any role in deciding who would
0:03:56 > 0:04:05be on the regular regulatory bodies? Politicians would be
0:04:05 > 0:04:12removed. We were anxious to keep a free press. The statutory
0:04:12 > 0:04:22underpinning that comes from the UK Government's proposed Royal Charter,
0:04:22 > 0:04:28that it would be -- wouldn't be part of the equation. One thing you
0:04:28 > 0:04:36do welcome, I assume this new agreement between the politicians
0:04:36 > 0:04:39at Holyrood and Westminster, and the holly rude basically saying, we
0:04:39 > 0:04:47will do what London decides. You presumably like that, because you
0:04:47 > 0:04:54did not want separate legislation here? We have had meetings with the
0:04:54 > 0:05:00the party leaders and we made it clear the Scottish newspaper
0:05:00 > 0:05:07Society did not once in Scotland only arrangement. Newspapers
0:05:07 > 0:05:13circulate both sides of the border single, UK wide solution based on
0:05:13 > 0:05:19self-regulation. How far are you prepared to push this? We heard
0:05:19 > 0:05:23David Cameron said he would look at what you were suggesting, but it
0:05:23 > 0:05:29sounded to me like he was just being polite. Ed Miliband said
0:05:29 > 0:05:34let's press on and do the Government's version, because this
0:05:34 > 0:05:39has been agreed by all the main parties. Are you prepared to defy
0:05:39 > 0:05:43it if they go ahead and do what they are proposing to do?
0:05:43 > 0:05:52fundamental is, there has to be industry by into what ever
0:05:52 > 0:05:58arrangements. But you could face legal penalties. If it came to a
0:05:58 > 0:06:05court case about an allegation and newspaper had maltreated an
0:06:05 > 0:06:10individual but could be punitive signed up to the new scheme?
0:06:10 > 0:06:12legislation that has been passed in Westminster and applicable to
0:06:12 > 0:06:20England and Wales provides for exemplary damages which can be
0:06:20 > 0:06:23awarded against a publisher that is outside the regulated system.
0:06:24 > 0:06:29in newspapers in Scotland, would they be prepared to take that risk,
0:06:29 > 0:06:35rather than sign up to what they see his Government regulation?
0:06:35 > 0:06:42There is a big question to whether exemplary damages would be awarded
0:06:43 > 0:06:48under Scots law. That is a big question. But I think, even if
0:06:48 > 0:06:54there was a case in the English courts were exemplary damages was
0:06:54 > 0:06:59to be awarded, I suspect one of the major national newspaper groups
0:06:59 > 0:07:05would contest that all the way through the courts, write to Europe.
0:07:05 > 0:07:09There is a widely held view... you are saying is, you would defy
0:07:09 > 0:07:15it and your belief is that challenge it through the courts
0:07:15 > 0:07:20system this system of exemplary damages wouldn't work? Correct.How
0:07:21 > 0:07:28comfortable are you with this? The press has come in for a lot of
0:07:28 > 0:07:33criticism. You are effectively defying the will of two parliaments
0:07:34 > 0:07:38now? I am not sure that is entirely the case. The industry has come in
0:07:38 > 0:07:41for some criticism for understandable reasons. We
0:07:41 > 0:07:45recognise there has to be changed and we want to work with
0:07:45 > 0:07:50governments north and south of the border to achieve the change in a
0:07:50 > 0:07:57way which is providing for effective and independent self-
0:07:57 > 0:08:01regulation. What we have proposed goes a long way towards that. Now,
0:08:01 > 0:08:11I would suggest somewhere along the line there has to be a meeting of
0:08:11 > 0:08:13
0:08:13 > 0:08:17minds, there needs to be more dialogue. Thanks very much indeed.
0:08:17 > 0:08:20It used to be the bank that liked to say "yes". But the Co-op has
0:08:20 > 0:08:23said no to buying old TSB branches. The Government had hoped that an
0:08:24 > 0:08:26expanded Co-op would create a new force in high-street banking. But
0:08:26 > 0:08:36with mergers forced on the banks by the financial crisis, are customers
0:08:36 > 0:08:37
0:08:37 > 0:08:41losing out? Andrew Black reports. Back in the 80s, the TSB was aiming
0:08:41 > 0:08:48high. The institution founded in Dumfriesshire in 1810, floated on
0:08:48 > 0:08:52the stock market raising more than �1 billion. It has been part of
0:08:52 > 0:08:58Lloyd's since the 90s, but now the banking group's enforced sale of
0:08:58 > 0:09:04thousands of branches has fallen through. Its plans by a, the Co-op,
0:09:04 > 0:09:10got cold feet and pulled out, sparking concern about decreased
0:09:10 > 0:09:15competition on the high street. In Glasgow's trendy West End, how much
0:09:15 > 0:09:20choice to customers get? Bank of Scotland, which merged with the
0:09:20 > 0:09:26Halifax, and then became part of Lloyds Banking Group following its
0:09:26 > 0:09:34acquisition of HBOS. Lloyds TSB forms through the merger of Lloyds
0:09:34 > 0:09:38Bank and TSB Group. Then there is Santander, the Spanish bank which
0:09:38 > 0:09:48in the UK bought up Abbey National, Bradford & Bingley and Alliance &
0:09:48 > 0:09:49
0:09:49 > 0:09:54Leicester. And a few doors up, there is another Santander. And
0:09:54 > 0:10:04what about Clydesdale Bank? It survives for now, but its
0:10:04 > 0:10:05
0:10:05 > 0:10:10Australian owners say it has become a problem. Then there is RBS, and
0:10:10 > 0:10:16that is mostly owned by the taxpayer. Industrialisation came on
0:10:16 > 0:10:20stream, the Royal Bank of Scotland... Historian, Duncan Ross
0:10:20 > 0:10:26says today's landscape is different to the way things used to look.
0:10:26 > 0:10:31It's very long and rich history and the Bank of Scotland, its 1690, and
0:10:31 > 0:10:36many others in the 18th century. And a range of conventional banking
0:10:36 > 0:10:43companies that were established in the 18th and 19th centuries. For a
0:10:43 > 0:10:47long time Scotland has been very well banked. But these days, why
0:10:47 > 0:10:51are potential investors are cautious when it comes to banking?
0:10:51 > 0:10:57We are asking banks to be much safer and less reckless than they
0:10:57 > 0:11:02were, but with good reason. We are blaming them that they don't lend
0:11:02 > 0:11:07enough and asking them to put aside a much bigger offers for when they
0:11:07 > 0:11:13hit problems. We are not willing to pay the price for more expensive
0:11:13 > 0:11:17lending and more difficult conditions being attached. And we
0:11:17 > 0:11:22want banks to be confident enough to lend and take risks and support
0:11:22 > 0:11:27the economy, but we want them also to be there to beat them over the
0:11:27 > 0:11:31head and banker bashing is still a national sport. Between all these
0:11:31 > 0:11:36tensions and pressures we have not made it an attractive place to be.
0:11:36 > 0:11:40Some people are still making a lot of money out of it, but it you are
0:11:40 > 0:11:44going into a sector at the moment, given the amount of uncertainty,
0:11:44 > 0:11:50the amount of regulation new phase, it does not look like a very
0:11:50 > 0:11:54attractive place to work or invest. This summer will see the creation
0:11:54 > 0:11:59of a new TSB stand-alone bank, to be sold through a stockmarket
0:11:59 > 0:12:08listing. But with the future still looking uncertain, when we again
0:12:08 > 0:12:11ever see the likes of a bank that likes to say yes? I am joined from
0:12:11 > 0:12:18Edinburgh by Ray Pearman, author of Hubris, a book about the downfall
0:12:18 > 0:12:24of HBOS. And by the financial journalist, Ian Fraser.
0:12:24 > 0:12:30Let's be positive. Imagine, you have now got the TSB branches
0:12:30 > 0:12:35floated off, over 600 of them. RBS are selling 300 branches which they
0:12:35 > 0:12:41are being forced to do by the European Commission will. National
0:12:41 > 0:12:46Australia might be willing to sell Clydesdale and Yorkshire banks. You
0:12:46 > 0:12:50put that lot together and you have got a major, new force in British
0:12:50 > 0:12:55banking that could introduce an competition? A new force in British
0:12:55 > 0:13:03banking, we have had that before with the beginning of HBOS 10 years
0:13:03 > 0:13:09ago. It ended in tears. I think we want three or four new challenger
0:13:09 > 0:13:14banks. They need not be National in scale, they could be regional and
0:13:14 > 0:13:20small. A sustainable banking sector I think has different sizes. It has
0:13:20 > 0:13:24been banks, small banks, National banks and international banks and
0:13:24 > 0:13:29regional banks. I think that is what we need for sustainability and
0:13:29 > 0:13:34economic well-being. Ian Fraser, can you see something positive in
0:13:34 > 0:13:42this? It could end up beget more competition than a bit less? It is
0:13:42 > 0:13:48possible, but it is disturbing the co-operative decided against going
0:13:48 > 0:13:52ahead. It may have had some issues with the branches that were up for
0:13:53 > 0:13:59sale which might deter other purchasers. Maybe there is some
0:13:59 > 0:14:03hidden problems within those branches it identified through the
0:14:03 > 0:14:11due diligence process which might deter other potential buyers.
0:14:11 > 0:14:17is your view on that? The other side is the view is actually that
0:14:17 > 0:14:23there was... How can I put this? There were questions asked about
0:14:23 > 0:14:26whether the manager of the Co-op could really handle such a big bank,
0:14:26 > 0:14:36rather than there was a problem with the branches they were going
0:14:36 > 0:14:55
0:14:55 > 0:15:03shareholding as not open to it. We cannot put huge amounts of new money
0:15:03 > 0:15:10into it. There are a number of problems which are insurmountable.
0:15:10 > 0:15:15It did make an acquisition of the Britannia building society a few
0:15:15 > 0:15:20years ago and it has taken a long time to digester. We can act as the
0:15:20 > 0:15:30desirable outcome that we could break up banks like RBS and have
0:15:30 > 0:15:33
0:15:33 > 0:15:36lots of new banks? Will there be room for the old-style TSB? A lot of
0:15:36 > 0:15:46these branches are in areas which are not the richest areas of the
0:15:46 > 0:15:48
0:15:48 > 0:15:52country. Is there a sustainable model doing the old-style banking?
0:15:52 > 0:16:02think it would probably struggle. If it does get floated as an
0:16:02 > 0:16:05
0:16:05 > 0:16:11independent bank, which Lloyds says it may do, the danger -- sorry,
0:16:11 > 0:16:19there is a real danger that, if that does happen, it will get swallowed
0:16:20 > 0:16:22up. We have very feeble anti-trust rules here in the UK and the
0:16:22 > 0:16:29Competition Commission is generally pretty weak in terms of blocking
0:16:29 > 0:16:36deals. We saw that on numerous occasions over the last two decades.
0:16:36 > 0:16:42There would be a fear that, if it became an independent company, it
0:16:42 > 0:16:48would soon after be taken over by a rival bank. Should the government be
0:16:48 > 0:16:58a bit more active than this? The government says it wants more
0:16:58 > 0:16:59
0:16:59 > 0:17:09competition but these three branches could be bought by a private equity
0:17:09 > 0:17:10
0:17:10 > 0:17:16firm who then flog it off after a few years. I think that is the
0:17:17 > 0:17:20point. We need political courage. We need politicians to say that we need
0:17:20 > 0:17:30a more sustainable banking sector and we are prepared to do things we
0:17:30 > 0:17:30
0:17:30 > 0:17:34haven't done before. Example, to say that this new bank will have
0:17:34 > 0:17:44protection from the competition authorities for a certain number of
0:17:44 > 0:17:47
0:17:47 > 0:17:57years in order to establish itself. If we want to go back to having an
0:17:57 > 0:17:58
0:17:58 > 0:18:03banking system like before then the politicians have to do that. I find
0:18:03 > 0:18:13it difficult to define what the attitudes to any of these things in
0:18:13 > 0:18:14
0:18:14 > 0:18:23the financial industry are. TSB was very strong in Scotland so the
0:18:23 > 0:18:30advantages will be weighted strongly towards Scotland. It could be a bank
0:18:30 > 0:18:34which does well for the Scottish economy. I think the Scottish
0:18:34 > 0:18:40Government needs to start lobbying hard for the outcome it thinks is in
0:18:40 > 0:18:45the best interests of Scotland. we, in an attempt to compensate for
0:18:45 > 0:18:49the lack of regulation which led to the financial crisis of 2008, led to
0:18:49 > 0:18:55making it much more difficult for new entrants? It is pretty well
0:18:55 > 0:19:02known that one of the fears that the Co-op had was that it would be
0:19:02 > 0:19:04pledging to much capital to meet new equity rules if it's tripled in
0:19:04 > 0:19:12size. Are we making it more difficult for newcomers to get
0:19:12 > 0:19:20started? I think there is a degree of truth in that but I think the
0:19:20 > 0:19:30capital requirements prior to the crisis were incredibly low. 2% of
0:19:30 > 0:19:36
0:19:36 > 0:19:44assets. They are increasing it to approximately 9% under new
0:19:44 > 0:19:54legislation which comes in effect in 2019 but personally personally I
0:19:54 > 0:19:58
0:19:58 > 0:20:04feel that is sensible. We talked about RBS. Is there a case for the
0:20:04 > 0:20:09government being more radical there? The position seems to be to keep the
0:20:09 > 0:20:16shares until they go up which is a legitimate thing for them to say but
0:20:16 > 0:20:21it could say, let's be a bit more radical, break that up as well.
0:20:21 > 0:20:25less an authority than the Archbishop of Canterbury has called
0:20:25 > 0:20:30for that. There was a very interesting opinion poll last week
0:20:30 > 0:20:37which asked people, do you think the government should get out of banking