Browse content similar to 12/06/2013. Check below for episodes and series from the same categories and more!
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safety conditions. 15 American companies have refused to join in. | :00:02. | :00:12. | |
:00:12. | :00:19. | ||
They say they are pursuing their own safety checks. | :00:19. | :00:22. | |
Tonight on Newsnight Scotland: We'll have more on RBS. Should the | :00:22. | :00:25. | |
priority be to sell off the shares or to increase lending and maybe | :00:25. | :00:28. | |
create regional banks that could help the economy in Scotland and | :00:28. | :00:31. | |
other areas? We'll ask one of the men who's producing a Parliamentary | :00:31. | :00:33. | |
report on RBS next week. And unemployment falls again here | :00:33. | :00:37. | |
we'll have a tale of two nations. Not Scotland and England, but London | :00:37. | :00:44. | |
and the rest of the UK. Good evening. There will be much | :00:44. | :00:47. | |
debate about whether Stephen Hester wanted to go or was he pushed, about | :00:47. | :00:49. | |
the pay-off he'll receive for leaving, about whether there are | :00:49. | :00:53. | |
splits within the bank on its future or splits between the bank and the | :00:53. | :00:57. | |
Government. The Chancellor praised him for doing a very good rescue job | :00:57. | :01:01. | |
but Hester won't be the man to lead RBS back into the private sector as | :01:01. | :01:11. | |
he wanted. But there's a deeper issue here. | :01:11. | :01:15. | |
Hester found himself at the centre of a web which weaves together many | :01:15. | :01:21. | |
of the most crucial issues of the economy. The most offices, can we | :01:21. | :01:28. | |
have our money back? �45 billion of taxpayer cash was ploughed into | :01:28. | :01:31. | |
RBS. George Osborne wants to put the bank back in the private sector and | :01:31. | :01:36. | |
is due to make a speech outlining how he intends to do it. Some have | :01:36. | :01:41. | |
suggested giving the shares a way to the public. Others argue getting RBS | :01:41. | :01:44. | |
and other banks to lend more to business should be the top priority | :01:44. | :01:50. | |
because that might help the economy to grow again. Vince cable has | :01:50. | :01:56. | |
argued that is more important than a quick sale. Some argue RBS would be | :01:56. | :02:00. | |
more able to make those new loans if it was split up into a so-called | :02:00. | :02:05. | |
good bank and bad bank with the latter taking on most of the | :02:05. | :02:09. | |
underperforming loans. That is expected to be one option in a | :02:09. | :02:14. | |
parliamentary report due next week. Then there's the even bigger | :02:14. | :02:23. | |
question. Whether or not they end up being privatised, our giant | :02:23. | :02:27. | |
financial institutions anything like what Scotland or the UK need? After | :02:27. | :02:32. | |
all, the one thing almost everyone agrees on is there is not enough | :02:32. | :02:35. | |
competition in banking. Joining me now from Millbank is Lord | :02:35. | :02:38. | |
McFall, a member of the House of Lords Economic Affairs Committee. | :02:38. | :02:41. | |
And in our Edinburgh studio is the author and financial journalist, Ray | :02:42. | :02:49. | |
Perman. Before we get on to other matters, a quick take on what you | :02:49. | :02:57. | |
both make of Stephen Hester stepping down. A lot of miners were saying as | :02:57. | :03:00. | |
recently as last weekend, Stephen Hester had no intention of stepping | :03:00. | :03:09. | |
down. I had a breakfast meeting with Stephen Hester a couple of weeks ago | :03:09. | :03:14. | |
in relation to the issues. Let me tell you, he was a guy who was up | :03:14. | :03:24. | |
:03:24. | :03:24. | ||
for it. I, for one, couldn't imagine Stephen Hester saying he would go | :03:24. | :03:32. | |
and someone else was going to take over. He was take -- he was keen to | :03:32. | :03:36. | |
take the bank through. In the financial Times article, he said, I | :03:36. | :03:42. | |
hate losing. I want to keep going, I want to win. What has happened here | :03:42. | :03:50. | |
is there has been political interference with the Chancellor. | :03:50. | :03:57. | |
What do you make of him stepping down? The fact that Stephen Hester | :03:57. | :04:04. | |
is getting a payoff clearly shows that he is being bored out of his | :04:04. | :04:10. | |
contract. He is not leaving voluntarily. There's probably been a | :04:10. | :04:17. | |
disagreement, and the most likely subject for that disagreement is the | :04:17. | :04:23. | |
timing of privatisation. On that privatisation, there is an | :04:23. | :04:29. | |
atmosphere being created, that the only issue about RBS is when it | :04:29. | :04:34. | |
should be sold and how much it should be sold for. Do you think | :04:34. | :04:44. | |
:04:44. | :04:47. | ||
that is the right way of framing the debate? Concentrating on getting tax | :04:47. | :04:56. | |
payers money back at the expense of anything else, particularly in | :04:56. | :04:58. | |
trying to get it in before the election, is probably the wrong | :04:58. | :05:03. | |
thing to do because what we need to get back to is a sustainable banking | :05:03. | :05:07. | |
system, one which will not threaten the economy and the country in the | :05:07. | :05:14. | |
future and is going to do a good job. On the specific point about | :05:14. | :05:19. | |
selling it, one of the problems is if I am running I -- I am running | :05:19. | :05:28. | |
RBS, and I am told the shares will sold, my priority will be to build | :05:28. | :05:35. | |
up my capital, the bits of the bank that sure it up against future | :05:35. | :05:40. | |
catastrophes over lending to the kind of businesses who are saying, | :05:40. | :05:46. | |
we can't get money from the banks at the moment. It is an issue but it is | :05:46. | :05:51. | |
not the only one stopping banks from lending. One of the big issues is | :05:51. | :05:56. | |
lack of demand, and lack of demand is driven by the fact the economy is | :05:56. | :06:00. | |
in the doldrums and companies can't see an upside. It's not entirely the | :06:01. | :06:08. | |
fort of the banks. But the banks could lend more easily. What do you | :06:08. | :06:16. | |
make of the way this debate has been framed? The chairman let it slip | :06:16. | :06:21. | |
tonight in an interview when he said that the Treasury want privatisation | :06:21. | :06:31. | |
at the end of 2014. You want a stable banking system. You don't | :06:31. | :06:36. | |
want an unstable one. Stephen Hester will be the sixth senior executive | :06:36. | :06:42. | |
to leave RBS in the past number of banks. This is an unstable bank. | :06:42. | :06:48. | |
Economic size got to drive the issue. It has not got to be | :06:48. | :06:58. | |
:06:58. | :07:03. | ||
politics. -- economic 's has got to. This is a demand issue. It isn't all | :07:03. | :07:10. | |
the fault of the banks. The overall consideration here should be the | :07:10. | :07:15. | |
stability of the bank, and political interference and political diktats | :07:15. | :07:24. | |
doesn't help the situation. A point you were about to come onto is | :07:24. | :07:30. | |
this: It doesn't make sense, although RBS has shrunk its balance | :07:30. | :07:40. | |
:07:40. | :07:42. | ||
sheet, nonetheless, it is still a huge bang. Doesn't make any sense at | :07:42. | :07:47. | |
all -- does it make any sense at all to put that back out on the private | :07:47. | :07:54. | |
sector? You're right. The balance sheet of RBS has been shrunk by a | :07:54. | :07:59. | |
third but it is still the size of the British economy. The problem | :07:59. | :08:08. | |
with Britain is that we only have one sized bank. We have for huge | :08:08. | :08:13. | |
banks and practically nothing underneath that. If you look at | :08:13. | :08:18. | |
successful economies, for example, the German economy, they have big | :08:18. | :08:22. | |
banks and small banks. We need sustainable ecosystems in banking, | :08:22. | :08:28. | |
just as we do in the economy in general. The Archbishop of | :08:28. | :08:33. | |
Canterbury was right when he said we need regional banks that understand | :08:33. | :08:38. | |
local regions and businesses and can rent them. Breaking up RBS would be | :08:38. | :08:46. | |
one way of achieving that. Is that an argument? One of the options was | :08:46. | :08:53. | |
this idea of a good and bad bank. What he is suggesting something | :08:54. | :09:02. | |
different: Why not just break up RBS into lots of banks, get back into | :09:02. | :09:12. | |
:09:12. | :09:13. | ||
this idea? Perhaps, let them compete with each other in the future. The | :09:13. | :09:21. | |
need for increased competition is there, but think of the disposal of | :09:21. | :09:28. | |
the 316 branches which the European Union asked RBS to undertake. | :09:28. | :09:36. | |
of the 630 Bryants structures -- branches which Lloyds were | :09:36. | :09:43. | |
undertaking. Both deals have now crumbled. After �2.5 billion spent, | :09:43. | :09:47. | |
we are in a worse position now than three or four years ago. What does | :09:47. | :09:54. | |
that tell us? It tells us that in getting a new architecture for | :09:54. | :09:59. | |
banking, it can be long and difficult. Regional banks are a | :09:59. | :10:09. | |
:10:09. | :10:12. | ||
noble aim. But if we are going to do this, this is a long-term basis. We | :10:12. | :10:16. | |
should take the opportunity to say what type of banking system do we | :10:16. | :10:19. | |
want in our country and how do we go about that over the next ten or 20 | :10:19. | :10:29. | |
:10:29. | :10:32. | ||
years? Tamil talk about how it is London, paradoxically, which has | :10:32. | :10:35. | |
benefited more than anywhere else from the crisis in the British | :10:35. | :10:45. | |
:10:45. | :10:47. | ||
economy. In banking, we seem to have the same thing. Does he have a | :10:47. | :10:53. | |
point? Delay all this and have a broader look than the Vickers | :10:53. | :11:00. | |
commission had? I'm hoping that the Parliamentary banking commission, | :11:00. | :11:07. | |
which John is a member of, will come out with a pretty radical and far | :11:07. | :11:12. | |
reaching report within the next few days or weeks. Whether that is taken | :11:12. | :11:17. | |
up by government or not, or even by the opposition parties, is another | :11:17. | :11:22. | |
matter. It would take extreme political courage to take on the big | :11:22. | :11:26. | |
banks and completely to change the architecture. Scotland has lost out | :11:26. | :11:35. | |
in a big way from the banking collapse because RBS has moved its | :11:35. | :11:39. | |
headquarters away from Scotland and London. That has hit Scotland and | :11:39. | :11:45. | |
the other regions of the UK. To reverse that will take a real effort | :11:45. | :11:55. | |
:11:55. | :11:59. | ||
of will. Effort of will. There seems to be almost paralysis. Even on your | :11:59. | :12:04. | |
committee, you've got to compromise. It's almost as if there | :12:04. | :12:10. | |
is no mechanism to have the kind of deep thinking that you want, unless | :12:10. | :12:14. | |
you happen to be a government that already had those ideas that has | :12:14. | :12:18. | |
just been elected with a large majority. Our commission has been | :12:19. | :12:26. | |
sitting for a year. It has been a long exercise. I would like to think | :12:26. | :12:33. | |
that we would have a report which would do would sign post a way | :12:33. | :12:39. | |
forward. There's no magic bullet solution. We've got to take a | :12:39. | :12:44. | |
long-term view on that and I would hope that there are challenges | :12:44. | :12:48. | |
therefore government generally about getting a banking system that serves | :12:48. | :12:56. | |
the interests of the current -- of the customer. The only scandal is | :12:56. | :13:00. | |
the consumer has been forgotten in this. If we start at the bottom, it | :13:00. | :13:06. | |
is better than going up at the top and working away down. How did you | :13:06. | :13:14. | |
see a way through this? You are both agreeing that there needs to be a | :13:14. | :13:18. | |
more profound look at the structure of banking then we have had from the | :13:18. | :13:28. | |
:13:28. | :13:34. | ||
You both want to change the structure of banking but you have | :13:35. | :13:39. | |
not said how you would get from there to here. Let me tell you what | :13:39. | :13:43. | |
I think will happen but not what I would like to happen because that | :13:43. | :13:48. | |
will not happen. The Royal Bank has to sell something like 300 branches. | :13:48. | :13:52. | |
Pity is being compelled to do that by the European Commission and | :13:52. | :13:57. | |
Lloyd's has to sell 600 branches and the buyers for both of those | :13:57. | :14:00. | |
has fallen by the wayside. Something will have to be done | :14:00. | :14:05. | |
there and what seems to be the only choice is that the banks themselves | :14:05. | :14:10. | |
are going to have to break off part of their own banking system and put | :14:10. | :14:14. | |
their own match -- put their own management in it, effectively | :14:14. | :14:18. | |
create daughter banks would they then launch on the stock market so | :14:18. | :14:23. | |
there will be an attempt to create some regional banks. OK, we will | :14:24. | :14:28. | |
have to leave it there. Thank you very much for joining us. Now, | :14:28. | :14:31. | |
there were new unemployment figures out today and the numbers out of | :14:31. | :14:34. | |
work fell again in Scotland. The unemployment rate here is below the | :14:34. | :14:37. | |
UK average. But when you look at almost any economic indicator from | :14:37. | :14:41. | |
employment to house prices the area doing best in the UK is London and | :14:41. | :14:43. | |
the South East of England. Despite the financial crash, and that | :14:44. | :14:46. | |
London is Europe's main financial centre, London has actually done | :14:46. | :14:49. | |
better from the crisis than most areas of Britain. As we'll hear in | :14:49. | :14:52. | |
a moment that's not just worrying Scottish Nationalists who say | :14:52. | :14:55. | |
Scotland would be better off on its own. It's worrying people in areas | :14:55. | :14:58. | |
of England which are falling more rapidly behind. But first here's | :14:58. | :15:07. | |
Andrew Black. Hello. At this upmarket Edinburgh | :15:07. | :15:11. | |
barbers, the customer base is growing. In many ways the economy | :15:11. | :15:16. | |
may still be on a knife-edge but is this year is looking good. Going | :15:16. | :15:20. | |
from strength to strength. Starting in the recession was a brave thing | :15:20. | :15:25. | |
to do but we thought it was a good idea, seeing as there is a niche in | :15:25. | :15:28. | |
the market and this is a service led environment so it will never be | :15:28. | :15:33. | |
taken over by internet sales or anything like that so we have had a | :15:33. | :15:35. | |
very strong start and we are growing in terms of customer | :15:36. | :15:40. | |
numbers and staff numbers as well. He is the good fortune spreading? | :15:40. | :15:45. | |
Official figures out today revealed unemployment in Scotland has fallen | :15:45. | :15:50. | |
for the 7th time erode. How it was Scotland doing when compared to the | :15:50. | :15:58. | |
UK? Not too badly, it seems. According to a report Scottish GDP | :15:58. | :16:07. | |
rose by 0.5% in the last quarter of 2012, while falling in the UK. I | :16:07. | :16:11. | |
think tank said that when you take out declining oil and gas | :16:11. | :16:15. | |
production Scottish and UK growth was largely identical. On that | :16:15. | :16:22. | |
basis the report said that GDP grew at 0.5% in the UK, compared to 0.3% | :16:22. | :16:27. | |
in Scotland. Down at Westminster today's job news was welcomed but | :16:27. | :16:32. | |
there was a warning against complacency. I know there is more | :16:32. | :16:35. | |
work that needs to be done to get more people in Scotland in to work. | :16:35. | :16:39. | |
That is why am very keen to make sure the work programme is | :16:39. | :16:42. | |
effective and that is focusing on helping the long-term unemployed | :16:42. | :16:46. | |
and we will work with the Scottish government to get good outcomes for | :16:46. | :16:51. | |
people who were out of work at the moment. Launching a jobs programme | :16:51. | :16:54. | |
in North Ayrshire today, the First Minister said the UK Government | :16:54. | :17:00. | |
could not be trusted. We have got a Tory Chancellor who doesn't | :17:00. | :17:03. | |
understand a way to recovery is in investment and Martin austerity. We | :17:03. | :17:08. | |
could get blown off course by London economic policies. Of course, | :17:08. | :17:12. | |
when Alex Salmond hits out at London he is making a political | :17:12. | :17:19. | |
point but there is a political -- but there is an economic one as | :17:19. | :17:29. | |
:17:29. | :17:32. | ||
Yesterday mayor Boris Johnson called for even more investment in | :17:32. | :17:37. | |
the UK Capital, which he said was fair. London is not benefiting to | :17:37. | :17:41. | |
the detriment of other parts of the UK at all. It is not some great | :17:41. | :17:46. | |
beast that is hogging all the resources. We have got four of the | :17:46. | :17:50. | |
six poorest boroughs in the UK in London, we have more Child poverty | :17:50. | :17:54. | |
-- poverty. The argument we are trying to making this document is | :17:54. | :17:59. | |
that investing in London drives the rest of the UK. When it comes to | :17:59. | :18:02. | |
boosting the economy, can Scotland and the rest of the economy outside | :18:02. | :18:07. | |
London compete? In all sorts of ways it is a massive dynamic global | :18:07. | :18:12. | |
city. I don't think there is much you can do about that. Nevertheless | :18:12. | :18:16. | |
it is argued that Scotland is still a strong competitor. Everyone seems | :18:16. | :18:20. | |
to agree, even the Scottish government's Council of economic | :18:20. | :18:24. | |
advisers said in a recent report that outside London and the south- | :18:24. | :18:28. | |
east Scotland is the most prosperous part of the United | :18:28. | :18:32. | |
Kingdom. Given London's powerhouse status, it seems like to the City | :18:32. | :18:36. | |
will continue to attract a high level of investment. The question | :18:36. | :18:46. | |
:18:46. | :18:46. | ||
is, can Scotland increase -- compete? | :18:46. | :18:49. | |
Professor Karel Williams is a Director of the Centre for Research | :18:49. | :18:52. | |
on Socio-Cultural Change at the University of Manchester. He joins | :18:52. | :18:58. | |
me now from Salford. My apologies in advance that we do | :18:58. | :19:02. | |
not have that much time so I will get straight to the point. You have | :19:02. | :19:07. | |
been doing some work on the paradox, that we had a financial crisis, | :19:07. | :19:12. | |
London is the scent of finance, but somehow London is emerging better | :19:12. | :19:15. | |
and it is stretching its lead over other areas of Britain. Yes, I | :19:15. | :19:21. | |
think that is definitely true. This is part of a long run pattern. | :19:21. | :19:25. | |
London has been putting on full- time jobs and the pattern is also | :19:25. | :19:29. | |
that London is being supported are all kinds of ways by the taxpayer. | :19:29. | :19:34. | |
Huge amounts of spend on infrastructure, like Crossrail, | :19:34. | :19:39. | |
with Boris Johnson asking for more. Of course, huge amounts have gone | :19:39. | :19:43. | |
in to the financial sector after the financial crisis. There is | :19:43. | :19:47. | |
another bit of your theory in their you believe this has been going on | :19:47. | :19:50. | |
for years but there was a social compact through public spending and | :19:50. | :19:55. | |
you believe that is now breaking down. I think the basic point is | :19:55. | :20:00. | |
that under New Labour what happened was that there was spending that | :20:00. | :20:05. | |
created jobs and health -- in health and education, publicly- | :20:05. | :20:09. | |
funded jobs right across the UK and also won the Dee industrialised | :20:09. | :20:14. | |
areas you had up to 20% of the working-age population parked up on | :20:14. | :20:18. | |
benefit. Now we are seeing cuts that heard about a Britain | :20:18. | :20:24. | |
disproportionately because these cuts actually take out publicly- | :20:24. | :20:27. | |
funded jobs and these cuts scale back benefits and all the evidence | :20:28. | :20:32. | |
suggests that this takes Persian it -- purchasing power | :20:32. | :20:36. | |
disproportionately out of, for example, poor northern English | :20:36. | :20:40. | |
cities. The depressing bit about all of this is that you do not | :20:40. | :20:43. | |
think there is all that much that can be done about it, certainly in | :20:43. | :20:48. | |
economic terms. Using London's dominance will increase. I am not a | :20:48. | :20:55. | |
Scottish that some are less but it is really a political problem. The | :20:55. | :20:58. | |
counterweight is not really the economic competition between the | :20:58. | :21:03. | |
regions and London but it is some kind of political negotiation, some | :21:03. | :21:07. | |
kind of political settlement. Let me take one simple issue. As far as | :21:07. | :21:12. | |
we can measure 80% of the extra jobs in London are taken by people | :21:12. | :21:17. | |
who are born outside the UK. That means that internal migration is | :21:17. | :21:22. | |
not working as it did in the 20s and 30s, when in nearly half-a- | :21:22. | :21:27. | |
million people left South Wales for the Midlands and the south-east for | :21:27. | :21:32. | |
jobs. That is a political problem about how you get internal | :21:32. | :21:37. | |
migration moving and I don't think it is simply a question of economic | :21:37. | :21:45. | |
competition. A right, what is your solution? I think we need strong | :21:45. | :21:51. | |
regional governments who would actually raised the question of why | :21:51. | :21:55. | |
it funds like pension funds, where are they going to London? How much | :21:55. | :21:59. | |
taxpayers' money is being used to support a financial system | :21:59. | :22:02. | |
concentrated London and how much infrastructure spend is going on? | :22:03. | :22:06. | |
All right, thank you very much for joining us. We don't really have | :22:06. | :22:10. | |
time for the papers but I will show you them. That is the Scotsman | :22:10. | :22:14. | |
which is leading on Stephen Hester. Most of them are. I will be back | :22:14. | :22:24. | |
:22:24. | :22:28. | ||
Hello. The wind is really picking up at the moment. It will be a very | :22:28. | :22:32. | |
blustery day across the southern half of the UK tomorrow. | :22:32. | :22:36. | |
Unseasonably strong gusts could cause problems, damage trees and | :22:36. | :22:40. | |
caused transport disruption. Heavy showers across Northern Ireland but | :22:40. | :22:45. | |
also sunny spells. Not too many showers across Scotland. There | :22:45. | :22:49. | |
could be spells of sunshine lifted the temperatures to 15 degrees. | :22:49. | :22:54. | |
Heavy showers across northern England, also across the North West | :22:54. | :22:57. | |
but moving eastwards to the afternoon and evening. Heavy | :22:57. | :23:01. | |
downpours developing in the Midlands. A blustery day here and | :23:01. | :23:04. | |
in East Anglia and the south-east. Generally dry and sunny but the | :23:04. | :23:08. | |
wind will be unusually strong for the time of year and it could cause | :23:08. | :23:12. | |
problems, may be some transport disruption but certainly problems | :23:12. | :23:18. | |
if you are out in a small vessel on the coast. North Wales is blustery | :23:18. | :23:22. | |
but with heavy downpours. As we go into Thursday night the wind will | :23:22. | :23:25. | |
ease down but it will strengthen again on Friday as more wet weather | :23:25. | :23:30. | |
pushes in from the West. In eastern areas there will be sunshine or | :23:30. | :23:35. | |
Friday and with lighter winds on Friday in London it could feel | :23:35. | :23:38. | |
warmer. It is far from settled, there were at the moment. The wind | :23:38. | :23:43. |