:00:00. > :00:00.its place. However, it still needs to act within the law. There needs
:00:00. > :00:00.to be accountability and scrutiny around what it is they do.
:00:00. > :00:15.Should have been involved... ? Tonight on Newsnight Scotland:
:00:16. > :00:18.The man who runs Alex Salmond's team of economic advisers tells us it
:00:19. > :00:26.might be better if RBS became English if Scotland becomes
:00:27. > :00:30.independent. Personally I think it would be a shame in many ways
:00:31. > :00:34.because it has been a fantastic company as a Scottish company, with
:00:35. > :00:38.a long and proud history, but I do not think it would matter and it
:00:39. > :00:40.would spread risk dramatically and help us considerably.
:00:41. > :00:43.Good evening. Well, yesterday Crawford Beveridge told us the
:00:44. > :00:45.economics will trump the politics when it comes to the proposed
:00:46. > :00:49.currency union between an independent Scotland and the rest of
:00:50. > :00:53.the UK. Today, he conceded he has a strong economic case to answer. And
:00:54. > :00:56.he said it might be better if RBS, which is several times larger than
:00:57. > :01:01.the Scottish economy, was, legally at least, based in London. I'll be
:01:02. > :01:11.talking to him in a moment. But first, here's Julie Peacock.
:01:12. > :01:15.SNP says that if Scotland becomes independent, there will be a
:01:16. > :01:19.currency union and Scotland will show the pound. People need to know
:01:20. > :01:28.currency union and Scotland will that is not going to happen. He has
:01:29. > :01:31.got to jealous if there is no currency union what we will be using
:01:32. > :01:34.to replace the pound. That is the reality and nothing he says, no
:01:35. > :01:41.matter how much he plasters, can change that fact. Standard life has
:01:42. > :01:47.just told of their Plan B. Why will the Prime Minister not? The Scottish
:01:48. > :01:52.Government's hand will be stronger if we have already at least mapped
:01:53. > :01:58.out the ground around some alternatives, including an
:01:59. > :02:02.independent currency. Did someone ask for a Plan B? If there is one,
:02:03. > :02:07.it has not come from this group of economists. It has been just over
:02:08. > :02:10.one year since the fiscal commission working group published the advice
:02:11. > :02:11.on the best Monetary Policy Comittee depend
:02:12. > :02:16.on the best Monetary Policy Comittee Their conclusion? Keep the pound and
:02:17. > :02:24.maintained a monetary union with the rest of the UK. -- monetary policy
:02:25. > :02:30.and independent Scotland. That advice stays the same. Now, they
:02:31. > :02:33.have gone further saying the UK Government's analysis overstates the
:02:34. > :02:38.risk of a monetary union and plays down the benefits. The group said a
:02:39. > :02:42.union is in everyone's best interests. The argument is that
:02:43. > :02:49.economics will trump politics so this group of the condiments are
:02:50. > :02:52.sticking firmly to their first plan. I spoke to Crawford Beveridge, the
:02:53. > :02:56.Chair of the fiscal commission working group, after their meeting
:02:57. > :02:59.today. I began by asking him just who he was trying to convince when
:03:00. > :03:00.he insisted all three Unionist parties would change their minds
:03:01. > :03:06.over a shared monetary union. parties would change their minds
:03:07. > :03:11.old days, selling computers, my boss used to tell me that when the
:03:12. > :03:15.customer says no, they are making an objection and you want to go back
:03:16. > :03:18.and ask what they are objecting to and taken off the table so that we
:03:19. > :03:24.have a different conversation about whether they will buy. I think we
:03:25. > :03:26.are trying to make sure that for all the Unionist parties that we
:03:27. > :03:30.understand what the objections are and if we can overcome them, we may
:03:31. > :03:34.not be able to, but if we can, we wanted to get those of the table so
:03:35. > :03:38.we can understand what the real objection is to moving forward.
:03:39. > :03:46.Meanwhile, there is a chorus of companies saying there are risks for
:03:47. > :03:49.their companies associated with an independent Scotland. We have had
:03:50. > :03:55.our theirs, Shell, standard life most notably. What do you make of
:03:56. > :04:01.that? Think you need to remember that the regulatory authorities here
:04:02. > :04:06.require companies to run a risk register and to put into the reports
:04:07. > :04:09.every year, they do not say to give us the opportunity is, for our
:04:10. > :04:14.investors, you must lay out what the difficulties are. One difficulty,
:04:15. > :04:17.plainly, is when a company is holding a referendum to go
:04:18. > :04:20.differently. There could be a risk if you went down a currency would,
:04:21. > :04:26.for example, they did not like. In the same way they have got in there
:04:27. > :04:30.reports the risk of staying in the UK and then the UK opting out of
:04:31. > :04:33.Europe. Standard life or not just saying that but saying that they
:04:34. > :04:38.will take measures starting now to set up companies in England to which
:04:39. > :04:42.we could transfer some of business. That is going along with beyond just
:04:43. > :04:44.think... It is but they were also saying they would do that in the
:04:45. > :04:47.event that there were disruptions that they did not lie to their
:04:48. > :04:53.business. The Scottish Government have been very clear that in the
:04:54. > :04:57.event of a yes vote, the regulatory environment, and we hope the
:04:58. > :05:00.currency moment, will not change so there will be no particular reason
:05:01. > :05:03.to make that change. They are drunk each other in the protection for
:05:04. > :05:08.their money from the 80% of people that they deal with those of the
:05:09. > :05:12.border. That is all. You said yesterday that use on a currency
:05:13. > :05:17.union eventually be economic would trump the politics. Even on what you
:05:18. > :05:20.have said today, you clearly accept there are economic arguments against
:05:21. > :05:24.the currency union and they are serious arguments. We believe some
:05:25. > :05:28.of them are serious arguments but we think we can argue those in ways
:05:29. > :05:31.that will take people's concerns of the table. I do not think there are
:05:32. > :05:35.serious enough to say that it would not still be a great option for both
:05:36. > :05:38.sides of the border, not just Scotland. One of the most obvious
:05:39. > :05:44.ones, which has been made by the Treasury among others, is that there
:05:45. > :05:49.is an imbalance. That should there be a currency union and should
:05:50. > :05:53.something happen, either in a financial institution in Scotland or
:05:54. > :05:59.indeed to Scotland as a sovereign state, which required intervention
:06:00. > :06:04.from the yes of the UK, -- the rest of the UK, the cost of that
:06:05. > :06:10.potentially, and we saw that only six years ago with RBS, could
:06:11. > :06:15.massively outweigh, for the UK, any benefits to the UK from not having
:06:16. > :06:18.transaction costs because they are still in the pound. And that is why
:06:19. > :06:23.we need to settle out with the Treasury as far as they will tell us
:06:24. > :06:27.what they think these risks are. The banking on, for example, with the
:06:28. > :06:32.new regulation and the way in which risks are being shared mean that
:06:33. > :06:36.that kind of risk is fairly small. At the moment, remember, the two big
:06:37. > :06:41.banks they worry about, the Royal Bank and the bank of Scotland, are
:06:42. > :06:47.mostly owned by the Treasury donor anyway. The risk to this big animal
:06:48. > :06:51.call the rest of UK... Would it make more sense if this was to get off
:06:52. > :06:56.the ground, or even if it does not, for a company like RBS to be an
:06:57. > :07:00.English company rather than a Scottish company? You know, we have
:07:01. > :07:06.seen in the last few days some thoughts from the EU's regulations
:07:07. > :07:11.requiring that the move into the place where most of the business is.
:07:12. > :07:15.Essentially, what we are seeing is please remove the brass plate from
:07:16. > :07:18.the door up here to the door in Whitehall, it does not necessarily
:07:19. > :07:22.mean that if they make that move and became an English company that it
:07:23. > :07:27.would in any way need for them to move any of the staff or operations
:07:28. > :07:29.from Scotland. But from the point of view of an independent Scotland,
:07:30. > :07:34.would you think it would be better if they did do that? There is an
:07:35. > :07:37.argument that that would solve a lot of the questions that the Treasury
:07:38. > :07:43.have. Now the balance is back again in a way that makes Scotland much
:07:44. > :07:46.less risky for them. And for Scotland itself, there would then
:07:47. > :07:51.not be the risk of what might happen. Correct. The other side of
:07:52. > :07:56.that is that people will watch what you're saying and say, "look, this
:07:57. > :07:58.is getting older and older. What we have people arguing for an
:07:59. > :08:03.independent Scotland and they seem to want nothing more than to leave
:08:04. > :08:06.then immediately go back and and now they are telling us it would be
:08:07. > :08:10.better for an independent Scotland not to have whatever biggest company
:08:11. > :08:17.by far the! -- getting stranger and stranger. " Voters may think they
:08:18. > :08:22.are getting confused. Remember, first of all, the government has
:08:23. > :08:26.been very clear that it would want to set up a business environment
:08:27. > :08:30.here in a way that did not require anybody to move. It would not change
:08:31. > :08:32.the regulatory environment or currency environment so there is no
:08:33. > :08:38.political reason for that. If there is a mandate from Europe having
:08:39. > :08:41.somebody to move them, as I say, it does not necessarily mean that we
:08:42. > :08:45.would lose any other banking skills. The bottom line is you it
:08:46. > :08:51.probably would be better, for everyone, whether there was a
:08:52. > :08:56.currency union or not, if RBS was a London company and therefore would
:08:57. > :08:59.be backed up IP sovereign wealth of the United Kingdom. Personally I
:09:00. > :09:03.think it would be a shame in many ways because it has been a fantastic
:09:04. > :09:08.Scottish company, a long and proud history, but I do not think it would
:09:09. > :09:11.matter a lot and would spread risk dramatically and helped
:09:12. > :09:13.considerably. The other question is whether you or the Scottish
:09:14. > :09:19.Government would really want the kind of currency union that might be
:09:20. > :09:23.on offer. I mean, the Treasury, as you know, produced that the child
:09:24. > :09:28.document the other week and can I just read you, there with me, and
:09:29. > :09:32.above paragraphs from it? Buried in it there is actually quite a beetle
:09:33. > :09:38.description of what they think a currency union would look like. --
:09:39. > :09:55.YTD tilled description. "It may need to stretch beyond fiscal rules. This
:09:56. > :10:01.includes efforts to minimise the risk of tax competition that could
:10:02. > :10:08.lead to an erosion of the tax base. Put into plain English it means if
:10:09. > :10:22.Alex Salmond goes on to a currency union, he is up a tree. We would see
:10:23. > :10:29.this is entirely unnecessary. The Edinburgh agreement, that said in
:10:30. > :10:34.the event of a bought the site would come together amicably and try to
:10:35. > :10:42.agree a set of rules... But you have to admit the Edinburgh agreement did
:10:43. > :10:45.not commit the United Kingdom should Scotland become independent to
:10:46. > :10:51.agreeing to a currency union. No one at the time suggested it. The fact
:10:52. > :10:53.that at the time they said this is how we would characterise it is
:10:54. > :10:58.difficult to how we might want to, how we would characterise it is
:10:59. > :11:01.which is why we have to talk and we will not get anywhere until people
:11:02. > :11:08.start discussing which of these things are clear. I just want to
:11:09. > :11:14.talk to you a little bit about the other options. I understand
:11:15. > :11:19.politically why the Scottish government wants to say they are
:11:20. > :11:24.just lying and once we get our yes vote things will change, but from a
:11:25. > :11:29.purely economic point of view would not be more sensible to start
:11:30. > :11:35.working on this range of options and see, if we get our currency union
:11:36. > :11:45.that would be great, but surely some work needs to be done? If the
:11:46. > :11:48.necessity is the tooth... Is that they are too central back,
:11:49. > :11:52.necessity is the tooth... Is that not should not be not more than just
:11:53. > :12:00.on a piece of paper? There's a feel a detailed examination, last resorts
:12:01. > :12:06.and whatever it was... But it is bricks and mortar. Is there not a
:12:07. > :12:12.case for starting the process? Remember, this is a purely technical
:12:13. > :12:17.group. All it does is say here are the things that are feasible for
:12:18. > :12:24.Scotland to do and options we would recommend to you. What we'd would
:12:25. > :12:31.ask you to think about hard as a currency union. If they ask us to
:12:32. > :12:41.explore another one we will go and do that. We need a beam it to do
:12:42. > :12:47.that and we do not have one. We just had a dream it to get to the
:12:48. > :12:50.options. Would you like one? I am totally open that is the way the
:12:51. > :12:56.government wants to go but not I will not home and cry. Let me finish
:12:57. > :13:03.by asking you a more personal question. One of the criticisms of
:13:04. > :13:06.your working group is people saying, these are bunch of very talented
:13:07. > :13:11.economic and business specialists, most of whom do not even live in
:13:12. > :13:16.Scotland or at least not most of the time. This is great fun for them
:13:17. > :13:21.coming up with intellectual exercise is about how you might run a new
:13:22. > :13:25.country, but the bottom line is people say, we are going to have to
:13:26. > :13:32.live with the consequences if it goes wrong. They can walk away but
:13:33. > :13:41.we cannot. But remember, once again, all we are asking those people to do
:13:42. > :13:43.is give us really good technical advice from the world wide
:13:44. > :13:51.experience of how these things happen. You know how this has been
:13:52. > :13:56.used politically. Alex Salmond and others trumpet the fact they have
:13:57. > :14:05.this Council of economic advisers with Nobel laureates. It is being
:14:06. > :14:09.used politically. That is for others to use it that way or not but all I
:14:10. > :14:15.am saying is that group was chosen because we have people vast
:14:16. > :14:20.experience of many countries in the world including Ireland and its
:14:21. > :14:24.experiences. I think that is a really good broad experience to
:14:25. > :14:28.this and I do not think anybody this and I do not think anybody
:14:29. > :14:32.would feel we are just going to walk away at something went wrong. They
:14:33. > :14:35.are all deeply committed to advice that is sensible and we argue all
:14:36. > :14:42.the time about whether this is good advice. If it does go wrong you can
:14:43. > :14:49.head for the airport? Many of them can but some of us have to live
:14:50. > :14:53.here! Thank you. With me is the business and economy
:14:54. > :15:01.editor Douglas Fraser. What did you make of his comments? Opinion seems
:15:02. > :15:05.to be building if you look at what the credit rating agency were
:15:06. > :15:13.saying, there is an attraction to getting the liabilities off the
:15:14. > :15:18.books of a sovereign and Scotland in terms of its credit rating for
:15:19. > :15:23.selling sovereign bonds. He seems to be supporting that idea. If you look
:15:24. > :15:30.at what the Treasury has argued, it is in the region of ?1.8 billion of
:15:31. > :15:38.liability, which kind of exaggerates things. Give them responsibility for
:15:39. > :15:41.stuff that is happening in London, the SNP which usually tries to beg
:15:42. > :15:48.up what is happening in the Scottish economy wants to minimise the scale
:15:49. > :15:55.and says that Scotland sheers finances much closer to the UK
:15:56. > :16:02.average, 8% have opposed to 25%. This transfer of RBS would be a way
:16:03. > :16:08.of making clear that liabilities have moved out of Scotland. It might
:16:09. > :16:10.initially be a legal thing that it would become a London company but
:16:11. > :16:16.the dangerous thing is that over would become a London company but
:16:17. > :16:22.time, actually jobs and all the rest of it drain away to where it would
:16:23. > :16:28.then be based. The powerful jobs are already in London. The joint head
:16:29. > :16:31.office is in Edinburgh and you might lose some of that, but the
:16:32. > :16:39.attraction to these banks and other starter banks is that the skills
:16:40. > :16:42.are, irrespective of independence the skills would still be there and
:16:43. > :16:49.attractive to the banks based in London. This is not economic
:16:50. > :16:54.nationalism? It is not. That was a care I heard from Alex Salmond.
:16:55. > :16:57.Eight years ago it was ScottishPower is being taken over and he said that
:16:58. > :17:04.the French can look after their companies why are we letting these
:17:05. > :17:11.glittering prizes of the Scottish economy taken over by the Spanish
:17:12. > :17:18.companies? There is absolutely no strategy for protecting headquarters
:17:19. > :17:21.operations in Scotland. Perhaps emphasising that Scottish companies
:17:22. > :17:24.can do well even operating outside of Scotland but this would be
:17:25. > :17:29.strange that the biggest company of all, troubled as it is, would be
:17:30. > :17:34.leaving for London. As we leave you tonight, our thoughts turn to the
:17:35. > :17:38.very sad loss of the economist Professor Ailsa McKay. The First
:17:39. > :17:47.Minister paid tribute to her many achievements in the chamber. As we
:17:48. > :17:52.all know she was a leading voice in the campaign for gender equality,
:17:53. > :17:59.not only through her work but as a founding member of the Scottish
:18:00. > :18:01.women's budget group. We think it is important we now have astonishing
:18:02. > :18:07.contribution as a feminist economist, both in arguing the case
:18:08. > :18:14.for women into work but also being the principal author of an argument
:18:15. > :18:19.for transformation of childcare which made that possible. I hope and
:18:20. > :18:20.believe and know that her contribution will be recognised by
:18:21. > :18:35.every member of this chamber. A wet night tonight for many of us
:18:36. > :18:39.and the wet night tomorrow for England and Wales but the rain will
:18:40. > :18:45.slowly peter out with bright skies following for Scotland and Northern
:18:46. > :18:49.Ireland. Let's have a closer look at 3pm in the afternoon with bright
:18:50. > :18:56.skies but a cold wind. Particularly cold over Scotland and it will be
:18:57. > :19:02.getting down to low levels. Further south into northern England, chilly
:19:03. > :19:06.but the sunshine compensating. For south, the winds are lighter and
:19:07. > :19:16.where the sun breaks through it will be springlike. Temperatures 14
:19:17. > :19:24.Celsius. Not bad going for March. It will feel quite cold. A little bit
:19:25. > :19:29.of a breeze taking the edge of temperatures with a springlike day.
:19:30. > :19:32.Pleasant enough tomorrow while in the sun breaks through but by
:19:33. > :19:38.Saturday temperatures are starting to rise with Manchester up to 14
:19:39. > :19:43.Celsius. Better brightness elsewhere and on more into Saturday, again
:19:44. > :19:49.temperatures are definitely on the mild side because of the winds
:19:50. > :19:51.coming in from the south. A wet start for Scotland and quite windy
:19:52. > :19:55.across Northern Ireland.