 Gweithiwyr hwn, maen nhw i'n rhoi ddwylo o gyfnodol sy'n ymweld y 12 yma i ym 2014 o'r Hysby listing gyn Vous i gwasanaeth y dynnu o ddweithio yma i gilyddads gyda'r gyfnodol o gwbl gweithio o gweithio sy'n ei wneud yn hollog, oherwydd rydych chi'n dweud i chi'n mwyngno oherwydd yr ymwynd i gwych iawn. Ainksu gyfed yr olygu rwy'n swyddol cenderwyd. Mae'n gwybod y gwirionedd yma yn gyfraffwyr o'r pethau ar y mynedd. Mae gennych agen nhw i ddweud y byddai ar y penodau ar gyfer y Pwg ond 2014. Mae gweithio'r pannol ymlaen i chi. Rwy'n fawr i'n meddwl i'r ffwrdd panel â'r Gweithnodol a oeddwn i'r Gwyr Nidol Gwyrnodd Alistar Darlin, y mddorol y mae'r cherdd yng nghymudd gwrs. Gwyr Nidol Gwyr Nidol Gwyr Nidol Gwyrnodd i chi. Rwy'n meddwl i chi. Ie, wrth gwrs, wrth 90 ymwy Ditwm ar y pryd, mae'n gweithio'r gweld, i chi'n gweithio'r gweithio'r gweld am roedd ei wneud yn oedgen i'n gweithio'r wahanol, oherwydd mae'n gweithio'r wahanol i'n gweithio'r gwahanol i'n eu cyferu i gwelliadau mewn dywedadau ar gyfer y cyflogledd. Rwy'n credu ar gweithio'r gwahanol i gyflogledd, ac mae'n drwy gweithio'r gwahanol i'n gyflogledd ar gweithio. I wonder if I could just start by simply asking you if you could say maybe no more than two or three minutes why you believe in the interests of Scotland's economy that there is a no vote in the referendum in September. M Decemberct developing market to a market of more than 60 million people. Now, that is important for Scottish firms which are large and small because we sell more to the rest of the UK than we do to the rest of the world put together. That opportunity and the strength that comes from that is very, very important because it is firms that will create the wealth that Scotland will need to look after its gyda'r ei wneud i ddim enw nifer y ddechrau i ddodol yr ydynt. Mae'r ddaf yn cael ei wneud yn y attitudei, yn cymryd yn enw i amdano i'r ddodol ar ein nefreddau yn y llywyr a'r gymysgol yn gweld digwydd, i'r brifyn effeithio ar plymau dechrau? Mae'r ddaf yn cael ei wneud i ddodol ar eu ddodol y ddodol i ddodol mewn ychydig ac neu hynny o'r ddodol oes y pethau. yn y cyd-dwylliant, rwy'n meddwl yw'r hyn, gweld. My view is that, at the moment, we do have the best at both worlds. We've got this Scottish Parliament responsible for many of the things that affect us in our day-to-day lives in terms of education and the transport in terms of health, but we're also part of something bigger, which benefits us as individual Scots and I think that that is very, very important. Although there are other emotions that are equally important, I think that gyda'r ffordd o gygarol, oedd mae chyfnodd yn fod yn dweud yn gwneud unig wedi bod yn i wneud bod y ffordd gydag hwnnw yn dweud yn fawr ynor i'ch gwrthedd o'ch sefydliadau? Mae'n ffordd o'ch cyfle. Rwy'n credu gwaith wrth fynd i'n mynd i gwybod stradddol ar 5000 diolch â'i cwmwyntau. Dyfodol, rwy'n credu gan cymdeithasol pan i gwrz gwrthdoedd Cymru. Rwy'n credu i'w chathor i'w lleidio ychydigol i'w cwmwyntau. teulu, mae'n gwybod chi'n rhan o, mae'n gweld eich cychwyn o'r ddweud, dwi'n ei fawr i'ch bod yw'r Gwladol Llywodraeth Ffynanc yn yng Nghymru. Mae'n gwybod ei ddefnyddio'r cychwyn am ddeud o'r ddefnyddio'r cychwyn o'r ddeud o'r ddeud o'r ddeud o'r ddeud o'r ddweud, Diolch ar boi. A at y time rsdowod, RBS was probably the biggest bank in the world. Its balance sheet was about £1.4 trillion, which is roughly the size of the UK's GDP. Now, this is where credibility is important. When we announced the next day that we were going to recapitalise RBS and H-boss and also make money available to other banks as well, gan bod nhw dweudio llog oedd yn ei hunai i gaelol, ond bynnag fe ddefnyddio'r cyfrifiad. Felly, doedd yr unrhyw, rydw i'r cyfrifioedd Cymru, gyd-dewidwyr i'r sgwllition drydd gyda eu teulu ar gaelol i'r cyfrifiad, ddweud iddynt i gynnig o ganfain a'r cyfrifiad ydy. Rwy'n dechraudes i hynny, ond ti'nezerio'n ôl i'w. Ond, rydw i'n edrych yn ei ddechrau i'r gaelol hwn. Mae'r gwahoddau sydd o'r cyhoeth deimlo i ddweud eu bod yn y gwasanaeth clwr. Rhyn o'r ffordd, mae'r Gwfyrdd y Banffordd Gwbeng yn ddim yn gwybod i'r ysgol o'ch gyfer ymgwrdd ac yn ddigonol i'r FFG yn ymgyrchu i ysgol o'r ffodaethau fel ydy o'r gwasanaethau? Mae'r gwasanaethau yn gyfer, ac mae'n ddod i'n ddigonol i'r gwasanaethau, ac mae'n ddigonol i'r ddweud i'r gwasanaethau? Roeddwn i eich Llyfrgell gyda Llyfrgell, tako'r Llyfrgell gyda Llyfrgell gyda'u Llyfrgell yn caelch ond ar gyfer yr Llyfrgell, yn gyfliwyr yng Ngryffredig, yn y dry獵 iawn i'r ddulltiau cyd-gwyrddwch. A gwyddai'r Llyfrgell yng Ngryffredig yn perffech fawr. Haydyn ni wedi'i ddechrau, a pob ar y cyfliwyr, ymyfodol o'r iawn o laddiemiau yn irsaf y gwrsio? Ae, mae'r Lawyried Fawr yn gwbíol? Ond walch chi'n flaen wrthill, a rwy'n gweithio allu rhywbeth sydd o bobl ei angen i'ch grau garydd. Felly, jyst yn lleol'r cyquodiao, o baprodd, o bob eich baprodd cyfnod gychyr y Gweithloedd UK cyfoedol ac oedd gweithio'r cyfnod hwn. Yr eich cyflym yn y cyfnod gyda'r brolau yma yn y cyfrifold yma. Ydi wrth iddo am y cerddau cyfnod, yw'n gweithio'r gwaith cyfnod, llyfr, ac'r dda'r ddweud. Mae'r Bank i'r cyfan hynny oedd o hyn o'r cyffredigol yn ei fod yn bwysigol ac yn gwneud cyffredigol. Yn hynny, y U.S. yn ymddechrau, mae'n ganddo i'r cyffredigol a ganddo i'r cyffredigol ar gyfer Ysgrifennidrag. Rydym i'r problemy o ddim yn ymddangos. Mae'n ganddo i ddim yn ddweud i'r cyffredigol a rydyn ni i'r cyffredigol. Mae'n ganddo i ddim yn ddim yn argynnu fydd yn ôl. Mae'r Bank i London yn ysgrifennideg y Bank o'r Llyfrgell Cyfoesbydd. Mae'r problemau yn y cyfnod o'r holl ddweud o'r cyfrifolau. Rhyw gael y bank yw'r ddweud? Ydw i'r ddweud i gael eich gofyn, mae'n gweithio'n rhaid i gael eich gofyn. Mae'r ddweud i'r ddweud i gael eich gael eich gofyn, yn y scheme sy'n cyfrifolau ar y 8 oes 2008, mae'r FFSA, sy'n gyflawni'r regulataeth, oedd gael i'r ddweud i ddweud i gael i gael eich gael eich gael eich gael eich gael. If they needed more capital, the first place to go was to the private market, and if they couldn't access the private market, then the government would provide it. So, if you take HSBC, for example, it didn't really need very much at all and raised it itself. Barclays decided as a matter of principle that they would not take money from the British government for various reasons. Sorry to the department, but we're going to get by the Mildard by the Qatari and the American governments, which flies in the face of what you're saying. That's not quite true. They raised money in the Gulf from what were sovereign wealth funds, but it was not the Qatari government per se, although obviously their wealth funds are heavily influenced by these governments. Equally, the money that they raised from America didn't come from the US government as such. It came from American institutions. It's quite different from the situation with RBS and HBOSS, or Lloyd's HBOSS, as it was about to become, simply because they had to come to the UK government because nobody else would lend them money, because bluntly they were bust. Barclays was not bust, it was solvent and was able to raise money in a way that any other financial institution or any other company can do that at the same time. I should say to Blair McDougall, if you want to come in at any point, just catch my eye. Like me, this is probably above your pay grade, but it certainly feels above my pay grade these discussions. I'll bring in Dennis Brown. I think that I'm probably even a lower pay grade than word about it. Good morning, gentlemen. I'll maybe come back to some of your opening remarks in a second, Mr Darling, but first of all, the Prime Minister, David Cameron, said that those supporting yes will always be able to come up with examples of small, independent, successful economic countries, you know, that sort of thing, like Finland, Switzerland, Norway. And then he was saying that, you know, of course Scotland can be a successful independent country. Do you agree with David Cameron? I don't think size determines your economic success. I agree with David Cameron saying that Scotland can be a successful independent country. He didn't use small. I think that in your preamble to your question, you were talking about large and small countries. My position is quite clear. It's not your size that determines what you do. Clearly, if you are a smaller country, the evidence tends to suggest that you have to run a tighter fiscal policy than otherwise that you might otherwise do. And if you look at countries like Denmark, for example, they have higher tax rates than we do. Actually, as a matter of policy, they shadow the euro. I think in relation to Scotland, as long as you're prepared to cut your cloth according to your means, and as long as you understand the maybe things you can't do, I'm answering the question my way rather than, you know, it is, but I hope my answer is relatively simple as well. I've never taken the position that somehow you can't do it. What I have said, if you do do it, then you can do it, but you need to be straightforward about the consequences about what that means in terms of your tax and spend policy, in terms of what risks you can take on and what you can't do. I've never, I don't think that size isn't the issue. It's actually how you run your country, if you like, and I suppose in this day and age how you're perceived to run your country in terms of credit risk and so on. You've got caveats in terms of what David Cameron said that of course Scotland can be a successful independent country. Any country can be successful, and as I say, size doesn't matter. However, if you take, let's get on to the point in relation to Scotland, whereas you know, in the last 20 years and every year, Bar 1 Scotland has been running a deficit. Now, if it became independent, it would clearly have to do something about that, and you'll be aware of the IFS report that was published last November, which pointed out that we have, as I said earlier, in a rising ageing population, we have a relatively falling working age population. They've made the point in order to meet, in order to reduce the deficit that Scotland would inherit as part of any settlement, but in order to make sure that you were running a fiscal policy that was credible, there would have to be some changes. Now, if that is a position that you take as a matter of principle, which I assume you do, that's fine as long as you tell people what the consequences of that are. In the white paper in itself, Scotland's future, and it's basically set out the aims of what the Scottish Government would be taking forward. A couple of points that you made in terms of the exports, etc. You'll be aware that, in terms of what's happening within Scotland at the moment, we're actually punching well above our weight in some respects, and there was some question as to whether investment might dry up in Scotland. If we were to go ahead with our referendum, you're aware that Scotland has had one of the most successful years in terms of investment coming into Scotland. Firstly, I'm sure that you and I will disagree about whether or not we accept the white paper published last November as being the gospel or not. There are some things in there that I think are open to dispute. In relation to investment, what I would say is that, firstly, Scotland, yes, we have done well for some time. Indeed, the whole of the UK has been the number one destination for foreign direct investment for some considerable time, and Scotland has benefited from that. Where the problem would arise in relation to investment is, firstly, in relation to any uncertainty arising from a yes vote in September, in relation to what our arrangements were in relation to currency, in relation to debt, in relation to how we allocate responsibility for pensions, our membership of the European Union, wherever you've got uncertainty, as I think members of the committee will accept. Mr Darling, people who are investing in Scotland at the moment are well aware that it's a referendum. They're being aware that it's going to be a referendum for some time and they're still investing. That wasn't the point that I was making. I said that if there was a yes vote and consequences naturally followed from that, because if that happened then independence would be inevitable. Is there going to be a no vote or a yes vote? They've invested regardless, surely. No, I'm not saying that. You were asking me about uncertainty, and I was saying that the uncertainty that we likely to hit investment is in the event of a yes vote, you would get a whole range of uncertainties. Now, as I say, you know, the matter of principle you believe in an independent Scotland, but I got that one right. However, for the sake of completeness I don't, so there you are. In relation to when you've got uncertainty and you've got risks, you've got costs. That's where I think it would be damaging. In the longer term, in relation to investment, it would all depend upon, as I say, fundamental questions like what currency we would be using, membership of the European Union, the terms and conditions and so on. To my original point, Mr Darling, what I'm saying is that you're suggesting that all those companies that have been investing in Scotland, record investment in Scotland at the moment, are doing so thinking that they invest for five, 10, 15 years ahead. They're not just investing for tomorrow or for the outcome of a referendum on 18 September. They're investing because they know that Scotland is going to be a successful, economic, perhaps independent country. Nobody knows because we don't know the outcome of this referendum. I'm saying that they've invested regardless. I'm not going to repeat everything I said about where I think the uncertainty comes in, but I'd also make the point that they have been investing in Scotland for the last few years, knowing that Scotland is part of the United Kingdom, that if you invest in Scotland or a Scottish firm, that firm has got unimpeded access to sell to a market of 60 million as opposed to 5 million, and they know exactly the terms and conditions in which the UK is a member of the European Union. What I'm saying to you is that if Scotland were to vote to become independent in September of this year, then many of those uncertainties would become uncertainties, and that's where your risk to investment comes in. I can highlight my declaration of interest as a member of the board of Better Together. My questions around financial regulation have taken a great deal of evidence over the course of this inquiry on the issue of financial regulation, of course a separate Scotland would have to establish its own financial regulator. What challenges do you think this would bring if Scotland wasn't in that situation in its own regulator? Also, not just looking forward but looking back, some people have said that if Scotland had its own financial regulation prior to the banking crisis, we'd never have happened in a separate Scotland, and I wondered if you had any views on that. Firstly, in relation to setting up your own regulatory regime, I suppose that the obvious challenge is setting up something that's brand new in an environment that is still pretty turbulent. You also have a major challenge where you have a financial sector that is about 12 times the size of Scotland's GDP, and that I think would be a formidable challenge. One of the big decisions that you'd have to reach is to what extent would the regime here be different to the rest of the UK? Obviously, given the relative size of the sector to Scotland, you might, for example, have to say that banks need to hold more capital than otherwise. That affects their ability to lend. You might well want to have a different regime indeed. I know that you've taken evidence, and there have been many people who have given evidence in various committees and other hearings as well, who have made the point that the regime might well have to be rather more tight, if you like, than it is south of the border. I think that would be one of the biggest challenges. One of the other things is that, at the moment, the UK is one of the world's leading regulators, whether it's the FSA or now under the auspices of the Bank of England, and that does give us a lot of influence. If you look at the main regulators, largely the Americans, ourselves, the Europeans, or that's rather fragmented at the moment, they have, in the past, been hugely influential on what their overall regime looks like. That matters for Scotland, because one of our strengths in Scotland is our financial... We are, I think, the fourth or fifth biggest financial centre in Europe, but actually we are one of the few financial centres outside the really big ones that, in addition to banking, pensions and insurance, we've got a lot of asset management and so on, so it's actually very, very important as to what the regime looks like. Where it would directly bear on Scotland is how would it affect a firm based here, like Standard Life, which sells about 90% of what it does to south of the border, where you'd have a different regulatory regime, therefore there would be a cost in trading across the border, what would it mean in terms of asset management and banking and so on. Nothing in this life is impossible, but there would be additional costs, uncertainty, and also, as a spectator, we'd knock into negotiations with the European Union. In relation to what would have happened to be the Scottish regulator, it's very difficult to say, although I do know that the First Minister writing in the times just before the 2007 election, I came across this quote in which he said that we are pledging a light touch regulation suitable to a Scottish financial centre with its outstanding reputation for poverty. Now, that was 2007, let me say now before the rest of you get stuck in, there were many mistakes made in relation to the regulatory system in the UK, in America, in Europe, you name it, because too often the regulators were simply accepted the word of the banks they were regulating and other institutions that everything was okay. However, as I've said on many occasions, yes, regulators and therefore the government's responsible must shoulder their share of the blame, but the primary responsibility for the conduct of any firm is the board of directors and unfortunately the decisions that led to the collapse of RBS were made by RBS here in Edinburgh as there were an HBOS unfortunately made here in Edinburgh. Both these banks were brought to their knees and have collapsed because of bad decisions, and I think it's really, if you look at what was being said at the time of 2007 when light touch, which incidentally is a term I've never advocated, it was being used all over the place by all the political parties at the time and we're paying a very heavy price for it. We all accept we need tighter financial regulation, but what were you saying at the beginning of your question and that would be particularly stringent in the context of a new financial regulator in Scotland with a very big financial services sector. So as your argument that would actually make a situation of access to lending even more difficult in Scotland where many businesses say it's already very difficult for them to get access to lending which they need. It's true that the more capital a bank has to hold, the less capital it's got for lending. You don't misunderstand me, we've got to make sure our banks are much better capitalised than they were. RBS in 2008 was running on today's equivalent of about 2% capital whereas it ought to have been 10% and 12% which is why it was so vulnerable when it bought ABN which eventually brought the thing crashing down. Obviously that does have an impact, it will have an impact across the UK as a whole because people are now seeing banks having to hold more capital. If Scotland was independent there is no way that we would not have to run a pretty restricted regime because you couldn't peril the entire country on the possible folly of a financial sector that was 12 times bigger than you were. Look what happened to Ireland or Iceland, they were completely done over by the fact that they did not have proper control over their financial institutions so we would have to run a far more tight regime. The other thing, it's one of the things that when most of these institutions raise money internationally, particularly in the United States, people will increasingly look and I suspect it will be true for the next 100 years or so on, not just who are you if we're going to lend you money but who stands behind you. Who is your central bank and what's the central bank worth and our central bank frankly is worth only as much as the country. The Bank of England doesn't have very much money of its own, it's really just routine stuff. All the support that was given to the Bank of England, either through capital or through support, everyone of it has a letter signed by me guaranteeing the Bank of England every last penny that it's spent and that's why it's the credit worthiness of the Government that actually very often determines the credit worthiness of an institution. It would have to be much, much tougher I think but obviously the more costs you add in the regulatory regime, the less money there is to be going elsewhere. Finally, on the issue of the Bank of England being Scotland's lender of last resort potentially and the proposal for a currency union, many of people have questioned the wisdom of that approach which the Scottish Government has brought forward. Not least the noble laureate Paul Krugman who's made the very points you've made about the size of Scotland's financial sector compared to the rest of its economy and of course even people in Scotland have questioned the wisdom of that proposal. Is it your view that on this proposal for the currency union of Stirling's own that it's simply not politically acceptable to the rest of the UK or not on their interests or do you think it's something that's actually been in Scotland's interests either if we were to be a separate nation? That's a big question and I'll try and do what Mr Fraser asked me to give you a succinct as possible answer. The first thing to keep in the front of your mind is that when we talk about the Bank of England being the lender of last resort, which technically it is, it is actually the Government that is the lender of last resort because whether it was Northern Rock, RBS or any of the other banks, the special liquidity scheme, the various other schemes the bank operated, the lender of last resort was the UK Government and similarly if you look at America at the moment, the US Fed is the lender of last resort but it's actually Uncle Sam that's the US Government that people look at. So it would not be up to the Bank of England to say yay or nay to such a proposal but it would be up to the Government that stood behind the Bank of England as to whether it would do this or not. I think the way that I look at a currency union is I look at it from the economics of the thing and you can't ignore the politics because politics is entering into most things in life and I look at it from Scotland's point of view. Even if one was on offer, which it isn't, you would be in a position where in order to guarantee a currency union you'd really have to sign up to anything that your other partner or enterprise was insisting upon otherwise there wouldn't be a deal. As someone who is Scottish, if there was an independence vote, I would be disturbed as a country in which I then lived was in a situation where it basically had to sign up to hold a bunch of conditions on tax, spending, borrowing, undertaking not to compete on tax or whatever else they might throw into the works. I think that would be very bad for Scotland. Equally, from the rest of the UK's point of view, a currency union only works if you've got a substantial degree of economic cooperation. You need, as Mark Carney said earlier this year, to have the ability to transfer funds from the better off parts to the poorer parts, he said, maybe 25% of GDP, and critically, you need a banking union. What you'd be saying to the rest of the UK is you've got to underwrite both countries in theory underwrite both sets of banks, but it's a very asymmetrical relationship simply because of the size of the Scottish financial sector. I think for those economic reasons, the whole thing doesn't stack up. There is the political overlay because if two countries would break apart, politics would enter into it, just like politics enters into every aspect of life, but it's the economic test that I think it fails, which is why I don't think it would work. Mr Mackenzie has got a follow-up on this question. Good morning, Mr Lamming. Don't you feel a tiny bit of shame coming to Scotland and lecturing us about banking? You were the Chancellor who allowed the banking crisis to happen. It happened on your watch. Don't you feel that you owe an apology to the people of Scotland and indeed the UK? The first point. I live in Scotland. It's my home. My family's been brought up here, so I'm not coming to Scotland, as you put it. I understand the sincerity which you hold, your views, but please also understand that there are some of us on the other side of the argument who are equally sincere in what we're doing. In relation to the point that you made about the banks, as I said in reply to the point raised by Mr Baker, I was Chancellor at the time. I was a member of the Labour Government for 13 years and, of course, I accept responsibility for everything that we did or didn't do during the course of that time. I've said also to you that I think that the regulatory regime at that time was found wanting, although I have to say that the clamour for light-touch regulation was one that was advocated by every party, your own one included. Don't you think there's a deep irony that you of all people should lecture the people of Scotland about banking? Firstly, I'm simply answering the questions that you and your colleagues are putting to me. A lot of it turns on what happened at that time. I'm more than happy to be judged on what I did or didn't do at that time. My concern now, if you like, as we look forward, is that firstly we don't repeat the mistakes that were made at that time. As I said to you, I'll accept my responsibility, but also the leader of your party was advocating light-touch regulation at the time. Heavens even wrote to RBS Fred Goodwin, you remember him, commending him on his takeover of ABN Ambro, which proved to be absolutely calamitous at that time. So all politicians make mistakes, but in relation to this particular problem, what I'm seeking to point out is that, moving forward, if Scotland had a financial services sector of the size that it has, then there are consequences so far as the regulatory regime are concerned. We just have to accept those consequences. As you and your colleagues would say, well, we want independence, therefore we accept those consequences, but for goodness sake we need to tell people what those consequences are and don't sort of pretend that they don't exist. Very briefly, Mr Dahlink. I was interested in your answer to Mr Baker. Didn't you previously say that it was a logical thing to do to enter into a currency union? What you will find from your party's various press releases is the use of two words, which were separated by a number of paragraphs. It's never a great thing to do, and I know all political parties do this from time to time. Rather than take up too much of the committee's time doing this, what I suggest you do is read my entire reply to Gordon Brewer on Newsnight Scotland, which I think was in January the beginning of 2013. Nobody listening to that could have been the slightest doubt that what I was advocating was what we have at the moment, which is a currency union, and it works because you've got a political and economic union and a banking union that stands behind it. I was making the point at some length about the difficulty you've got with the currency union, where you've got an asymmetric relationship, where you've got one very large partner and one much smaller one, and the terms and conditions which I thought would be objectionable to nationalists. Never mind anybody else. Do you read the whole thing? I'm not often I would commend any answers that I give to someone on a late night programme, but if you're going to look at it, you will then be able to see where the word logical and desirable appeared, but you find that they do not appear together. I'm better together and you yourself suggested this morning that there are benefits for us all as individual Scots in remaining part of a larger UK, but it certainly doesn't feel like that for far too many people. The areas of multiple deprivation that in Edinburgh, and I'm Edinburgh born and bred, they remain markedly and disappointingly unchanged under the current regime. Clearly too many Scots aren't seeing the benefits, and that's despite the fact that the Times Rich List have reported that they've never seen such fast growth at the top end, but what about all those people that we continue to let down at the bottom end? There's no written submission from better together this morning, and I just wondered what you have to offer. What guarantee is there that under the current UK settlement we're going to see change for those people who've been ignored for far too long, because evidence would lead me to believe that it's not being given enough attention? These people are constantly being failed by Westminster policies. Where I disagree with you is that what determines action in relation to either alleviate poverty or disadvantage or better still to stop it in the first place is the political actions of the government of the day, whether it's in Edinburgh or whether it's in London. It's not the constitution that determines that. Where I think you and I would disagree is that having access to being part of something bigger, having a bigger economy better equips you if you're willing to take the political decision to alleviate poverty. If I look at what happened in the 13 years that we were in government, in the UK as a whole we took a million children out of poverty, but in relation to children living in absolute poverty fell from 28 per cent to 12 per cent during that period and relative poverty fell from 28 per cent to 12 per cent. That is because the government of the day took a decision that it would do increased child benefit through childcare provision, through other tax credits, all of which the present government takes a rather different view of that because it's quite hostile to a lot of these things, but that is an action of where you can reduce child poverty. In addition to that, that's by alleviating the symptoms if you like. In addition to that, surely what is important is making sure that you stop it arising in the first place and that means for example improving educational attainment. That's why I, for example, wouldn't have cut over 100,000 college places in Scotland, a decision taken here, not taken in London. If you look at health, which is another determinant of poverty, I noticed last week a Scottish Minister was comparing the health comes in Glasgow and Harrow. Why not compare the health comes in the east end of Glasgow and Lensie eight or ten miles away, which you will find does a 10-year difference in life expectancy. I mentioned education and health because they are totally devolved at the moment. It is up to the government of the day, whatever government happens to be in the Scottish Parliament, to decide what it's going to do. It's not the constitution that determines these things, it is the political decisions taken by the administration wherever it happens to be. The constitution clearly has a part to play, but thankfully some issues are devolved and they are allowing the Scottish Parliament to mitigate the worst impacts of welfare reform. We are having to spend money that we could spend on other things to address the bedroom tax, for example. The Joseph Rowntree Foundation, I believe, has suggested that the improvements that we have made to children's lives will be lost if things continue as they are. The constitutional settlement is key because who's to say that, after May's election next year, we're not going to have a conservative UKIP coalition? There are no guarantees under the current system. In any political system you've got, there's always choices that are going to have to be made. As I say, if you look at Scotland's overall position, we unfortunately have had a deficit in every year, bar one on the last 20. You'd have to do something about that. You can't just live with that. If you look at the decisions that the Scottish Government has taken in relation to college places, it has a choice as to whether it does that or whether it continues to give free prescriptions to everybody. You can argue for as long as you want as to which choices it makes, but the idea under any constitutional settlement, anywhere in the world for that matter, that you aren't at some stage confronted with difficult decisions, I just disagree with you on that. I'm not here to defend the Scottish Government's position on college places. It's one that I disagree with, but I still don't feel I've had a response to my question. Things haven't changed in our peripheral housing schemes for decades. What are better together going to do about that? A narrow point is not a political party. We're fighting the referendum. What are better together offered? In relation to housing, I agree with you that Scotland has for a long, long time had a situation where we've had far too many houses that are not up to the standard that we'd want. In addition to that, we haven't been building as many houses as we want, but I say that that is a political decision by successive Governments, which is the decisions that the Scottish Government has taken. They're entitled to take them, but it isn't the constitution that determines these things. Two things determine it. One is how much money you've got to spend in the first place. I said what I had to say about the economy and our economic prospects earlier on, which I think is very important. As someone who will be living in Scotland regardless of the result, I'd be very concerned if the IFS is right in six or seven years' time. We've faced the situation where we're having to make greater cuts or increasing taxation simply to keep going, which means that you would not have the money to do the things that perhaps you and I would agree with. The second thing you need to do is have the political will to tackle these things. Sometimes we do have the political will. You're hamstrung and prevented from doing so. If you look at Westminster's policy on renewables, for example, we're not seeing the investment that Scotland needs. Instead, we're seeing a Government that's determinedly investing in nuclear power stations. A recent report from several, from five experts have pointed out that electricity would be cheaper in an independent Scotland because the UK is going to be paying for the Hinkley Point reactor for some 30 years or more. You and I might disagree and listen. I think that we all benefit from having a mix of energy provision. I know that your party doesn't believe that. A lot of Scotland's base load electricity comes from two nuclear power stations at the moment, the future of which we've yet to hear what's going to happen to them. In relation to renewables, it's made the point that the renewable energy industry, particularly in Scotland, benefits from the fact that the subsidy comes effectively from all UK consumers because we all pay into that. I know that because I set it up. It's one that's very beneficial to Scotland because, as you know, we've got more investment here proportionately than the population would suggest. If you actually lost the UK energy market, that would be very damaging to the renewables industry in Scotland. I agree to differ. Can I ask one more question? One point that you have made time and time again is about pensions and how secure they will be if we remain part of the UK. I cast currently estimate a £300 billion private pension deficit, which is in exactly prudential management by the UK. Stirling University has shown that the extra costs in Scotland can be offset by levels of immigration that have been the norm for the last decade. Do you not agree that an independent Scotland, a wealthy country, an independent Scotland can create a system to provide wealth for people in their old age? There's three things that I'm going to ask Blair to say something since otherwise he'll be here in relation to pensions. Firstly, in relation to the state pension, as you know, the state pension isn't funded. It's paid as a pay-as-you-go basis. You are right that the IFS and others have said that, given the fact that we've got an ageing population and our working age population is falling relative to that, you either correct that by making people pay more tax to fund the thing, because that's actually what pays it, or you increase the level of migration. However, I am unaware of the Scottish Government or anyone else on that side of the argument, saying how much more immigration you would need. However, you are right that the only way, if you can't replace your working age population through increasing the birth rate, you have to do it through migration. If you don't do that, you have the problem that Japan's got at the moment, where they have very little migration, they've got an ageing population, they've got debt of 200% of their GDP. Let me just answer the other two points. On the other ICAS point, it was in relation to funded pensions, the occupational pensions. For many years now, too many pensions have not been properly funded, or at the moment you've got a situation where they are UK-wide. Under EU law, if Scotland became independent, these pensions would split, and you've got to make sure that both sides are funded. The only people who can make sure that they're funded are either pension members through increased contributions or reduced drawings out, or I suppose if the Scottish Government felt enough cash around to do that, it would have to top them up. I think that those are both issues that certainly concern me, both in our ability to fund the state pension and to increase it, because that's what most people would want. In addition to that, you've also got the problem in relation to funded pensions, where you're taking on a whole bunch of risks and expenditure that you don't need at the moment, because we don't have to fund them separately. Sorry, you were going to come back. We have the case in Ireland where there was a transition period. I think that this is perfectly possible, but the immigration issue is key. Again, I'd come back to the point that, if next May we see a Conservative-UKIP coalition elected, surely that is a greater threat to the stability of Scots pensions than anything else, maybe? I'm not surprised that I'm not enthusiastic about a Conservative or a UKIP, let alone some coalition, since UKIPs seem to have difficulty working with themselves and never mind working with anybody else. In relation to pensions, one of the things about pensions that we all know is that they span several Governments by their very nature, whatever Government introduced the reform with several Governments on before you know whether it worked or not. But I think in relation to the immigration point that you rightly put, if you've got a falling working age population and a rising retired population, as I say, there's only two ways you can get the money. It either comes out as something else you'd otherwise be doing, or you try and encourage more migration. Now, if that is your policy, like so much else, that's a policy decision you're entitled to take, but you better be upfront about it because we would like to know. If you're part of a larger UK that has an immigration policy that doesn't match your country's needs, that's a real challenge. There are consequences, too. If you have two different immigration policies across a landless border, at some point I suspect an obvious issue is going to arise. But in independent Scotland, needing to boost its working age population by x, because I don't know what the number is, and it might be useful to know what that number is between now and 18 September. If you are going to increase immigration to fill that gap, that is a policy decision that the Scottish Government is entitled to make, but so far it has been very coy on A, the fact it's going to do that, and B, if it is going to do it, and how many people are we talking about? Because it has a knock-on effect on housing, on schools, on health and so on. I mean, I think that as I've covered most of the points I would make, just on this point of immigration, with the ageing population you've got over 65s set to grow significantly over the coming decades in Scotland, and you've got the working age population actually set to shrink in comparison to that, whereas with the rest of the UK you've got all sections of the population, broadly speaking, set to grow. The question about what immigration policy we need, from the pension's point of view, arises from the decision of independence. The question, then, is, as Alasaw says, if the affordability of pensions is predicated on interventions in the population through immigration, then you've got a question whether that is actually a credible policy. Now, two independent researchers have now put a figure of 1 million immigrants on that in order to make pensions affordable at the rate of equivalent to the UK. The Scottish Government, to the best of my knowledge, has not put a figure on that, so it's very difficult to judge whether the promise to make pensions affordable through immigration is actually a credible one or not. I think that until we see what the Scottish Government's figure is, it's difficult to tell whether pensions are actually safe or not within an independent Scotland. Before I do that, I wonder if you might explain why, in your answer to Dennis Robertson about foreign direct investment, up until 2008, Scotland had about 8 per cent of the UK jobs that came from foreign direct investment. In 2010, it rose to 19 per cent. In 2011, it was 20 per cent. In 2012, it was 18 per cent. In 2013, it rose to 20 per cent. To what do you attribute that dramatic change in direct investment towards Scotland as opposed to the rest of the UK? That's a benefit, I seem to remember, from those figures that came out last year. As I said, Scotland benefits to a very large extent, not just because of what we offer in Scotland, but we're part of the United Kingdom, part of a bigger market. In the same way as we benefit hugely from overseas investment. We have a lot of investment, for example, in the motor industry that is purely and simply here, because we're also part of the European Union. People like getting into a market where they not only get into that immediate market, but they also get into a bigger market as well. It has a big benefit. Scotland was part of the UK before 2008, so you really haven't explained the difference. Let me get on to forecasting. In 2010, the Financial Times, you talked about the OBR. You said right from the start that Tories use the OBR not just as part of the Government, but as part of the Conservative Party. In fact, if we look at the first chairman of the OBR was Sir Alan Budd, who is an adviser to Mrs Thatcher. If we look at the constituency of the existing board, you might have been right. Have you changed your view? I do remember that. If I remember rightly, that was the first OBR report that was published about three weeks after the general election prior to George Osborne's first budget. I remember discussing it with Alan Budd at the time who said that matters hadn't been handled in the way that perhaps were ideal. Since then, the OBR has moved on. Robert Chote, who currently chairs it, is doing an excellent job. There is a broader point here in relation to forecasting, because I dare say that you will come on to this. Forecasting at a time of economic crisis is incredibly difficult because there are so many unknown things that are happening. If you look at the time that I was forecasting an extremely turbulent period in 2008, my forecasts were in line broadly with others, but by the end of 2008 it was quite clear that the world had changed dramatically, equally if you take the OBR. The forecasting that is done post 2010, as you know, things were considerably worse than the first two years that people anticipated, were now in a situation where they are saying that things are getting better. It is a difficult thing to do anyway, but I do remember the point. After the general election in 2010, there was a general feeling that the OBR had gone off to a bad start, but that has been put behind it. I think that this is a case where the facts have changed, and when the facts change, I do change my mind. Perhaps I should acknowledge somebody else who said that originally. That is very welcome, thank you for that. We are, as you say, we are in better times. If I look at the economic fiscal outlook for Scottish tax forecasts for the OBR, I have a statement here that says, and you said that they have improved, we are therefore not able to produce a Scottish macroeconomic forecast to drive the Scottish tax forecast because of the methodology. We consider these methodologies work in progress, so why are we putting so much emphasis on the OBR when they haven't established a meaningful methodology, which they themselves say is work in progress? The OBR, first of all, is there to do forecasts for the whole of the UK, and it operates off the data that we have. What it hasn't done, and what's more difficult to do, is to disaggregate the tax take from the different parts of the UK. It's relatively easy to do it for income tax, but it's much more difficult, even with corporation tax. It's not always clear where the money has been made, and for indirect taxations it's more difficult still. The OBR's job wasn't set up to do that sort of studying, but people like the IFS, who have a record on this, have done quite a lot of work on that. As you know, forecasting tax take, forecasting growth and everything, is never going to be an exact science. What it can do is give you pointers as to the sort of environment you're likely to be operating in. I think that your first question was about the politicisation of forecasts, and your second question, I guess, was about the maybe illustrated point about the need to be cautious with things. The Scottish Government in its forecasting, published by John Swinney for oil projections going forward, took five scenarios from scenario one, which was the most pessimistic for oil revenues coming out of the North Sea to scenario five, which was the most optimistic. For the year 2012-2013, even scenario one, the most pessimistic scenario of how much oil revenue would flow out of the North Sea, was out by about £1 billion. I think it reinforces your initial point about the need not to be too political with forecasting, because the problem with those oil forecasts is that they are the underpinning for the sole page of economic forecasting, which is within the white paper on page 75. It's already been shown to be optimistic. The Scottish Government is depressing the forecast for oil revenue. I'll come to that in a minute. This was real tax take that has been proven to be out of kilter with the forecast that was made. I was going to say that it is also regrettable that OBR, in its own statement, says, due to the confidentiality of the measures, the methodologies that are using, we were unable to involve the Scottish Government in the stage of the process. One of the other things that we have heard a lot of is businesses will move from Scotland in the event of referendum. I have a year of herald's newspaper, the day after your budget, Mr Darling, in 2010. One of the headlines is, large companies may ask why stay in the UK. They are talking about the relocation because of corporation tax and making various comments about moving their headquarters. Why do we have so much scaremongering? We understand uncertainty when things change and those of us who have run businesses understand that uncertainty. Why are we having so much emphasis on that when, in fact, it is a very select few individuals within organisations who are talking about they might not stay in Scotland? Your own evidence suggests, or the evidence of your budget in 2010 suggests exactly the same situation that was happening. I think to make two observations to you. For larger organisations, they do over probably not immediate reaction from a longer time scale. They do make choices about the jurisdictions in which they operate, whether it's the regulatory regime, the tax regime, what's it like as a place of doing business. It is influential and you can't ignore it, particularly in a world where it's a very globalised economy. People are not just choosing between Scotland and England, but they're choosing the Far East or Europe or South America or anywhere like that. In relation to the companies themselves, I'll give you two examples. Standard Life was them who said it, not me. Standard Life didn't discuss it with us before they made the point. What they're saying is that they compete with other big insurance pension companies based south of the border. They said not that they would move everything, but they might have to move some of their operations south of the border if they were faced with a different tax regime or regulatory regime. Also, the pensions industry is largely driven by the tax and the pensions regime. Or if you take a smaller company that I met in Port Glasgow that makes mechanical pumps where most of its customers are south of the border and most of the component parts come from south of the border, and the guy that owns it was just making the point, he's having to deal with two separate regimes for a tax and accounting and so on, and he said it would make a difference to me and I don't think I could carry on doing it. Obviously, each firm, each individual, have a different view as to how it affects them. What we, the population as a whole of Scotland have to decide is on the balance of probabilities what's unlikely to be best for an economic environment where you have a thriving business sector that employs people, that pays its taxes, that contributes the wealth of the country, and you will understand which side of the argument I'm on as far as that is concerned, though I quite understand that you're firmly on the other one. I hear what you say but if I look at the list of companies of that time, we're talking about Diagio, Guinness, Diagio, Unilever, HSBC and who in fact has actually moved, I think it's time we started being realistic and stopped a lot of the scaremongering that goes on in that situation. One last question, if I may. You made a comment about my First Minister talking and supporting the Royal Bank of Scotland, Fred Goodwin. In your autobiography on page 62 you indicate that Mr Goodwin came to you on December 23, I believe, with a panatone. He told you then that there was a problem with the liquidity of the banks. Why didn't you do something about it? Firstly, thank you for the plugger from my book, which is still available from all good booksellers. I hope you got me on page 62 and you weren't just standing in WH Smith looking at it. Fred Goodwin did come to my house on December of 2007, I think it was. He had two concerns. One is that he was concerned about the lack of liquidity in the system, which is something that the Bank of England addressed a very short time after that, because you remember that in a co-ordinated action the Bank of Japan, the Swiss Bank, the ECB all said they would have a combined scheme, so it did provide liquidity. I think that the problem was that it was always the view of RBS, certainly Fred Goodwin's view, that RBS simply had a cash flow problem. It was a lack of day-to-day money, which they certainly had, but what he did not accept at that stage, which is also recorded in that chapter, is that I said to him that, why does everybody think you've got a capital problem? Now, he said he didn't have a capital problem, but the markets at that time thought they did, principally because of the takeover of ABN, to which, as you said, your First Minister was adding his blessing. Because ABN was an absolute basket case, and it wasn't the sole thing that brought down RBS, because they lost money in conventional lending, they lost money spectacularly in relation to some of the trading and derivative instruments, particularly in the United States, which started in 2006, I think. The long and the short of it was that this was a once great bank, one of the biggest banks, if not the biggest bank in the world, brought to its knees. I come back to the point that Mr Fraser made at the first time. At least the RBS is still here, it still employs a lot of people in the city, and it's only did that because I was in a position to be able to do something about it. If we'd trusted Mr Goodwin on the board of RBS and weren't in that position, a lot more jobs would have gone, and the consequences for the Scottish economy, never mind the UK economy, would have been catastrophic. I want to ask you about the parent secretary to the Treasury, Nicholas McPherson, who raised eyebrows when his advice to the Chancellor was published on the same day as George Orr's born made the speech emphatically ruling out a currency union. A freedom of information request in November 2012, the Treasury stated that Sir Nicholas met yourself, occasionally, socially, from time to time. When did you and Sir Nicholas last meet? I think I bumped into him in March. How many times have you met him since the referendum campaign began? Oh, I don't know. I don't know. I don't want to give you an actual advantage. Just to say it's just one thing, Ms McAlpine. Obviously, I worked very closely with Nick McPherson for three years and previously when I was chief secretary of the Treasury in the late 1990s. For the sake of completeness, I also keep up with a number of other permanent secretaries in the departments that I worked with, including other civil servants. It's not abnormal. The one thing that I've made very clear is that every single civil servant that I have contact with is absolutely scrupulous about not discussing what they advise the current Government. That's one of the strengths of the civil service in this country. I wouldn't read too much into the fact that I know Nick McPherson and I saw him nearly every day of my life for three years during some quite interesting times. Discussed aspects of the independence referendum with him? In terms of the contact that we have with the UK Government, that's done through political channels, not through the civil service. I asked if you had discussed aspects of the independence referendum with your friend Nick McPherson. I've discussed many things, and I'm not going to go into private conversations, but in terms of what I've said to you, I'm not going to go into private discussions I have with him or anybody else for that matter. But what I can tell you is in relation to whatever advice he happened to give to the current Government, I've not discussed that, no. I'm asking what he said to you. Did you discuss aspects of the independence referendum with your friend Nick McPherson? I'm not going to discuss private conversations any more than I've discussed a private conversation with anybody. Did you discuss the current senior union with Nick McPherson? I can't really add to what I've said to Mr Carpine, but what I can say to you is that the advice that Nick McPherson and his colleagues give to the current Chancellor and Chief Secretary is advice that I'm not aware of. It's something if we have contact with the Government, we do it through political channels, not through the civil service. I was asking me about your conversations with your friend Nick McPherson, but we'll move on to... You understand that, yeah? Yeah. If I can move on to a report in the garden by the Chief Political Correspondent Nicholas Watt on the 29th of the third this year. It quoted a Treasury source saying, Alistair and Andrew are running the show, we just did what they said. They were referring to Andrew Dunlop, the PM's special adviser for Scotland, who also advised Margaret Thatcher and yourself. Can I ask when you and Mr Dunlop first ruled out a currency union, discussed ruling out a currency union? We didn't. It's news to me that I'm running the show so far as the Treasury was concerned. I mean, I did, but I don't know. I think it's a matter of fact that I don't quotes run the show. Of course I've discussed with Ed Ball's George Osborne, Danny Alexander, a currency union. It would be extraordinary if I hadn't done so. You may recall, you want to know where people were thinking about these things. When George Osborne, I think, first spoke on the subject, it was last summer, when he said what he said, his own words, his own thoughts, when he said he thought it would be very difficult. Prior to him saying, actually, he wouldn't do it. And it would be extraordinary, too, I think, if I hadn't discussed with Ed Ball's, who was the shadow chancellor, a member of my own party, if I hadn't discussed him the merits of these things and for the sake of completeness, I've also discussed it with Danny Alexander. But it won't surprise you to know that on that particular issue, in relation to currency, we have a common view. Ed Ball's, when he appeared on Ian Dale's LBC radio show on 12 February 2012, which was the day before George Osborne made a speech about currency. He revealed that he hadn't read the Treasury paper that day, but he immediately came out to back up George Osborne the next day. As a member of the Labour Party, very senior member, did the Labour Party carry out their own analysis before rolling out a currency union, or did they just adopt George Osborne's analysis? You may recall that Ed Ball's, when he was a special adviser in the Treasury, was very largely instrumental in determining what was the then Government's policy response to the euro. So he is well versed with the problems that are associated with the currency union. Indeed, you may recall, since you seem to be reading quite a lot of clippings from the press and so on, that when he came up, I think it was during the deferment and by-election, and again at the end of last year, on both occasions he expressed extreme skepticism about currency union. The Government papers are published by the Government, so Ed wouldn't have seen them, but the idea of coming fresh to this is just not right. He has got a lot of experience. This was a co-ordinated, staged, managed event in which he was wheeled out to support the Chancellor. Can I ask you that the usual practice for the Labour Party to follow the policy of a Tory Chancellor without scrutiny? In relation to a currency union and the currency, what would happen post independence? It's surely not surprising that the principal finance spokesman for all three parties would have looked at this matter and taken a view on it. The view is universal that the economics don't add up. The actual production, the preparation of the Treasury paper that you refer, that's obviously a matter for the UK Government because that's what governments do. The fact that they have a common view shouldn't surprise anyone. Although the process is fascinating to some, I would have thought that what's more interesting is the actual substance of a currency union, which, as I said and replied to earlier questions, I think would be bad for Scotland. Never mind the rest of the UK. Mr MacDougall, better together published a dossier immediately after Osborne's announcement claiming that the currency union wasn't possible. Had you been told what the UK Government was announcing? In the matter of days before it had happened, yes. So you had discussions with the UK Government on the announcement of the Chancellor? Yes, as I've told you through the political... I'm asking Mr MacDougall. He can answer as well, but I'm just... I'm asking Mr MacDougall. He's just admitted that better together had discussions with the UK Government before Mr Osborne's announcement. Not about whether the decision should be made, but about whether the decision was coming. Thank you. Margaret MacDougall. Thank you and good morning panel. Throughout this inquiry, we've heard from different witnesses that taxation and the welfare state would be much better if we were independent. And could you perhaps tell us your view on what the levels of income tax would be? Because really what the people that we're talking to when we're out and about, they're worried about how much it's going to cost them personally. So, and we've heard from, as I said, various witnesses that tax levels, income tax levels are likely to be higher if the aspiration by the S campaign and the SNP would lead to welfare benefits, for example, being working to the Nordic states. Well, I suppose this comes back to the point I made right at the very start, that if you look at tax and welfare, if you are part of something bigger than the United Kingdom as a whole, you have about 31 million taxpayers, as well as in addition to business taxpayers as well, or which you can spread the burden of the money you need to raise to pay for pensions, the welfare state, health education and so on. Scotland has a taxable population of, I think, about two and a half million people, so it's a lot smaller. Now, if you look at what's often said about the Nordic states, people have said what we can have, what they have, you can, as long as you also accept the taxes that go with it, that in all those states is higher than ours, typically 25%, the top rate of tax is higher than we pay at the moment. I always say to people, if you want to advocate that Nordic settlement that says there are, in some cases, better public services than everywhere, frankly, to go with it, you get the higher taxation, by all means advocate it, but tell people what you're going to do, because people might vote for it, but they want to know in advance what's going to cost me, how much more am I going to have to pay an individual taxation and so on. I think there's another consideration, again, which I think I've adverted to earlier on, in relation to the IFS report, which no one's seriously challenged. I mean, IFS is one of the few organisations that I'm aware of that possibly because it's very good and possibly because every political party at one stage or another usually in opposition has endorsed, and it's actually very difficult then to say we don't believe what they say more in government. But they've made the point that, in about five or six years' time, Scotland will have a very big gap between what it spends and what it gets in, which will have to be filled. They estimated at about £6 billion. Now, if you have a gap of that size, there are a limited number of higher rate taxpayers in Scotland. The Scottish Government has already said it's going to cut corporation tax by three pence, so that means somebody else is going to have to pay, and that somebody else is the rest. The ordinary people who are going to have to pay either an income tax or increase that. Now, that in this country at the moment is now 20 per cent. I think people will be very, very concerned if it went up to 25 per cent because that would be a big hit. I just think that you can look at any country you want and make your comparisons, but the thing to remember, and I'm sure everybody appreciates that, there's no country in the world where everything's perfect. They've all got their problems. You know, Sweden's got big social problems. You know, so have some of the other Nordic countries. But if you advocate higher taxation as it is open to anyone to do, then by all means to do so, but remember to tell people first. I'm trying to get a figure out of you. What level do you think it would be at in an independent Scotland? Again, it would depend on, I forget, someone asked earlier on, we are at the moment, we are running a fiscal deficit, we're spending more than we get in. And this year alone, if you look at the latest figures, we lost £4.5 billion of revenue from the North Sea oil, which is roughly what we spend in schools in Scotland. That gap would have to be plugged if you were in independent Scotland. You have to plug it now and you have to plug it from somewhere. The amount of money that you raise in tax is driven by two things. One is what are you spending your money on in terms of your services and also how much you have to spend on servicing debt. The best estimate that I have seen is the IFS one because it has looked at the demographic pressures facing Scotland. It's also looked at the fact that whatever is happening in the North Sea oil by definition is not renewable and every day there's less than there was the day before. So it's very good to put a precise number on it, they put a number on it, £6 billion, which would either come off, you either go up, increase taxes or reduce spending. If I can just ask another question, around if there was independent Scotland, how difficult would it be to set up a separate tax system given the intricacies of where we are just now in the UK? What would be the cost implications from that? I think that we've all seen the ICAS report this week. I figure out about £750 million, I think. I think there's two things. One is the Scottish Government's view is that HMRC presently constituted and on the benefit side the DWP would continue to pay out benefits and collect taxes for maybe five years, which actually limits the scope to what you can do anyway because certainly the DWP, I know from my own experience, can't operate. It can pay out universal benefits but it's very bad at chopping and changing. But you would have to replicate these things and that's money being spent on a new bureaucracy you don't need and I would rather see that money spent on some of the things that, as Johnston was saying, I thought I'd switch the thing off, I'm very sorry about that. The point that Ars and Johnston was making, if there was £750 million available to spend, I would rather not be spending on replicating what already exists. I think that ICAS also made the point that you'd expect to have less civil servants administering it and I think that they put the figure at £2,500,000 or something. Again, if that's what you're going to do then tell people. That's my point I think because I think that the people in the street want to know just what it's going to cost them and it's okay to look at their bigger picture and we talk about the economy and what that would mean but in actual fact people's most concern is around how it will affect them personally. And I think they're looking at how realistic both sides views are. So if we could just perhaps, in reality, how long would it actually take to set up these institutions within Scotland post referendum? I have some experience here in that when Jobcentre Plus was set up for the whole of the UK about 10 years ago, it took about two or three years to set it up. The more problematic thing is not so much the people but the computer systems that go with it. We're not the only country but there's a long history and on a happy history it is too of brand new computers which when they get unpacked we're supposed to do all sorts of things but then you find they don't actually quite do that. You'd also remember that when you're doing this you're presumably changing the tax code at the same time. There'll be issues in relation to tax of who's a Scottish taxpayer, who's a UK taxpayer and so on. I think these are questions where to be honest nobody knows how long it would take but we are kidding ourselves if you can do these things quickly because these things always take longer than you think. And where there is delay or uncertainty you've got costs, you've got risks, you've got blight frankly and the blight that would come when decisions have yet to be made. I'm an eye-cast who would know that the tax system makes all sorts of points about that and all the rest of it. These are all issues which we could greatly benefit with far more information now rather than find out on the 19th September that it would have been a good idea if we'd known it all. Does that go on to the uncertainty and turmoil that would follow on from if it was an independent Scotland? The idea that you could fix all this by March 2016 is for the birds to start with. My experience in the European Union is that nothing that I'm aware of has ever been fixed in 18 months, even when they agree. Maybe two permanent sources for your last two questions. In terms of the cost of setting up the tax system, yesterday John Swinney was in the media saying that he believed that setting up a tax system could actually save Scotland money. In the leaked Cabinet paper of 2012, he predicted that the cost of a separate taxation system could be in the region of £625 million for Scotland, which I think is around about £300 million more than the share that we pay in to maintain the UK tax system. I'm not quite sure how what was written in private quite squares with what was said in public yesterday. On the point about the length of time in setting up institutions, the Scottish Government's own expert group on welfare in its first report looked at some of the types of issues in terms of setting up systems for the payment of benefits and pensions. I think I'm right in saying that their conclusion was that you're looking at a period of time around about a decade in terms of scaring institutions set up in any attempt to move to separate systems before that was, in their words, a serious threat to the continuity of payments for people. Obviously, those are the things that would be rolled into any negotiations after independence, but you're looking at 10 years and you're looking at a lot of costs. In response to Alison Johnstone's questions earlier, you were keen to talk about poverty rather than inequality, Mr Darling. We also said about the IFS that it's very difficult to say—we don't believe what they say—your words. The Institute of Fiscal Studies report that poverty and inequality in the UK, published in 2011, found that, quote, "...income inequality rose during the 13 years of Labour Government across a range of potential measures." What guarantees do you see for any kind of change in the event of a no vote, given the record of Labour? The reason the income inequality rose largely was because of a very rapid increase in the top-decile of the population, which is something that you see right across the OECD. We see it in this country, particularly because in the last 20 years we've had an influx of people on the very high income scale. If you want to do something about that, the question is what your top rate of tax is. As you know, I put the top rate of tax up to £0.50 and the last budget I did has now come in back then again, but again that's a political decision. Equally, in Scotland, if you wanted to narrow that inequality—I don't think that Scotland's got anything like the same number of very high earners—it is open to a Scottish Government to say that we're going to have a top rate of more than £0.50 if it wants, I just think that if that's what your intention is, then you should tell people beforehand rather than afterward. Draw your attention going as your very first response to the issue about the top going up as a reason for inequality to the final Prime Minister's questions by Margaret Thatcher, where I believe that was her exact defence and I assume you were there. For the last 55 years, Scotland has voted Labour in every general election. Do you think that inequality would be higher or lower in Scotland if we had had Labour Governments every time we'd voted for them? Is there an impossible question to answer? What I can say is point to— Government's women's equality. No, I'm not saying that at all. I was about to say that if you look at the Labour Government of which I was a member, it did reduce poverty and particularly on people on the lower income levels, we increased income levels. There's a very good study that you want to read and prepare by the LSE, so it's impartial. It's not our one. It's done by Professor John Hills and others in which he goes through—it's a report card, if you like. Actually, yes, there were things that weren't right, but there's a lot of things that were—we did get right. If we were elected again, we'd like to continue to do that. In your test, would 55 years of Labour Government, or indeed Scotland getting a Labour Government whenever it votes for one, have reduced poverty more than the last 55 years have? It's impossible to say, because if you look past— Governments wouldn't have reduced poverty. That would be the object of any Labour Government and every Labour Government to reduce poverty. That's one of the central planks of what we stood on in 1997, and we'll be standing on next year. Don't misunderstand me. I want to see Labour Governments, but I rather got the impression that you were in favour of independence, regardless of whether it was a Labour Government or not, because you didn't like us when we were in government any more than you like the Tories. I'm not sure that there's any party anywhere in the world that has been in power—certainly that democracy has been in power for 55 years anyway, so it's an interesting hypothetical. For me, in the way that I take my better together hat off and put my Labour Party activist hat on, inequality and poverty are tackled through policy decisions made by parties, and what we're looking at now is not about a hypothetical past but what we're being offered in the future. My party is offering, as I said, a 50p top rate of tax on the bankers' bonuses in order to guarantee— Are here as a better together representative and not a representative of the Labour Party? I'm about to segue into the referendum. There are policies being espoused that are redistributive. There is not a single policy within the white paper that you stand by that has any redistribution in it. In fact, there is one that is redistributive, but it's redistributive from the poor to the rich to the corporation tax cut, so we can talk about reducing inequality, but there has to be a recognition that there is nothing within the white paper that's being held up as the promise of reduced inequality within Scotland, which is actually redistributive. I disagree over your interpretation of the white paper, obviously, but my question remains, what is the offer from the no side to reduce poverty and inequality? Is it to continue voting for the Labour Party, which hasn't worked for the last 55 years? Your question is more about the Labour Party and the word about better together. I repeat what I said earlier, better together is not standing in the general election next year. Our purpose is to fight in the referendum campaign, but I suppose I would come back to the broader point. Our ability to tackle inequality to make sure that we live in a fairer and better society is far better delivered as being part of the UK because of the resource, the potential and the opportunities than it would be if we were to break off and go it alone. Obviously, we disagree on that, but that's my position. You clearly believe that there are benefits to being in the union. I would disagree with you on that. I think that we've had quite a few honest disagreements here. How many years, what proportion of years of Conservative Government that Scotland didn't vote for do you think is a price worth paying for what you consider to be the benefits of union? At the last general election, the more people actually, though I don't approve of this, voted for the coalition Government than voted for the SNP. The Tories were in the last place, then you, then the Liberals, then us. If you look at over the years, there have been times when people in England have found that they didn't get the Government quotes that they voted for. But I don't think that your argument is a strong one in saying, well, we should break up the UK and everything that goes with it. I don't think we would agree on what sort of Government you want to see in May next year because I say I don't think you like the Labour Party ones either. But I think that the potential that we have of being part of the United Kingdom, it means that it's far more likely that it would have the ability to deal with the inequalities and the injustices that possibly you and I might agree on. Now, we disagree on the way of achieving that, obviously. Thank you, convener. Questions for Mr Darling. They're currently running a poster campaign with the message more powers for Scotland guaranteed now. I'm assuming you're not talking about the powers conferred by the Scotland Act because they'll come into being regardless of the outcome of the referendum. What are these more powers that you're guaranteeing? Yes. I'm glad you agree that. The last couple of times I crossed swords with the nationalists that were busy asserting the Scotland Act wasn't going to come into force, so it hadn't been agreed yet. What these more powers are that you're guaranteeing? The taxation powers that come in the 2012 act, but all three non-nationalist parties, if you like, are promising that they will have additional powers. Not all the same is something that no doubt they might want to agree between them. It is the case that the additional taxation powers coming to the Scottish Parliament, the power of stamp duty and relation to borrowing all came under the 2000 act. I say that these are guaranteed, but there's more beyond that. You've talked a lot this morning about, indeed, over the last year or two, the need for certainty. Don't you think that the people of Scotland need some certainty from the no campaign and specifically in terms of what those extra powers are that you're guaranteeing if there is a no vote? The Labour Party and the Liberal Party have announced their plans. The Tories, I understand, are going to do so shortly, so before the referendum campaign you will see what the three of them are offering. Now it may well be, as presaged the Scotland Act of 1998, that they will come together and possibly who knows for once there will be a fourth party there because the fourth party was not there on the other two occasions, either for Kalman or in the Scottish Constitutional Convention. But it is the case that more powers are guaranteed, not just the ones that are coming through, but also in relation to what the three non-nationalist parties are saying. Well, in relation to the Labour Party offering then, because I'm assuming that you're at least able to speak for that, the Ffonsgottons analysis suggests that they offer a further 4% in terms of tax-raising powers and ability. What do you think that 4% is going to do in terms of dealing with the type of inequality that Markleby, Ajay and Alison Johnstone have talked about? I'm sorry to have heard you attempt to deny that there are these problems in Scotland earlier on. What is it that better together can offer the 400% increased people using food banks? What is it better together can offer people who are experiencing fuel poverty in Scotland's islands a rate of 50%? How do you think that 4% extra powers is going to tackle in any way those problems? Since you said something that wasn't quite right, no point have I ever said that Scotland doesn't have huge social and economic problems still to be tackled. Of course it does. I mentioned health inequality, the fact that if you look at the health outcomes in a large part of Scotland, they compare very badly. Some of them are really a disgrace for a country of our status and our maturity. If you look at our life expectancy of some of our citizens, people dying 10 years before their counterparts living in other parts of Scotland, not as well as other parts of the UK, and in relation to our educational attainment, we do very well by a lot of our pupils but there's a lot of people still leaving school without the qualifications you would expect. So nobody is going to tell me that the job is done or even anything like that. The thing that we've come back to again and again and again is that I don't believe it is the constitutional arrangements that determine people's success or people's life expectancy or wellbeing, or it is about the political decisions that the Government of the day either here in Edinburgh or in London take in relation to any of the matters that you referred to. What the Scottish Labour Party's proposals are, it will give the Scottish Government more power, more responsibility over raising the money that it spends, which I think is all to the good. But at the end of the day, whatever Government is elected in 2016 or in London Westminster 2015, it is the political decisions that they make that will determine many of the things that we've been discussing today, not the constitutional arrangements. It's almost like if only you change the constitution and you'll have all the money and everything that you need to do things, it's not like that. Could you please explain to me how those 4% extra more powers, tinkering around the edges, will help to deal with the problems that we've heard described this morning? I don't know where you get your 4% from. It seems to me that what the Scottish Labour Party was putting forward, plus some of the things that Liberals are putting forward and we'll wait and see what the Conservatives have got to say, are additional powers which I think most people will welcome. But what I think people in Scotland want above all else is they want to know what is the best way of achieving the ends we all want to achieve as a competing vision between building on the strengths and opportunities you get from being part of the UK and making our decisions here in Scotland, or whether you achieve these things by breaking away. Now you know which side I'm on now, but I think that that is what it's like to be foremost in people's minds when they go to the polls in September. It's been a long session, we've covered a lot of ground, I'm very grateful to you both for coming along and answering our questions this morning, and we'll have a short suspension to allow a change. Right, if we can reconvene. I'd like to welcome our second panel. We're joined this morning by Blair Jenkins, who is the chief executive of Yes Scotland, and Dennis Canavan, who is the chair of the Yes Scotland advisory board. Welcome to you both. We've got about, well, maybe about 90 minutes for this session, but I remind members that they would to keep their questions short and to the point, and if we could have answers that are equally concise that would be very helpful, because there's a broad range of issues we want to try and cover in the time that's available to us. I wonder if I could start by asking a very similar question to the first question that I put to the first panel earlier this morning. What, in your view, are the advantages to the Scottish economy from a yes vote in the referendum? You can maybe try to answer that in two to three minutes that would be helpful. Thank you, convener. I'm a convert to the cause of independence, and my conversion is not based on any emotional experiences, mainly on my parliamentary experience. I spent 26 years as a member of Parliament at Westminster, followed by eight years here in the Scottish Parliament. I've been retired now for seven years, and that's given me time to think, and I have come to the conclusion that Westminster is increasingly out of touch with the people of Scotland on economic as well as political matters. Whereas the Scottish Parliament, although it's not perfect, responds far more readily and far more positively to the values, the needs, the wishes, the aspirations and the economic priorities of the people of Scotland. Let me just take a few examples. Radical land reform, absence of tuition fees for university students, care of the elderly, no prescription charges for NHS patients, but of course the powers of the Scottish Parliament are very limited. Most of the big political decisions and the big economic decisions are still taken at Westminster, and I believe that with independence the Scottish Parliament could do so much more economically and politically. I say to myself and I say to you, as distinguished members of the Scottish Parliament, if the Scottish Parliament can be responsible for important services such as education and the national health service, why should it not be responsible for taking decisions on whether or not we should be involved in illegal warfare or whether we should have nuclear weapons? And similarly, on the regulation of financial institutions, if the Scottish Parliament had powers over that, we'd be able to have, to my mind, a better regime stopping bankers filling their pockets with big fat bonuses while bringing the country to the brink of economic disaster. And if we had powers over tax and national insurance, then we'd be able to introduce a fairer, more progressive system of taxation and, well, a fairer system of benefits too, including the abolition of the iniquitous bedroom tax, which would never have seen the light of day if we'd had complete independence in our parliament. So, in conclusion, I see independence not as an end in itself. I see it as a means towards building a better Scotland, a more prosperous Scotland, a fairer Scotland and a Scotland that will place full part in the international community to help to build a better world. Do you think that you want to add anything at this point? I had a very brief thought, if I may convene it to what Dennis has just said. I mean, I'm not a politician, but I know quite a few. It seems to me that in whichever party all the politicians I know come into politics to make a difference. I think that if you imagine 2016 and the first elections to an independent Scottish Parliament, I mean how exciting for every party in this Parliament, for every politician in this Parliament, that for the first time you'll be able to devise, to propose and then perhaps to implement a fully co-ordinated and integrated set of proposals to develop the Scottish economy, to do the kind of things that Dennis has just been talking about, to achieve fairer distribution of wealth, to grow our economy, to make the kind of changes that we all know we'd like to see in Scotland. So I believe that there are lots of reasons why Scotland would benefit economically from independence. We know that the Westminster system is not working for Scotland. We know we need to address huge issues around inequality of wealth and opportunity. I firmly believe, and I know we'll get into the detail of this, that the compelling arguments for Scottish independence are nowhere more compelling than they are in the areas to do with the economy. Thank you very much. I will have a couple of issues that I want to follow up on and then I'll bring in some others. Maybe I could start off Dennis Cannon with yourself. You talk very passionately there about the need to have full independence, to extend the powers of Holyrood and to control the levers of power. One issue that we spent quite a lot of time looking at in this committee is the question of currency. It's always seemed to me that if you want to have an independent country to have proper control over the levers of power, power to set your interest rates, what do you want to have as your own currency, not somebody else's? Would you agree with that? As you may remember, convener, at an earlier stage in this whole debate, before the Scottish Government issued its white paper, I expressed a personal view, expressing support for the principle of an independent Scottish currency. However, I don't think that my own personal views are of paramount importance in this great debate. Since I made that statement in public and I did not retract it, the Scottish Government has published its white paper and made it clear that its preference would be for a sterling currency union. Therefore, bearing in mind that the Scottish Government received a mandate from the people of Scotland to have that referendum and to negotiate on the terms in the aftermath of a yes result in that referendum, as a good democrat, I accept that the Scottish Government has the democratic right to proceed and to try to get negotiations going regarding sterling currency union. Do you believe—as I do—that if we were to be an independent country, we should have our own currency, because that gives us the maximum economic freedom? Why then do you think that the Scottish Government in its white paper is not proposing that, if that is the optimum outcome? Is it just because they are not trying to scare the horses in advance of the vote in September? No, I think that if you look at the independent commission, which the Scottish Government set up, including some distinguished Nobel laureates who know far more than I do about economics, I think that there are pros and cons in each of these options. I think that the commission said in so many words that any of the four options that they put forward would be workable in an independent Scotland. The Scottish Government has, in its white paper, outlined the reasons why it prefers to have a sterling currency union. It intends to pursue that, despite the opposition that has been expressed by the UK Government. In my view, in my humble opinion, I think that the UK Government will be cutting off its nose despite its face by not negotiating on that matter, because there will be certain disadvantages to the rest of the UK economy. Not just the transaction costs, but more importantly, the growing trade deficit, which will arise as a result of the loss of oil and gas revenues. I think that, convener, courtesy of the Guardian newspaper, we now have a much clearer idea of what the UK Government's real position is on currency union, as opposed to what politicians say in public. The point that you made in your opening remarks, your opening question, which I'd just like to pick up, was that you suggested that it was an absolute prerequisite of being an independent country that you set your own interest rates. There's an awful lot of countries in Europe that would have to go and say, by the way you realise you're not independent, we'd have to go into Austria and France and Germany and say, because the European Central Bank determines your interest rates across the eurozone, you're not really independent. I'm not quite sure that fully stacks up. One of the interesting things about this debate is that there are lots now of economists, and there's a long list of names, some of whom I think probably have given evidence to you, of economists who have no skin in this game, who either have no view on Scottish independence or who are against the notion of Scottish independence, who have nevertheless said that the best option for both Scotland and the rest of the UK, if Scotland votes, as I believe we will in September, to be an independent country, it is in the best interests of both countries to have a formal currency union. I think I know, certainly Professor Anton Muscatelli said that in evidence of this committee. Recently, of course, the very distinguished Beijing-based economist, Professor Lizzo Young, has also said that if Scotland votes for independence, and although he didn't say so in terms, he seemed to indicate that he wasn't personally in favour of that option, but nevertheless it was in the best interests very clearly of both the rest of the UK and Scotland to have a currency union in the event of Scottish independence. He described the publicly declared position of George Osborne as on rejecting currency union as a subterfuge to frighten Scottish voters, and I think he was pretty close to the mark there. I shouldn't remember when Anton Muscatelli came to this committee to give that evidence. He was outnumbered four to one on a panel of esteemed economists who took a different view. If we're banding around esteemed economists, the Nobel laureate to Paul Krugman has described the white paper's monetary proposals as deeply muddleheaded. Can I just ask one more question, because it follows up on something that Dennis Canavan said about the white paper? What is Yes Scotland's position on the Scottish Government's white paper? Do you endorse it? We endorse it insofar as that will be the starting point of negotiations, but of course the overriding principle with regard to Yes Scotland is that we believe in the democratic right of the people of Scotland to determine their own destiny. That is what sovereignty in independent Scotland means. Yes Scotland is not a political party. We do not set out a manifesto or anything like that, but we accept that the Scottish Government got the democratic mandate from the people of Scotland to have this referendum and therefore have a right and a duty, the Scottish Government, that is, to set out their proposals in that white paper for what they presumably hope to do. That hope will be not just the Scottish Government in the interim stage of the negotiations, but when the election comes to the first independent Scottish Parliament in 2016, ideas say that the present Scottish Government will be hoping that they will continue to be in government. That remains to be seen. It will be up to each of the parties contesting the 2016 first elections to an independent Scottish Parliament. It will be up to each of these parties to set out their stall and to seek the approval of the people of Scotland. Just in addition to that, there are two types of content in Scotland's future. Dennis is absolutely right that the stuff that is to do with the initial framework of an independent Scotland, the arrangements that we put in place for an independent Scotland, we agree would be the starting point for an independent country. Obviously, the white paper also contains a great deal of content that is related to policies that an SNP Government would pursue in an independent Scotland, and those are a matter quite rightly for the SNP. Where are you involved in discussions about the content of the white paper before it was published? Not formally, no. We have conversations rather than formal discussions. With whom? With civil servants? I chair the advisory board of the Yes Scotland campaign, and included on that advisory board are representatives of various parties and people like myself who are not members of any party at all, but Nicola Sturgeon, the Deputy First Minister, is a member of her advisory board. She attends most of her meetings, and we have sometimes very frank conversations. Are there no discussions with civil servants prior to the publication of the white paper? No, that is also true. No discussions with civil servants and no prior sight of the white paper. The final question is, did neither of you saw the white paper before it was published? No. Thank you. Good morning again, gentlemen. Earlier this morning, we had the battle together in this morning. I think that it was an advert for a Labour Party political broadcast, more than anything else, to be perfectly honest. At that time, the Prime Minister, David Cameron, has said that, of course, Scotland can be a successful independent country. Is there no disputing that? There is no disputing it at all. I believe that the leader of the Scottish Conservatives has said something similar. Indeed, there seems to be almost a welcome but rather belated recognition on the part of many of our opponents now that an independent Scotland would be very viable. In fact, some of the opponents are actually supportive of yes. Labour for yes, for instance, and we have Liberal Democrats for yes. I've even met a few Conservatives for yes. I'll give their names to Mordor later so he can pay them a visit. It's really across all parties in none, isn't it? And yourself, Blair Jenkins, you're not a member of a political party, but you believe in the route and the pathway that we're taking towards the referendum for independent Scotland. I absolutely do. I've no view on party matters, but I certainly do believe that the right future for Scotland is as an independent country. One of the enormously enjoyable things about the yes campaign, and it's a privilege to be in this job, is how many people are involved now very actively who have no connection previously with any form of political activity or any political party. I think what we've formed is a very exciting grassroots national movement, which encompasses all political views and people who simply think that this is the right thing to do. The benefits to Scotland from this campaign, apart from the yes vote in September, will be a re-energised and a re-engaged population and a much, much more active and much more interested electorate right around Scotland. There's a lot of people interested in stuff in the last year or two who are not just going to go back to being passive citizens or going to be very active citizens, including a lot of our young people, and I think we'll all get the benefit of that. Perhaps I can come to Dennis Canavan on this. More from your experience as a Westminster parliamentarian and indeed as an MSP here in Holyrood, we've just witnessed a record investment in Scotland at the moment from a variety of companies. We're also seeing extremely healthy exports. We're seeing a higher employment and lower employment than the rest of the UK. We're seeing an absolutely fantastic and successful apprenticeship programme. Do you put that down to the policies of the Scottish Government? Partly, yes, but I believe that if the Scottish Government, accountable to the Scottish Parliament, had all the economic and fiscal levers available to it, then it would be able to do so much more to regenerate the Scottish economy, to grow the Scottish economy and to create more jobs. The point is that companies, external companies that have maybe no political axe to grind, are continuing to invest in Scotland, regardless of a referendum. They have the confidence that, regardless of outcomes, their success is in the horizon. Yes, I think that that is a fair comment, particularly with regard to inward investment. I think that there is a good story to be told and many potential investors do not seem to be put off by the prospect of a referendum. I also recall a previous referendum in 1997 and a previous one to that, a way back in 1979, when there were all sorts of scare stories about potential investors being put off in the event of a devolved Scottish Parliament. The Scottish Parliament has now been up and running successfully for 15 years and I think that most of those scare stories seem to be unfounded. I too remember the referendums that you referred to and also remember that there were promises then of additional powers to Scotland. They were not forthcoming at the time, were they not? There was a famous case of a former Conservative Prime Minister who indicated that, in the event of the devolved Labour Government's proposed devolved Parliament or Assembly, as it was called, not coming into existence, a future Conservative Government would, in fact, bring forward better proposals for an Assembly or devolved Parliament. We all know what happened then. As a result, the creation of that Scottish Parliament was postponed for 20 years. I think that there was a missed opportunity for the people of Scotland. Perhaps, finally. Can I just one point, everybody, convener? It is the best, the most independent and objective interpretation that I have seen on this point about investment coming into Scotland. In the current context, it was from the Ernst and Young UK attractiveness survey last year where they said that the possibility of independence and its potential knock-on impacts on areas such as corporate taxation appear to be having little effect on foreign direct investment decisions. There is certainly no sign of investors being deterred from coming to Scotland if anything the reverse appears to be true. Finally, why do you think, then, that better together seemed to be wishing to promote the fact that it would be a threat to Scotland's investment if the referendum A were to happen and when it was happening, and if we became independent, that we would see companies upsticks and go? I think that that is a question that we better put into the better together representatives. I am not sure that they would have answered that. I think that if you look at the political situation, most of the leading lights in better together have got a vested interest, a vested political interest in keeping the state of school and keeping the power at Westminster. A general observation on the question that you asked, which is to say that, as a generalisation, because there is so little that you can find fault with and so little that is negative about the current and historic data relating to the Scottish economy, I think that in order to deter people from voting yes, you have to project all sorts of fanciful and fearful notions into the future, given that the published data is pretty hard to refute. Margaret McDonald. Thank you and good morning, gentlemen. To Dennis Canavan, you mentioned in your introductory speech that fairer taxation and welfare services would be one of the benefits if we had an independent Scotland. How would that be funded and how much of that would come from the taxpayers in Scotland? Well, we would have full fiscal autonomy, obviously, and the total tax take would come from the people living in Scotland or companies based in Scotland. That is how public services would be funded in an independent Scotland. So, it is without doubt that there would be increases in taxation for everyone? It is not without doubt that it would depend on which party actually won the 2016 general election in an independent Scotland and, indeed, the subsequent elections in an independent Scotland. As I said previously, it would be up to each party, including the Scottish Labour Party, to put out its proposals. I think I indicated previously that my preferred option would be to see a much fairer, more progressive system of taxation. Speaking personally, that means for me that the rich would pay a bit more, the not so rich would pay less and the very poor would not be paying anything at all. We have heard from the panel this morning and from previous witnesses that there are much fewer, higher rate taxpayers in Scotland than there is in the rest of the UK. The tax base itself is at about 2.4 billion people who are paying tax, 2.4 million. So, there is a much smaller base to start from, so surely if we are going to try and better the welfare system, there has got to be increases in tax if we are to balance the books. I listened to some of what Alistair Darling said previously and I think that he indicated that the size is not of paramount importance. Even a relatively small country can bring about a degree of redistribution of wealth, but of course we have also got to look at the creation as well as redistribution of wealth. I have every confidence that in an independent Scotland we would have a government or government elected that would get a balance between the need to create wealth, while at the same time ensuring that that wealth that is created is more equitably distributed amongst the people of Scotland. How long do you think you would realistically take to set up a new tax system and all the relevant institutes around that? I think that the present Scottish Government has indicated that there would be a transitional stage where they would be using basically HMRC or at least in part, but I would say that shortly after the first elections to the Scottish Parliament in 2016 we could get things moving fairly quickly. I wouldn't like to put an exact figure on it, but these are challenges which I'm sure they were quite capable of responding to. Even the Kalman proposals, if and when they become a reality, they would require certain changes in the Scottish taxation system, so I don't see that these problems are insurmountable. Well, I suppose we can call them challenges if you like, but it is a huge undertaking to set up a new tax system and welfare system. Well, it's a big challenge, but it's certainly not an insurmountable challenge. I mean, if you look at the poverty that occurred in the Republic of Ireland or the Irish Free State when it had to start all of these things off from scratch and they managed it and if a weak country like that can do it with a poverty that existed in Ireland in the 1920s, heaven's above, surely in Scotland with their expertise and relative wealth, we could rise to the occasion. It's likely to be that period, you're saying you could maybe do it within under two years, but in actual fact it could take a lot longer than that for that system to actually benefit the people of Scotland. I don't see it lasting a long time, but in the transition stage I would expect that HMRC would be accommodating and we could share some of their expertise and facilities, but that would all be points for negotiation. The basic principle for which Scotland stands is that Scotland as a sovereign country should be independent and that means having our own tax system. We've heard from ICAS that it would cost at least £750 million to set up the system. Who would bear the cost of all that? Obviously the Scottish Exchequer would bear the cost of that, but if in the interim we were sharing resources with HMRC then there would be obviously a sharing of the burden. Whatever the challenges, and of course they're always challenges, but whatever the challenges in developing a distinctive Scottish tax system, it has to be seen as one of the great opportunities of independence would be to escape from what was very widely regarded as the over complicated and unwieldy and inefficient UK tax system with its very high instances of evasion and avoidance. The tax system in the UK has not proved an adequate or successful regime for this country and I think that it should be regarded as one of the great opportunities to do something rather better and to transform that position. On your broader point about taxation, I think that politicians in this Parliament, at any party coming to the electorate in 2016 seeking to raise taxes, would face the problem that there has been a general loss of public trust in politicians and confidence in politicians, which I have to say is not particularly to do with the politicians in this Parliament and is much more to do with the politicians in the Westminster Parliament. However, one of the jobs of this Parliament, once it becomes independent, as it will in a couple of years, will be to rebuild that sense of trust and confidence with the electorate to a point where if a party does have a sensible and balanced set of proposals which might include an adjustment to the taxation rate that people are willing to place their trust and confidence in you. If you are to pay for good services, there has to be a balance there, so you cannot just say that idealistically we would like to start from scratch and have a much better tax system, but you have to be realistic and say that there is a cost to that. No matter which political party would be in, you have to balance the books, so if you want to have a better welfare system, you have to pay for it. We know from all sorts of people and fairly recently from the Bible of the city of London itself, the Financial Times, that an independent Scotland would begin life with a stronger set of public finances than the rest of the UK. We also have the benefit now of 30 or more years of official data to demonstrate that relatively the Scottish economy, Scottish public finances have been in a better and healthier state than those of the UK as a whole. Again, we ought not to be afraid of any challenges in this. This is the stuff that independent countries do—the opportunities far outweigh the challenges. Alison Johnstone I think that I will probably address this question to Dennis. You said at the beginning this morning that Westminster is increasingly out of touch with the wishes of the Scottish people. Do you think that this is in part because the Scottish people did not vote for the Westminster Government and the Westminster Government is all too aware that it does not actually need the votes of the Scottish people to stay in power? I mean, better together, they were absolutely determined this morning that constitutional change isn't the answer to the challenges that Scotland faces, that constitutional change isn't required to enable us to maximise the opportunities that Scotland has. Do you think that's a credible view? Well, there's a massive democratic deficit in Scotland, and I suppose the most obvious illustration of that at present is that we have a Tory-led coalition government at Westminster, and yet that lead party in the coalition has a magnificent total of one out of 59 Westminster parliamentary constituencies, one out of 59. And yet, under the existing constitution, the Westminster Government can impose policies on the people of Scotland, policies which we did not vote for and policies which we do not want. And it is that kind of alienation of people from government, which has led to a situation whereby I think Westminster is completely out of touch with the people of Scotland. Whereas, as I said previously, the Scottish Parliament, although it's not perfect, like every Parliament, is made up of human beings, and human beings sometimes make mistakes. But I think that in its 15 years of existence the Scottish Parliament has shown that the response far more readily to the democratic will of the people of Scotland. I think that I've yet to understand what steps those who maintain that we're better together are going to take to address growing inequality and poverty in Scotland. I mean, certainly the evidence suggests that there's a complete failure to do so. There's no vision from better together as to how they intend to bring about the change that's so clearly necessary. What opportunities would a yes vote provide? Well, I could comment just briefly on the better together statements. They claim that because there's a bigger pool that gives more opportunity for the sharing of resources, these are the terms that they use, better together pooling and sharing of resources. But it hasn't worked. I mean, it just hasn't worked because we have now in the UK the fourth most unequal society in the developed world. Whereas in Scotland, with the advantages of an independent Scottish Parliament, we'd have all the economic levers at our disposal to bring about a fairer distribution of wealth. And I do think that there is a will within the people of Scotland to accept a fairer, more sharing society rather than what we have at present where the gap between the rich and poor is getting wider instead of narrower. I think it's worth saying. I mean, you're absolutely right about the levels of inequality. It's worth saying that this is not just a feature of life under the current UK government or of just the recent years of the UK. I mean, the OECD has made the point that the levels of income inequality in the UK have risen faster than in any other developed country since 1975. So, this is not a recent phenomenon in the UK. This is the levels of inequality, the rise of inequality and the loss of opportunity for so many of our people. It's something that goes back years and years and it's not a phenomenon of the last few years. In terms of what Scotland could do to address some of these things, I mean, there is a need, I think, to do two things. Clearly to grow the economy and then within that growth to achieve a fairer distribution of wealth and opportunity. And I believe that this Parliament, when it has all of the economic levers at its disposal, will do more to bring in more investment. It's investment that drives growth. And I think there are all sorts of opportunities through devising the right package of incentives to secure more investment, not just by foreign ventures, foreign enterprises, but also our own indigenous companies. And it's for politicians in this Parliament to devise imaginative, creative sets of policies and packages that will do that kind of thing. But you currently, as you know, have very little power in the area of redistribution because you have no control over the tax system, you have no control over the welfare system. It's only by having those levers, and by being able to, as I say, offer the right kind of measures to attract investment, that you can really begin to get to grips with some of the long-term endemic problems that we have in the Scottish economy. OK, so Mark Weir, do you have a follow-up? Just as a follow-up to the issue of inequality, you highlighted in your submission the issue of the geographic dimension of inequality within the UK. And that the UK hasn't converged in a way that other quasi-federal states of the same size have. What difference do you think a yes vote would make to that? And how would you go about tackling that? You're right. It's an absolutely valid point that the regional imbalances in the UK are huge. And one of the things that I would hope that any elected independent Scottish Government would do in 2016 and from 2016 onwards would be to try and rebalance our economy and to revitalise manufacturing in Scotland. I think there are great opportunities there to grow the Scottish economy and to make sure that we grow the sector. It's not just the ones that are of long standing. We know where we've got great resources and great success, the oil industry and other areas. They're also to develop the opportunities and some of the sunrise industries like renewables. I think that part of the problem within the UK is over-centralisation of decision-making, over-centralisation of political decision-making and over-centralisation of economic decision-making. Whereas, I think, as we had an independent Scotland, that would act as a counterbalance to the pool of London, as it were, because there is an imbalance in economies. The economic spread, as it were, of the UK, whereby London and the south-east seem to get huge economic benefits compared with people not just in Scotland but in the regions of England. Richard Baker has got a supplementary question. It seems to me that the situation is more complicated than you describe in terms of levels of inequality. Don't OECD figures show that, since the bin 1980s, some of those countries, which those supporting independence often refer to the Nordic countries, in Sweden and Finland, they've had a far higher rising levels of inequality in the UK. Within the context of being a much more equal society from a starting point, so the spread of wealth is still much more even in those countries in the UK. We're still behind it, but they've been rising at far levels, at far greater levels, in terms of rise of inequality than has been the case in this country. Yes, but again, relatively speaking, in the context where those are much more fair and equal societies, I think that the Nordic countries demonstrate very well the fact that you can have strong economic growth and also beneficial societal outcomes. I'll follow up on that before I bring in Chick Brody. Where are the redistributive measures in the Scottish Government's white paper? For redistribution. If you're talking about policy offers from SNP, I'm not sure I'm the best person to answer on behalf of the Scottish National Party. I would have thought the commitment to the living wage, the commitment to keeping the minimum wage increasing and also to the living wages is quite an important part of that. But the policy aspects of the white paper are not really for me to comment on. No, I understand that. Both yourself and Mr Cameron have talked a lot about independence as a route to a more equal society and redistributing income. I'm interested in this because there's not a lot in the white paper that suggests, for example, increased taxation on higher earners. The major tax proposal in the white paper is a reduction in the incorporation tax, which you might suggest, as the earlier panel did, goes in the other direction. I'm not sure what's in there that suggests a more redistributive programme after independence. To be fair, that's a question that should be put to the Scottish Government members. We'll see them in a couple of weeks so we can answer that question. The point I would emphasise is this, that with the powers proposed in the white paper, quite distinct from the policy preferences expressed by the SNP Government, that certainly gives huge potential for an independent Scottish Government of whatever complexion to bring about a radical redistribution of wealth, whereas at present the Scottish Parliament's economic powers are very, very limited. Mr Cameron, where is the evidence that people in Scotland have any more interest in voting for higher taxes than anyone else in the UK? We've had the power to vary taxes in the Scottish Parliament since 1999, only one party has ever proposed increasing taxes, and that wasn't a great success in 1999. That's an interesting question, because if you look at the voting patterns of the people of Scotland over the past half century or more, then most of the parliamentary representatives who have been elected by the people of Scotland have been, let's say, within the UK political spectrum, they have been left of centre, and a left of centre Government or potential Government of Scotland would be more inclined to use the economic levers to bring about greater standards of fairness. Nobody stood for the Scottish Parliament election proposing to increase taxation. The only people who did that with the SNP in 1999, which was accepted to be a complete failure. So, where is the evidence that people want higher taxes? The powers at present vested in the Scottish Parliament are very limited in terms of bringing about the kind of radical redistribution of wealth that I would like to see. You would need the full range of economic levers to bring about that fear of society. I think that it goes slightly back to what I said earlier, which is that if you're going to talk about increasing taxation levels, then you have to do what the Nordic countries have succeeded in doing, which is have a very high level of trust between the electorate and the politicians who serve them. Where people have a high degree of trust, I think that they were willing to believe that what they pay in taxation is going to be wisely invested and will provide them with better public services. The tax differentials between the UK and the Nordic countries are not as high as they are sometimes represented, but such differences as there are and there are differences, I think, are based on a different kind of relationship of trust and confidence between the people and the politicians. Perhaps I can help the convener to walk through Scottish Futures, because this dwelling of the old traditional parties in London on higher taxes doesn't, of course, look at the consideration and the elements in the paper, which looks at how we develop higher incomes and more revenue and growth in the economy. A high productivity, a high wage economy, the thread runs quite clearly through the Scottish Futures paper. Just on high wages, I wonder if I may ask Dennis particularly. In a conversation that I had with Alasdairling this morning about his sharing of Christmas cake with Fred Goodwin, why didn't he react sooner? That's Italian Christmas cake, because I don't want to go through Scottish Futures now, but I also want to go through Mary Berry's cookbook. On 2 May 2012, Mervyn King, the Bank of England Governor, said that action during Alasdairling's 10 years chancellor had been too late and that bold action in October 2008 could have happened sooner. I wonder if having been involved in politics in Westminster, and I worked in the city for a while, can you give me an illustration of what you think the relationship is between the Westminster Government and the City of London? Alasdairling hinted in his earlier remarks that, in retrospect, he and other Government ministers adopted too light a touch on financial regulation. As a result, the City of London was able to do what they did. As a result, the country was on the brink of economic disaster. It's over well being wise after the event, but I would hope that, as I indicated earlier, that an independent Scottish Government would learn lessons from the past and we would have a better system of financial regulation of banks and other financial institutions. For example, stopping the culture of bonuses, stopping or at least having a better system of monitoring potential takeovers. I think that that kind of thing, as well as just stop encouraging the whole culture of debt, which seemed to have been going on. I wonder if Alasdairling wrote that he was responsible for the architecture of the UK financial regulation. We just had the Government of the Bank of England caution the Government about what some of us might call a housing bubble and the impact that that might have. I wonder if you have any comment that we don't want to destroy the future by just looking at the present, but the present looks pretty precarious when we seem to be in another impending financial crisis. The problem isn't the case with fundamental regulation and proper regulation and meaningful application of regulation that the banking regime under an independent Scotland would be a lot stricter. It probably would be. It's always difficult to see with absolute certainty what would happen in a particular situation, but I think that there is a feeling within Scotland that the people down at Westminster mishandled the economy and lessons have been learned. I think that there is a consensus within Scotland that there should be a better regulation of banks and financial institutions. I agree with that. I mean, there's no doubt that the failings of politicians were partly responsible for the financial crisis of some years ago. Primary responsibility lies with the behaviour of the banks and with the weak governance that was in place at the banks, but it ripples through the entire system so that the credit ratings agencies had a part in it. The regulator certainly had a part in it and politicians had a part in it. I think that it's good that the people who were in charge politically at the time should acknowledge some of the blame. It seemed for some years that the people who were in charge wished to take credit for having launched some of the lifeboats, but weren't quite so willing to take responsibility for the fact that they weren't just on the bridge, they were at the wheel at the point when we did hit the rocks. I think that it's encouraging, if there's a recognition that there were political failures, not just in the UK but in other countries as well. Thank you. One last question. Again, I'm referring to Mr Darling who was here earlier. When he was chancellor in 2008, when he's now head of the Better Together campaign, he cut corporation tax further beyond what Gordon Brown had done when he was chancellor, from 30 per cent to 28 per cent, stating, Our goal is and will continue to be to maintain the most competitive corporation tax of any major economy. We have the lowest corporation tax rate in the G7. A competitive and simplified tax regime is essential. If we want to achieve a high wage, high productivity economy, that might be one vehicle. Do you think he's changed his mind or do you think he's right then or wrong now? On corporation tax, when you implement a cut in corporation tax and you're right that the Labour Government did that, I know it's a policy proposal that's in the white paper on behalf of the Scottish National Party. You don't just look at corporation tax in isolation, so you obviously hope that a reduction in corporation tax will encourage investment, will encourage the growth of the assets of your economy. As you say, you also have other benefits. You feel the benefits in other parts of the economy. You'd hoped that your revenue from income tax would increase on the back of the investment that the lower corporation tax brought about. You'd benefit an indirect taxation expenditure as well. The receipts that any treasury would get from a cut in corporation tax should not just be looked in isolation at that tax on its own but at the benefits throughout the economy. It will be up to political parties in the first election in the independent Scottish Parliament in 2016 to set out the fully integrated set of proposals that they wish to make in the area of taxation to see to what extent they achieve those twin goals of economic growth but also a fair redistribution of wealth and opportunity. I must say that I'm not an enthusiastic cutter of corporation tax for the sake of handing back more money to big corporations. I would have to be convinced that there are economic benefits for many cut in corporation tax, particularly more job opportunities for people. But I think it was Gordon Brown actually, not Alistair Darling, who first introduced the Labour Government. Gordon Brown, I'll go first and then Dalton goes on. Anyway, Gordon Brown did in fact reduce corporation tax and I'm therefore a bit surprised by the utter hostility which I now hear coming from some Labour people saying that any cut in corporation tax is a very evil thing in itself. As I say, I would have to be convinced if there are other economic benefits particularly with regard to employment opportunities. You may have heard me asking Mr Darling this morning about what was in the table in terms of more powers for Scotland in the event of a novel and I wonder if he agreed with me that this seems to be a kind of bribe of jam tomorrow from UK politicians if they like to do what they tell them. It seems to be pretty watery, thin kind of jam to me but irrespective of what exactly the percentage in terms of more tax powers and so on may be, do you feel what's being offered from the Lib Dems and the Labour Party, what I haven't heard from the Tories yet, but do you feel that will make any real difference to Scotland in terms of being able to deal with some of the big problems and challenges we've heard about? Or indeed take advantage of any of the opportunities that we would have with independence? Of course there's no way in which any of the Westminster-based parties can guarantee more powers. It seems to differ. If you look at the three major Westminster parties, the Tory party has still to come out with, I think it's Lord Struth Clyde who's currently looking at the matter and he will no doubt be coming out with some statement fairly soon but we'll have to see that before we pass judgment on it. The Lib Dems have come out with something, the Labour Party, the Scottish Labour Party has come out with their proposals, but there is no consensus amongst these three Westminster parties as to what the exact proposals they would have regarding additional powers for the Scottish Parliament. I'm a bit suspicious because at the time when the referendum was first mooted there was a suggestion and I think that the present Scottish Government was fairly receptive to the suggestion of having an additional question about Devil Max, I think they called it, although it was never clearly defined what Devil Max means. But the Unionist parties anyway ruled out any additional question on Devil Max in the referendum and as a result we have an element of uncertainty about what their proposals are and also can they deliver? I mean I think if people are seriously wanting more powers for the Scottish Parliament the only guarantee of getting more powers will be vote yes in this year's referendum because I haven't noticed what will happen in any subsequent general election at Westminster and of course there is this basic point that I think it was Enoch Powell who said that a power devolved is power retained and ultimately sovereignty under the existing constitution sovereignty is based at Westminster. The Westminster Parliament could, if it wanted, abolish this Scottish Parliament completely. This Scottish Parliament at present is a creature of the Westminster Parliament and that to my mind underlines the basic democratic deficit that exists in Scotland at present. Very briefly, on the remit of this committee, which is the economy, it would just seem to me that there is no set of proposals from any of the anti-independence parties that would give this Parliament control over all the potential tax sources and tax revenues that an independent nation would have, not indeed control over the crucial area of welfare and social protection. I think in the absence of those things you are talking of something that is very far short of what Scotland needs. Would you agree with me that a very exciting opportunity for Scotland is that with full economic powers to shape economic and industrial policy and build the kind of high wage economy that we have talked about, that that is the real prize, the real opportunity in economic terms and that that in itself would result in a higher tax take without raising levels of taxation. Even if we continued with similar levels, building that high wage fairer economy wouldn't itself give rise to higher tax. I agree that it's not simply the case that you're dependent on increasing the tax rates in order to get a bigger amount of revenue in through the tax take, that if you have more economic growth, more people in employment then obviously even with existing tax rates you would have a larger amount of tax revenue and therefore be able to afford a higher rate of public expenditure. The previous debate about the so-called Scandinavian model or what happens in certain Scandinavian countries is that you must have punitive levels of taxation. It doesn't necessarily follow. If you have sufficient economic growth then you'll be able to get more income tax and more corporation tax too and other company taxation income in order to pay for public services. Do you feel there's an opportunity in terms of the white paper commitment to increasing childcare to a proper level both in terms of reducing the gender inequality but also in terms of an economic opportunity to create jobs by increasing participation in the workforce? Of course, childcare and preschool education are very important principles I would argue for educational opportunity for children but also for the economic benefits for women who want to get into the workplace or return to the workplace before their children start school. I said earlier that yes Scotland didn't necessarily take a view on the policy aspects of Scotland's future. I have to say of all the many people I talked to within the broad yes movement and the different political traditions they represent, I think I've found universal welcome for the proposals on childcare, for the proposals on availability of free and universal childcare. For the very reasons that Dennis mentioned we have a key strategic need to grow the tax base to grow the working population to increase participation in the labour force and this looks like one of the best ways of doing that and I think it has very broad support. A final question convener, just a short one. Do you agree that in the kind of zero sum game that the Scottish Government has to work with at the moment on a fixed budget that's impossible to make these kind of step changes policies, game changing policies because increasing expenditure significantly for instance in childcare implies taking it away from somewhere else that might be very difficult to do under current circumstances? Yes indeed, I mean I remember speaking about this in the Scottish Parliament when it was first set up and indeed during previous debates in the Scottish Constitutional Convention which led to the creation of the Scottish Parliament, I thought at the time that one of the biggest weaknesses in the proposed Scottish Parliament at that time was that it was going to be completely dependent upon another Parliament i.e. the Westminster Parliament for every penny of the year. The fact of the matter is that the budget of the Scottish Parliament is almost entirely from the block grant and so if John Swinney or any other finance minister wanted to spend more money, say on education, he'd have to look around somewhere in order to put the budget down. He'd have to cut something else because it's a fixed sum of money that he has to deal with and this leads to very difficult choices if you're going to increase investment in education. Are you for example going to cut investment in the national health service? I mean that's a very unhappy choice facing any finance minister whereas if you've got all the fiscal levers at your disposal then you can broaden your choices. Thank you very much. Richard Baker. It seems to me that with the white paper and indeed others who are going for an independent Scotland, they're looking to play a zero sum game as well saying that there'll be more generous provision on welfare, more generous provision on pensions, more generous provision in a whole range of areas and yet not saying how these things will be paid for. We've come back to the point about taxation levels, there's no detail about where taxation at levels will be, will be up, will be down or whatever. Do you not think it would be more honest if those supporting independence said how all these different areas will be paid for and indeed if they don't do that then that case is lack of credibility? I think you're confusing 2014 with 2016. It's for parties and their manifestos in 2016 to say exactly what they propose in terms of the public services that they would like to see in place and how exactly they propose to fund these. The general proposition, which is the one that is broadly supported across the independence movement, is that an independent Scotland is likely to place a higher value on having good and widely available public services than we think has been the general approach taken by the UK in recent years. The preferred method for funding that is what we've been discussing in the last several minutes, which is that you grow the Scottish economy. I think that the Scottish economy, left to its own devices, would have a far better idea of what will work here economically and create a far more balanced economy and use all sorts of incentives and levers. Both attract that investment that we talked about from abroad, which we do well in, but we could do better. Is there things like improving our business start-up rate? I think that we would all agree that we need to have more innovation, more entrepreneurial society. Personally, when I'm looking at all your manifestos in 2016, I would be looking to see what exactly you propose in terms of incentivising people to start their own businesses. There's some recent data in the American economy, which suggested that most of the new jobs being created there are coming from, not from existing businesses expanding their workforce, but from new ventures coming into existence. So let's start bringing some new ventures into existence. But the Institute of Physical Studies and others, independent experts looking at our economy, haven't said that any government or whatever political population which comes in will have, if it's Scotland was to be independent, would have great extra resources with a growing economy to spend and all these different pledges which have been made by various parties supporting independence. They said that further austerity will be required. In fact, more difficult choice is made over taxation or spending, either increased taxes or cuts spending. Why should your analysis be believed rather than those of independent economists and economic organisations like the IFS? Well, one of the things that we know about economists is that they seldom agree with one another. I think that one thing that they all do agree on is that their forecasting is seldom, if ever, accurate. Now, that's two of other professions as well. I don't just wish to put that against what economists have to say. Typically, predictive models that economists put forward deal with a certain number of variables. They look at a certain number of variables and, for the purpose of international comparison, they're looking to compare a finite set of things. What I don't think any of the forward projections for the Scottish economy take into account and any of the forward-looking work that's been done take into account is, if I can put it this way, is one of the things that I strongly believe, the far greater energy that will run through Scottish life, through Scottish society and through Scottish economy as an independent country, the determination to make this work. Now, how you measure that or predict that in terms of what it does to productivity, what it does to economic activity is hard to do, which is why it's not factored into those economic models. Just to mention three things, I think that greater determination to succeed, I think the greater raising of Scotland's international profile and I think the enormous amount of goodwill that would be towards Scotland as a new independent nation, all provide us with an enormously encouraging place from which to start. It wasn't me who said this originally, but it's something that I would endorse. It is hard to think of any country that has become independent in the last hundred years, which would be doing so. In a more benevolent, more attractive looking set of circumstances than will be the case for Scotland. Can I just add, convener, that it won't be the institute of fiscal studies that will be running the Scottish economy in an independent Scotland. It will be the Scottish Government accountable to the Scottish Parliament. I can understand Westminster MPs saying, we want to retain power at Westminster, that is our power base etc. I find it very difficult to understand people who are members of the Scottish Parliament when you say to them, do you want to grow the Scottish economy? Yes. Do you want to create more jobs? Yes. Do you want to eliminate child poverty? Yes. But then when you ask them, do you want the tools to do the job? They seem to be saying, no, we'll just leave that to the guys at Westminster. There seems to be a lack of confidence on the part of some members of the Scottish Parliament. I would hope that, collectively, there would be more confidence in the Scottish Parliament and that people who perhaps are inclined to vote no would in the fullness of time see that the people of Scotland and their elected representatives can form a good team to run the Scottish body politic and the Scottish economy. This is my final question, convener. I hope that you also respect the fact that there are those of us who simply believe that we benefit financially and physically through being part of the United Kingdom. We have more money to spend in public services by being part of the United Kingdom and that we think the relevance of having a separate country which would not be beneficial to public service and public service investment. For example, I take your point on corporation tax. Now, I rather think that you and I agreed on policies towards corporation tax, but that concern has been expressed, for example, on a race to the bottom on corporation tax. One country cuts corporation tax. Another will follow to be more attractive to business investment. Business wins out and what loses out is investment in a public sector. Do not you think that is a perfectly care and economic argument, another argument, but why we are better working together within the nations on this island? If you look at the European Union, there are still various rates of personal taxation and various rates of company taxation. That does not necessarily lead to a race to the bottom. It is up to each individual country within the European Union to take into account its own economic circumstances, its own economic priorities and to implement an economic policy that is best suited to the needs of that member state within the European Union. Most people, and certainly the view expressed in the white paper, are that Scotland wants to be a continuing member of the European Union. It is not as if we are going to be cutting ourselves off completely from our friends and neighbours in England and Wales. I would hope that there would still be a social partnership, an economic partnership, but the present political partnership is quite frankly putting Scotland in a straight jacket whereby if we want to move in a particular direction we find that our nearest big neighbour is calling a veto on what we can do. That again emphasises the democratic deficit in Scottish political and economic decision making. When the other side in this talk about the cost of setting up new institutions or transitions, it always seemed to me to give the impression of Scotland being this desolate moorland with wolves howling in the distance, as if there is nothing happening here at the moment. On independence, Danny Alexander, when he came before this committee some time ago now, I accepted the principle of Scotland inheriting a share of our assets, of the UK's assets, the share that we had contributed to. So how significant do you think that that will be for the economics of transition and how much of an opportunity is that for Scotland when, hopefully, we become a newly independent nation? Are you thinking primarily there of things like Bank of England and the currency or other things as well? You name it, I believe that it's 1.3 trillion in assets. I certainly take the view, I think, as do many others, that at the point at which Scotland comes independent there has to be an equitable distribution of assets and liabilities and that's the basis, I'm sure, on which those negotiations would be conducted. But you're right, large parts of the infrastructure of an independent nation already exist in Scotland. We have two successfully operating pensions administration centres, for example. There's a rather regrettable and I'm sure regretted list of institutions produced by either UK Government or Better Together, which would have to be set up from scratch in independent Scotland. As I recall, a very large number of the institutions on the list turned out to be things that we already had. So I don't myself believe, I would not pretend to you or to anyone else, that there will not be a lot of hard work involved in Scotland becoming an independent country. It's important that people in Scotland know there will be a lot of hard work in setting up an independent country. But what I think they also will know and believe when it comes to September is that the hard work will be worth it. Is it what we can achieve as an independent country is going to be worth the fact that we're going to have to all put our shoulders to the wheel and be determined to make it work? It is also, of course, a question of foreign-based assets, including our embassies abroad. I see our embassies because they are present British or UK embassies, but Scotland would presumably be entitled to a share of these buildings and other assets and resources. It may very well be that, in certain circumstances, we may want to continue sharing our diplomatic presence with friends south of the border or with some other European Union country. But this is very relevant to the economy of Scotland too, that very often the diplomatic presence or consular presence involves not just simply looking after people's social needs but also trying to promote the economy of a country. I am told by some Scottish business people that sometimes in the promotion of Scotland overseas there isn't enough emphasis as there should be in terms of that because again the priorities of the UK as a whole in terms of international promotion may be quite different from the priorities of the Scottish business sector. So I would hope that we could continue to get a share of assets, possibly even in certain circumstances sharing our presence in some of these embassies, but our policy in terms of international promotion of Scotland overseas would be something that would reflect more the needs and priorities of Scottish business. Just as a follow-up based on what you were referring to there, how much of an opportunity do you think there is for the internationalisation of Scottish business so that, yes, we continue to export to our major neighbouring market but we also increase our exports globally and turn our face to the world? Definitely, I am with you on that 100 per cent. I think there is a great opportunity there. We know that we are already much more of an export-based economy than the rest of the UK and I think that's something all of us would be determined to improve upon when Scotland becomes independent. I think in terms of the world overall, I think that 30 per cent of world GDP involves exports and it's a crucial part of running your economy that you don't just satisfy domestic market, you satisfy international markets. I think that the Scottish brand is a very, very good one. I think that, as I said earlier, I think that there's enormous amount of interest in Scotland and goodwill towards Scotland and if we have the right products at the right price, I think that there's every opportunity to internationalise our economy. Are you worried that the UK currently has a deficit of imports over exports of, I think, £72 billion whereas Spice have told us that Scotland would be at or near surplus in our trade balance? As I said earlier, we can go back over a number of years and we know that, while both countries have, for most years, run fiscal deficits, that the position in Scotland relatively has been better with the rest of the UK and we can see that evidence stitching back, not just five years but 30 years, that overall we're in a much stronger position. As I understand it, the projected deficit for the first year of an independent Scotland would look likely to be within the range that, for instance, the European Central Bank regards as a balanced budget, so I think that with every reason to be confident. The Westminster Unionist parties are all committed to the renewal of trident at the cost of £100 billion, I believe. What are the economic implications for Scotland in that decision, in your view, in the event of a no-hold? I think that I would be very confident in saying that that was money that people in Scotland would regard as being not well spent, as being spent on something that is not only unnecessary but is highly undesirable and against the wishes of people here. I'm sure that I'm right in saying it with Tony Blair in his memoirs, who said that the only reason that the UK would not dispose of trident and get rid of the trident system was because it had become an important status symbol for the country as opposed to having any defence rationale any longer. Among the many savings that an independent Scotland would make, I and I think that most yes supporters would say that the opportunity to stop wasting so much money on a completely unnecessary and demoral weapons system is one of the strongest arguments for independence. I have found, going around the country campaigning for a yes vote, that there is overwhelming support for the removal of trident. Opinion poll after opinion poll seems to indicate that that is the majority view of the people of Scotland. Even people who supported the retention of trident during the Cold War have now come to the conclusion that it is rather like a very expensive white elephant. It is unusable. We saw that at the time of the Iraq war, I suppose. I mean, much as everybody disapproved of the Saddam Hussein regime, then nobody would dream of using a trident nuclear weapon in such circumstances because of the massive loss of innocent civilian life which would ensure as a result of the use of such a weapon. So it is militarily unusable. There are strong moral arguments against it due to the almost certain loss of civilian life if it was ever used. But there are also economic arguments against it too because the money which is spent on a trident nuclear weapon could be used for things like education or national health service or job opportunities or whatever. So for all of these reasons I think that it would be great economic as well as social benefits from the removal of trident. On the subject of fear, the term project fear is what we understand the no campaign calls itself internally. Since the beginning of the year when Chancellor made his announcement about currency, project fear have also talked about a dam buster strategy. To the economic future please. A dam buster strategy approach to their campaigning, which some have criticised as very negative. What do you think the implications of that are on Scotland's economy and also on your own campaign? Well certainly it doesn't put a good image of Scotland across. I just hope that there are not too many potential inward investors listening to all these prophets of doom and gloom who are in the no camp. And I would hope that they will see the error of their ways. We are too busy in our campaign projecting positive things. We don't scare monger. I prefer to call our campaign project hope rather than project fear or project of optimism rather than project of pessimism. I think that that message is getting through and I would hope that even some of our opponents would realise that there is a danger if they are downplaying the success of Scotland then this could have a detrimental effect on Scotland's economy and other aspects of Scottish life. We keep on being told that we are all working for Scotland's best interests although there might be different concepts of what Scotland's best interests are. But I do think that we have got to be careful in the language that we are using because at present the eyes of the world are on Scotland and if we are projecting Scotland as a place of no hope and all these negative things then it could have a detrimental effect on Scotland's economy. On the precise example that you gave, which was the announcement in relation to the currency back in February, we now know from the Guardian that this was a campaigning position. It was not something that the UK Government had decided to reach after some prolonged period of internal discussion. Alasdair and Andrew were in charge, we did what we were told, we did what they said. I think that the fact that it was made so clear by a newspaper, which is not in any way well predisposed towards independence, that of course there would be a currency union said to the minister who is a central part of the no campaign and would have a key role in negotiations following a yes vote. We know that this was coming from the heart of government and of course it would be a currency union. The only reason we said anything else was for campaign purposes. I think that tells you a great deal about the nature of the campaign that is currently being waged. On that particular subject, I raised that report with Alasdair Darling this morning and he denied that it was him that was in charge. However, he refused to say whether he had discussed matters of independence in the currency union with his friend Nick McPherson, who of course was very involved in that particular announcement. Would it concern you if Alasdair Darling had been discussing these matters with Nick McPherson? I am not sure that I could comment in a great deal on that because, as he said, I do accept our friendships which go beyond necessarily the roles that people have happened at any given time. I think that I would say that the journalist who wrote the story, Nick Watt, who wrote the Guardian story, seems to be very well connected at the Treasury because he actually broke the news that George Osborne was going to formally rule out the currency union. So I am sure that he will be paying very close attention to what Alasdair Darling said this morning and checking it with his sources as to what the origins were of the sudden change of mind at the Treasury to stop saying that the currency union was merely unlikely and to start saying that they were formally ruling it out. Sometimes political collaboration can take place as a result of informal conversations between friends or former friends or civil servants and politicians etc. But I am very suspicious about the timing of all this and it seemed to me rather coincidental or too much to say simply coincidence that the three spokespersons for the three major parties at Westminster suddenly came together and said that we are ruling out completely any currency union. And it remains to be seen whether they will stick by that unanimity when they have to face up to the real politic and the real economic in the immediate aftermath of a yes vote. Richard Baker, I think that's all I mentioned. Can we have a question please? I was at question. Mr Jenkins recognised that indeed the campaign which has been brought forward and Mr Canavan, on behalf of Better Together, is indeed for more powers for this Parliament and no-one has ever suggested that this Parliament should be abolished. Indeed it could be argued that that's scaremongering for everybody's scaremongering in this campaign. I stated a simple fact that this Parliament, this Scottish Parliament is a creature of Westminster and it is possible for Westminster to abolish this Scottish Parliament by an act of the Westminster Parliament because sovereignty is vested in Westminster. That is a legal fact. That is not an opinion. I'm not saying that it is therefore likely that that would happen. But on the other point about the more powers for the Scottish Parliament, I referred briefly earlier to the lack of a guarantee that these powers can be delivered. The only real guarantee that people have of getting more powers for the Scottish Parliament is by voting yes in the referendum. I don't doubt the sincerity of lots of people in various political parties who wish to see a form of enhanced devolution for Scotland. That's a perfectly reasonable position. What I do really doubt is the appetite at Westminster for pursuing that with any enthusiasm after the referendum in September. I think that whatever Scottish politicians are politicians in this Parliament may wish and hope for what might follow a no vote, which I don't think will happen luckily. I think that you'll find that the resistance at Westminster to adding anything to the powers of this Parliament will be very considerable and hard to overcome. Given these powers being pledged prior to a no vote rather than afterwards, I think that that takes on board Mr Jenkins' concerns, but I'll leave that there Mr Cumbina. I think that we're out of time. Thank you very much for coming home this morning. I'll take a question helping us with our inquiry at which I'll now suspend very briefly and go into private session.