Page last updated at 11:27 GMT, Friday, 27 February 2009

Politicians peeved over pension

By John Knox
Political reporter, BBC Scotland

Fred Goodwin
There was anger and dismay regarding Sir Fred's pension

How are the mighty fallen.

Only a grim phrase from the Old Testament can capture the biblical proportions of the collapse of Scotland's two big banks.

And to add to the injury, the Samsons who pulled down the pillars of the temple of Scottish financial prudence are walking away with payouts worth up to 140 times the state pension.

On Thursday, we learned that the Royal Bank had made a loss of 24bn, the biggest loss in British corporate history. On Friday, the Bank of Scotland and the Halifax, now owned by Lloyds of course, reported a loss of 9.9bn.

Not much wonder there was anger and dismay in parliament. Labour's Iain Gray asked the first minister if he thought the pension of 650,000 a year awarded to Sir Fred Goodwin, the former chief executive of the Royal Bank, was "right".

"No I don't" said Alex Salmond," And I don't think the small shareholders and the customers and the general public will think it's appropriate either."

However, he went on to point out that the Treasury had been "fully involved" in the severance deal with Sir Fred. It was Westminster's fault.

Iain Gray said it was the fault of the man who appointed Sir Fred in the first place, the former chairman of the Royal Bank, Sir George Mathewson, now chairman of Alex Salmond's Council of Economic Advisers.

Tavish Scott, the Liberal Democrat leader, then joined in: "People find it truly shocking that the first instinct of banking fat cats is to arrange their bonuses and their pensions and the Labour government can sign off such a scandalously sweet deal behind closed doors and then attack it in public."

Efficiency savings

But he said the SNP government was making the economic crisis even worse by picking another fight with Westminster, this time over efficiency savings.

He was referring to a meeting on Wednesday in London between Gordon Brown and the leaders of the devolved administrations in Scotland, Wales and Northern Ireland. All three leaders had urged the prime minister not to go ahead with what they described as 500m of cuts in their budgets next year, "in the teeth of the recession".

Conservative leader Annabel Goldie said there was a good deal of confusion over the outcome of that meeting. "Is the Scottish Government finding more efficiency savings or not?"

Annabel Goldie
Annabel Goldie questioned Alex Salmond over efficiency savings

Alex Salmond said the Scottish Government was already making 2% efficiency savings. The further savings demanded by Westminster were not efficiency savings at all but "a top line cut in the budgets of Scotland, Wales and Northern Ireland."

For Scotland he said, that would mean job losses of at least 8,600 and amounted to "economic vandalism".

There was further evidence of the recession this week from the Fraser of Allander Institute. It predicted another 160,000 jobs would go over the next two years and unemployment could rise from the present 5.1% to 8.5%.

The banking crisis in Edinburgh alone, according to another study, is likely to lead to between 5,000 and 10,000 job losses.

Finance Secretary John Swinney told MSPs on Thursday that the new financial jobs task force is getting under way. It will meet monthly to try to match skilled workers who are losing their jobs in the banks with new jobs still being created in investment management companies, insurance and pension firms.

The education secretary, Fiona Hyslop, followed that up with 50 new apprenticeships in the "creative industries", music, drama, the visual arts and cultural heritage.

Devolution max

The other big growth industry is supposed to be renewable energy.

On Thursday afternoon, MSPs debated the marine bill which, among other things, sets up a new organisation Marine Scotland which will take charge of wind and tidal power developments offshore. The Labour party wants the new body to be independent of the government but that was defeated by 61 votes to 40.

There's been much shifting of the devolution scenery backstage this week.

On Tuesday, the Scottish Labour Party published its formal evidence to the Calman Commission on the constitution. Although it says the original devolution act got it basically right, it says there is a strong case for adding borrowing powers to the Scottish parliament's responsibilities.

Disabled parking sign
Jackie Baillie has succeeded in closing a loop-hole in the disabled parking law

The SNP, with Liberal Democrat encouragement, is about to make a similar call. And some commentators were hailing John Swinney's paper this week on fiscal autonomy as suggesting the SNP might settle for "devolution max" in any referendum, rather than go for straight independence.

Devolution max would mean the Scottish Parliament setting and collecting all taxes in Scotland and passing on some revenues to London to run joint UK services such as defence, foreign affairs and trade regulation.

The curtain will come up on this over the summer when the Calman Commission publishes its report and the SNP bring their referendum bill to parliament. Who will be on stage and what poses they will strike no one yet knows.

Finally, everyone was in praise of Jackie Baillie this week.

For the past three years the Dumbarton MSP has been plugging away at her disabled person's parking places bill. Finally, on Thursday afternoon, it was passed unanimously. Unfortunately, she was not there to see it because of an illness in the family but she has succeeded in correcting a little known loop-hole in the law.

Apparently, only those disabled parking bays painted in yellow lines, less than 20% of the total, are legally enforceable.

The white-lined ones are not. But from next year, councils will have to repaint all parking bays and make it clear that any able- bodied driver parking in them will be subject to a fine of up to 60. For Scotland's 200,000 blue badge holders the change cannot come too soon.

It may not be the high politics of nation building or economic reform but at least it has made some people's lives easier and the world a little fairer.

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