Mike Vickers' Blog

May 30, 2013

RSE Discussion Forum –Enlightening the Constitutional Debate No 3: Defence and International Relations

Filed under: DHI SPIF, Europe, Politics, Scotland, Scottish Independence — derryvickers @ 9:47 am


Lieutenant Colonel Stuart Crawford (with Richard Marsh)
Phillips O’Brien
Prof William Walker
Lord George Robertson
Chaired by Lieutenant Sir Alistair Irwin

 The points I picked up:

  1. The purpose of having armed forces are
    1. To protect the Democracy
    2. Defend against External Aggression
    3. As a last resort to be called in case of industrial action,   maintain internal stability, eg act as firemen, refuse collectors
  2. An Independent Scotland must keep the armed forces to a minimum
    1. 20-25 ships, 2 brigades, 13,000 to 17,000 personnel
    2. No subs, no aircraft carrier, no fast jets
  3. Cost estimates were around £1.8 billion per annum against the SNP’s £2.5 billion
  4. Faslane is one of the largest employers in the West of Scotland but has got to go in an Independent Scotland – around 6,500 to 8,000 jobs
  5. Naval ship building lost from the Clyde
  6. Primary defence location to move from West to East – one air base eg Lossiemouth
  7. Trident replacement – sacred cow – the debate at the UK level has yet to be taken seriously.  Labour committed in 2007 – continued by the Tories.  But since then Boom to Bust
    1. Talk of downgrading 4 – 2 or even 3 subs not a deterrent and the cost savings not proportional
    2. Real decision after 2016 elections
    3. Alternatives – cruise missiles or just no nuclear
  8. Faslane / Coulport given an Independent Scotland could
    1. Become a sovereign base,
    2. no proliferation treaty, gradual phase out over 10 years till rUK can build another base – yet adding more cost to a replacement Trident
    3. Legal position would be messy but be solvable
  9. Debate so far – consideration as to what if Independence – George Robertson – last speaker just waded in for the No Case
    1. The world is unsafe – terrorists everywhere
    2. independence giving the wrong signals to the rest of Europe
    3. Norway spends 4.5 billion and Denmark 2.8 billion per annum on defence (though figures for Denmark given earlier less than that)
    4. Scotland’s coast is 80% of the UK
    5. Need for separate MI5 etc
    6. Why spend all this extra money in duplication
    7. It took Ukraine 20 years to negotiate the removal of nuclear weapons by Russia from Sebastopol and even then an agreement to allow Russia keep them
  10. International Relations got short shrift with the speakers and only taken up in Questions
    1. Generally not welcomed by other countries in Europe, eg Germany, as it introduces further instability in Europe
    2. More to do with rUK than an Independent Scotland which is reasonably respected by other Europeans
    3. London much more interested in UK and Europe than the break-away with Scotland
    4. rUK and Scotland after an initial stormy period likely to settled done to reasonably friendly relations because so much will remain in common
    5. Would Scotland be neutral – unlikely
    6. All agreed an Independent Scotland would need to be part of NATO but unclear whether other NATO members would accept an Independent Scotland with a constitution which prohibits the acquisition of nuclear weapons within its defence force
  11. Finally George Robertson agreed that Scotland would survive if independent but why impose all the extra costs of separate institutions on it.  Phillips O’Brien said that it is known that people in smaller countries are happier
  12. It is somewhat unfortunate that the only comment in the following day’s Scotsman is George Robertson’s comment that Scotland going independent would start the rot towards a Balkanisation of Europe.

May 17, 2013

What if Scotland becomes Independent – Energy

Filed under: DHI SPIF, economics, Politics, Scotland, Scottish Independence — derryvickers @ 4:12 pm

In my last blog I referred to the series of ‘conversations’ on various aspects that would have a major impact on Scotland if its people decide to vote Yes in the referendum next year.  Here are my notes on the third conversion on Energy.  The participants are listed at the end of my note

  1. Investment in the Oil & Gas industry will remain competitive.  Other terrains are high risk / high gain – global capital even in oil & gas is limited
  2. North Sea a mature hydrocarbon province – risks not negligible and the gains are not great
  3. Steep downward curve of production – returns and attractiveness very susceptible to tax take
  4. Continued volatility it price per barrel 70$ to 270$
  5. Almost ½ million employed in Oil & Gas in Scotland
  6. We have very strong expertise in oil & gas in Aberdeen in particular – don’t  rock the boat with renewables.  May be one expertise to cross fertilise the other
  7. Dividing the responsibility of who pays if Independence happens – don’t expect any favours from rUK in the negotiations – who is legally responsible for removing the obsolete subsea infrastructure – £30b – already past its sell-by date
  8. Of course decommissioning nuclear is bigger still
  9. Only players in energy game  in Scotland are hydrocarbons and renewables
  10. Production and Supply should be better tied together as the two end of the supply chain
  11. This would allow costs to be spread more fairly
  12. At present the fuel poor suffer a double whammy – they can’t take out long term contracts and have to pay more for what they have (prepay meters) and they have less money to pay with anyway

A couple of personal comments

  1. How much does Scotland’s future depend on cheap energy or are we post manufacturing and its only our brain power that counts  – these of course are an asset which could quickly swamped by China and to some extent India
  2. Very little on the sources of energy production itself – oil & gas taken as read – renewables do exist but nothing on what they are? wind, ?wave, ?tidal.  We are still heavily dependent on coal and also cross border base supply.  And is nuclear quite dead?  (may be not a DHI consideration but one for the RSE).
  3. Could have been more on social aspects of energy pricing – good that Trisha McAuley had been invited



”The Scottish Energy Sector:

in the Context of Possible Constitutional Change in Scotland”

Main Speaker: Dr Andy Kerr, The University of Edinburgh

Chair: Jeremy Peat, Director David Hume institute

Authors of paper and contributors to Discussion; Professor Mark Schaffer and colleagues (Heriot Watt University); Professor John Paterson and Professor Greg Gordon (Aberdeen University); Professor Kim Swales and colleagues (Strathclyde University); Ms Trisha McAuley (Consumer Focus Scotland)

What if Scotland becomes Independent – Competition & Regulation

Filed under: DHI SPIF, Politics, Scotland, Scottish Independence — derryvickers @ 3:54 pm

The David Hume Institute has been running a series of four ‘conversations’ around the subject of Scotland’s referendum on whether to become a State separate from the UK .  The last one was on Competition Policy and Regulation.

I wrote a few notes following the meeting – they are below.  The papers supporting all conversations are available on the David Hume Institute web.

I didn’t know much about either Competition Policy or Regulation before this evening’s conversation.  I know a little more now. My points should be taken in this context.

  1. Competition Policy and Regulation are both subservient to Government Policy.  The trouble is that Government policy can change significantly on change of Government
  2. However most speakers spoke of the need for stability particularly of Regulation, not only to protect capital investment but also stability is liked by consumers / customers.
  3. Consumers in general are not familiar with the role of the Regulator and therefore blame them when prices go up.  I suspect consumers are even less familiar of the role of the Competition Commission.  This point was focussed on by questions from the floor
  4. There was discussion but little unison on whether Scotland should share the current UK regulators or Competition Commission if independent.  If their briefs are heavily dependent on Government Policy and if as expected Scotland moves further form rUK policy following a Yes vote then there was some support for similar functions to be set up by the Scottish Government.
  5. There was also some support for the view that small countries do well as they tend to focus on the things that matter to them; it was viewed that this was particularly so within a EU umbrella
  6. For Scotland WICS got much praise as an example of a small country not only going its own way but also leading.
  7. There was much discussion on whether Competition Policy and Regulation should be combined as in the Netherlands or kept separate – lumpers and splitters.  The issue for not lumping was that the organisations to be regulated vary quite markedly.  Dirk Janssen said one reason for their lumping was to save cash – 10%; another was to make the organisation more consumer facing.  Jeremy made the comment of poachers and gamekeepers
  8. One questioner from the floor was particularly critical of regulation in practice instancing the failure of the FSA and the apparent cartel on Oil Pricing.  Luis Correia da Silva responded that the FSA had been too fond of ticking the rule boxes rather than looking at the fundamentals.  He felt that CEOs need to be more conscious of the business they run.

Just a couple of personal comments

  1. Lumpers and splitters were seen at the national level; it would be quite possible to take an orthogonal view – lumping regulation by utility, for instance, across the EU – this was touched on by one speaker citing Energy (against) and Telecoms (for).  To me such lumps would give for instance the EU the power to regulate transnationals.  I understand that the EU was quite successful in bringing Microsoft to heel.  Banking could be another example.
  2. Everyone spoke of the need for long term stability and establishment of balance between investors and consumers, but as I see it consumers look at prices tomorrow and companies are increasingly being driven by investors looking for a quick buck (particularly in the UK).  On top of that Governments are thinking of the next election.  Not much room for stability here.   I am reminded of the critical life of Football team managers, witness Manchester City; what we want in regulation is more Alex Fergusons.
  3. And to consumers more generally Trisha McAuley was strong last week at getting them into the supply chain, how many current regulators come from the consumer side of the business.

ESRC Conversation 4

“Competition Policy and Regulation:

in the Context of Constitutional Change in Scotland”

Main Speaker: Professor Martin Cave, Visiting Professor at the Imperial College Business School and

Vice Chair of the Competition Commission

Chair: Jeremy Peat, Director David Hume institute

Authors of papers and contributors to discussion: Professor David Simpson (former DHI Trustee and

former board member of the Water Industry Commission for Scotland); Iain Osborne (Group Director of

Regulatory Policy, the Civil Aviation Authority); Luis Correia da Silva (Managing Director OXERA); Dirk

Janssen (the Netherlands Authority for Consumers and Markets); Jon Stern (City University and coauthor

with Martin Cave); and David Saunders (Chief Executive of the UK Competition Commission).

May 2, 2013

Possible Orkney

Filed under: Business Development, economics, Europe, Scotland — derryvickers @ 6:48 am

A presentation by Graham Hogg and Alex Hobday postgraduates at Strathclyde on Orkney in ?50 years – The last of this year’s Nordic Horizons

First – good that it was held at the Scottish Parliament – lots of MSPs and like bodies attending.

Second I was horrified that what they were proposing was to turn Orkney into an industrial site

A  little detail of their proposal:

  1. A northern city distributed round the Scapa Flow linked by a light rail – Population to grow from current 20,000 to 100,000
  2. Supporting a massive container transhipment port
  3. Providing marine supply and services for marine renewables
  4. A link to the North Sea Power Grid with a connecting point to Iceland geothermal power
  5. Not an instant development – over the next 50 odd years
  6. The north of Orkney to be left alone.

The rationale

  1. Orkney at the cross roads of shipping between UK, Europe and the Far East and America– A European Singapore.  The Far East via the North East passage north of Russia
  2. Scapa Flow ideal harbour demonstrated through two world wars
  3. Marine renewables in the Pentland Firth and further afield
  4. Orkney has always been a stopping off point since the beginning of time
  5. More generally commerce is moving North

The arguments against

  1. Orkney is a green and fertile land – let’s keep it so – products should be food not containers
  2. The bottom has dropped out of the Shipping market
  3. In any case the North East passage to the Far East is dangerous and long.  Ice breaking container ships need nuclear power plants as there are few bunkering points across the north of Russia – ice bergs the size of Jamaica – rum does
  4. The Icelanders have been here before and they recognise if the container port is to come it will be no earlier than 20 years and why not Iceland anyway. Narvik is better situated vis the North East passage

The arguments for

  1. Orkney ideal for servicing the UK east and west by boat at lowest energy cost
  2. Orkney would welcome influx of new people having lost many since WW2
  3. Orkney has the will to drive it forward

Other discussion

  1. A container port of the size envisaged can only be funded by a national government
  2. If only half to go ahead it should be the renewables half
  3. Orkneys ideal as a centre for search, rescue and marine security
  4. What about the Ferries
  5. Marine Cross Party Committee needed in Holyrood – Scotland should renovate its maritime heritage
  6. Control for the foreshore should be rested from the Crown Estate Commission whether Scotland independent or not
  7. The Nordic Council is becoming the Arctic Council – Scotland needs to join.

But thinking again about Orkney – it has been continuously inhabited since 3000 BC – Skara Brae – and the recent digs around the Ring of Brodgar may put the date back still further; so I’m sure that if this development were to go ahead Orkney would still survive as a place to go to see and glory at 6000 years of human history.

So let’s hope the lads get an audience with Alex.

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