Mike Vickers' Blog

March 20, 2014

Ian Marchant ex of SSE on Electricity and Scotland

Filed under: DHI SPIF, economics, Europe, Scotland, Scottish Independence — derryvickers @ 7:46 pm

Ian Marchant ex CEO of Scottish and Southern Electricity spoke to the David Hume Institute on who he sees the future of Energy and particularly Electricity in the UK and the impact on an Independent Scotland.

The points that got to me – not in seminar order

  1. Energy is the foundation of modern civilisation
  2. The Electricity Industry has had 11 Ministers in 11 years – this is not the way to run a major service
  3. Political interference is endemic – Either Regulate or let the market compete – in the UK we are doing neither with the government sitting in the middle – No stability – Marchant indicated that State owned government, before competition introduced, provided stability
  4. Labour’s proposed energy price freeze would undermine the market – tackling the wrong problem.
  5. Decarbonisation is key – whether we concur with climate change or not it’s just good risk management to decarbonise
  6. Cost and carbon – see table below
  7. Scotland is rich in Renewables but they take time to come on power – Off Shore wind needs to come down in price – other technologies could be at hand for Off Shore – Jim Steele of Morrison Construction (also presenting) mentions Sea Towers,  Hydro and biomass.  Tidal and wave, may be.
  8. Yet Scotland needs other sources to keep the lights on  – Gas quick to build – covering the next 10 years.
  9. And yet gas fired generation is not profitable; Peterhead Gas powered power station running at only 2/3rd capacity.
  10. Shale gas fine for the US where the geology is good – the US has more onshore drilling capability than the rest of the world put together – but not obvious in the UK.
  11. We will need to import more and more gas and be subject to Global Market – not helped at present by the Crimea.
  12. Scotland ideal generation portfolio: 20% small, 40% renewables, 40% gas.
  13. The UK has been complacent on power construction – generation is still surviving on CEGB power stations – but this is coming to an end
  14. You can tell Ian Marchant is a Perth Generator man.  Nothing on Supply side!
  15. UK is a Single Electricity Market – it would be good for an Independent Scotland to keep this, but it takes Two to Tango.   Jeremy Peat added  at end of the seminar  like ‘a Common Currency Union’.
  16. Transmission costs are a mess and presently smeared across the whole of the UK – currently amount to £10 -£20  of total consumer cost – costs must mount for an Independent Scotland.
  17. Finding capital is difficult with UK prevaricating on its membership of the  EU
  18. Energy is a good employer – long term jobs.  Jim Steele bemoans lack of engineers (I thought this was one of the priorities of the Wood Report?)
  19. Jim Steele again – there has to be shared risk in major construction: Government, Operator and Contractor.  Morrison dropped out of Off Shore because the operator wouldn’t play ball
  20. Energy needs to be conserved – totally rebuild Scotland’s housing stock – modern building technology could save 50% energy
  21. Marchant’s Energy Policy for an Independent Scotland
    1. Ten years of Regulation and then open the market to competition
    2. Politicians keep out

 

Generation Average Domestic Cost Carbon emission Marchant’s comments
Average £250 2.5 tonnes  
All Coal £200 4.0 tonnes Provides capacity
Gas fired £250 1.5 tonnes By2020
Onshore wind £380 / £250 zero Golden age is ended – few new sites
Offshore wind £600 zero Must come down
Nuclear £370 Zero 35 years lifetime – storage of waste

February 15, 2014

A Union revived – Ruth Davidson – in more detail

Filed under: DHI SPIF, Politics, Scotland, Scottish Independence — derryvickers @ 9:56 am

Ruth Davidson, Tory party leader in Scotland.  The last of the series laid on by the David Hume Institute to provide a platform for the Scottish Politicians tell members what they propose for Scotland in this Referendum year.

I had not heard Ruth Davidson speak before, well at least for so long.  She came over as someone relaxed, with a touch of humour and well in control of what she wanted to say.  More importantly she answered a set of exploring questions fluently and ducking only slightly.

Her main theme was the Union had lasted for 300 years, why change it.  She acknowledged that there had been mistakes in the past which should have been sorted, but the Referendum debate was timely in getting these on the table.  The Tory party under Lord Strathclyde is bringing together the reforms it would see to the Scottish Government given a NO vote; it was good to hear her mentioning the Scotland Act 2012 as a start.  She said she was unable to pre-empt the reforms but indicated it would recommend more tax raising powers for Scotland but would maintain welfare with Westminster to maintain parity of provision across the UK.  They would also be looking at a rebalancing of private versus public.  The party wants Scotland to be Responsible and Accountable.  She acknowledged that this looks like SNP policy, but No it is very Conservative: there has always been conservatives with a small ‘c’ in Scotland.  In contrast Davidson typified the SNP trying to appear Left of Labour.

Ms Davidson followed David Cameron’s lead in praising the Union as good for Scotland and good for the UK as a whole; the UK is one close knit community which would be broken asunder by a separate country Scotland.  No mention of the Scottish Tory Independence group ‘Wealthy Nation’!

She criticised the SNP for trying to cherry pick features it would like to share with rUK; of course currency, regulation, university research etc and saying goodbye to the rest; more generally for implying that the Scots are lodgers in the UK; are badly treated and unwelcome.

She stressed that since the 19th century it was the Tories who have spearheaded increasing devolved control to Scotland (only partly true).  She stated that there would have been no rescue package for RBS and Bank of Scotland if Scotland had been an independent country cf Iceland where the banks had gone bust.  She recognised that times continue to be hard but there has been recovery under the coalition with Scotland going slightly better than the UK as a whole.  She was most critical of the SNP wanting a currency union based on the £ but at the same time not committing to the £ indefinitely; all this does is bring jitters to the market.

Interestingly she stressed the great work that Scottish MPs do at Westminster!

Davidson repeatedly made the point that she feels both Scottish and British and can see no contradiction: she opposes ‘North British’.

She is for more ‘localism’ – decentralised power to local authorities with stronger local revenue raising; again re-balancing between Edinburgh and the local authorities.  She could see no value in a Scottish House of Lords but criticised the present Committee Structure where Committees are packed with party representatives – in this respect having one centralised Police Force had been forced through and is totally wrong.

To Cameron’s desire to renegotiate the UK’s membership of the EU; this is to be expected as there has been no review during the 56 years of the EU’s existence ( what about Maastricht and Lisbon!).  In the same way it is to be expected that Scottish Devolution is now being revisited through the Referendum.

As to Better Together she felt that the Tories at least are doing as many door to door visits as the SNP.  She stated that there had never any intention of a unified statement between the three parties as to what they would do after a No vote, only that each party would bring clarity to their individual positions before the Referendum Date – Lord Strathclyde’s report is due out in May.

February 14, 2014

A Union revisited – Thoughts following Ruth Davidson at the David Hume Institute

Filed under: DHI SPIF, Politics, Scotland, Scottish Independence — derryvickers @ 3:24 pm

As with Willie Rennie in the previous presentation to the DHI, I had not heard Ruth Davidson speak before, well at least for so long with a positive message.  She came over as someone relaxed, with a touch of humour and well in control of what she wanted to say.  More importantly she answered a set of probing questions fluently and ducking only slightly.

Looking back over the series of presentations by the five political parties in Scotland (and I could only maker 3 of them), we started with Nicola Sturgeon making the case for Scotland for the Scots and we finished with Ruth Davidson recalling the magnificent 300 years of Scots working within the Union.  Both cannot be right but that’s politics.

Davidson is Cameron’s Lady in Scotland.  Somewhat unfairly Cameron has been accused of not making his impassioned plea to the rest of the UK: England, Wales and Northern Ireland to woo the Scots to stay with us in the Union in London rather than Edinburgh; he was not wooing, at least at this time, for the Scots to stay in the Union directly – this may come.

It has been mooted that Salmond would have preferred to have renegotiated the relationship between Scotland and the Union, just as Davidson said last night that that’s what Cameron wants in his discussion with the EU.  It is also mooted that Cameron scuppered the first and clearly the rEurope are scuppering the second.  The case for remaining in Europe is certainly being attacked by UKip, but that did not come up at least directly last evening.

The bystanders claim that the Referendum is a distraction from the real issue of recovering from the financial crash: from Scotland’s point of view it is the reverse.  Some of the antagonism that is starting to boil up on both sides could have been avoided if the financial crash had not come in the way.  Davidson is right that Salmond failing to get a re-negotiation is trying to cherry pick the best of the Union for Scotland.  Osborne looks to be scuppering that too.

The situation as I see it is that a Devo-Max would have been the way forward and in this respect Davidson remembered the Scotland Act 2012 as a clear step in the right direction and which will come into law but unfortunately lost in the high blown rhetoric.

But from the Better Together’s point of view their real failing is that there is no statement of what Better Together means in practice – the three parties cannot come together to issue their ‘White Paper’.  Labour will announce its view in March, the LibDems with Campbell 2 in April and the Tories with Lord Strathclyde in May.  In September before the television cameras who will bring out the essence of the benefit of the Union before the wonderful words of Scotland for the Scots underpinned by Bannockburn by Alex Salmond.

January 16, 2014

Nicola Sturgeon at DHI – 15th January 2014

Filed under: DHI SPIF, Politics, Scotland, Scottish Independence — derryvickers @ 7:07 am

‘A choice between two futures – why it is better for all of us if decisions about Scotland are taken in Scotland

This was the first of five presentations by the five major political parties in Scotland about how Scots should vote in the September Referendum.

Nicola Sturgeon’s presentation was well prepared and polished, a fluent speaker.  She was on the ball when answering questions from the audience.

There was little that Sturgeon said that was new and I suspect cannot be found in Scotland’s Future.  There were a number of points of emphasis that are worth bringing out:

  1. She quoted David Hume ‘Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them’, but said nevertheless we need to bring Reason to bear when considering Independence.
  2. She emphasized that the decision on Independence is not just for us, it’s for our children and their children and so on.
  3. Devolution has worked, so why not have more of it with Scotland being solely in control of its own destinies – welfare and finance and debt.
  4. Why have to react to whatever Westminster chooses to throw at us rather than act on our own behalf.  In this respect she hammered home the fact that Scotland has just one Tory MP in Westminster yet we government by a Tory Prime Minister
  5. It’s not as though the No side don’t accept that Scotland could go it alone.
  6. Scots need to take Responsibility for the Risks rather than suffer Westminster’s Risks
  7. A Currency Union with the rUK is ‘common sense’ – almost a touch of Thomas Reid here. To Jeremy Peats’ question, what’s plan B if rUK rejects the currency union.  Sturgeon’s soft reply was there is no need of a Plan B – not quite an Osborne but almost.
  8. Child care of course and getting women back to work and the reason they must wait till after Independence.
  9. She accepted that the Scottish Government after Independence might not be SNP based but if it is, then removing Poverty would be a main thrust.  A minimum wage at least keeping up with inflation.  Scotland under Westminster is heading for 100,000 Scottish children in poverty.
  10. She was very careful in avoiding lambasting the NO side – no repeat of the 50 unanswered questions by the No side – just the occasional warning, such as what would happen to Barnett after a No vote
  11. Sturgeon coined the phrase Scotland a ‘Welfare State fit for purpose’ – I liked that –  though it needs a bit of expansion as did her comment that it could be ‘self-funding’
  12. Interestingly she saw no need for change in Holyrood’s single chamber but may be some adjustment on Committee procedure post review of law as well as the current pre-
  13. To a question why not devolve more responsibility to the cities (and for that matter the councils and beyond) – well may be.  Interestingly in talking afterwards the guy expressed the view that had there been more devolution to the cities then there would have been no call for Independence – worth a thought.
  14. To a question that only 14% felt they knew enough to make an informed decision as to Yes or No she responded that the information is there at least on her side in Scotland’s Future
  15. She defended Scotland’s Future as aspirational – and why not.
  16. Sturgeon made great play on Scotland being in the EU and its advantages for an open nation. £850 million alone from CAP.  She was astute enough not to bring up the UK leaving the EU.

In summary Nicola Sturgeon’s main thrust was as her presentation title, it is a self-evident truth that Scots are best placed to govern themselves.  I just wish there is more evidence that the buck doesn’t stop in Holyrood.

Nicola Sturgeon ‘s presentation in Jeremy Peat’s words quoting David Hume was of  ‘well-tempered eloquence’ – She received a good reception but not the standing ovation received by Mary McAleese  at the recent RSE MacCormick lecture  – but then Nicola  Sturgeon has a few more political mountains to climb before she reaches Mary McAleese’s  stature.

November 27, 2013

“The evolving Scottish Labour market; how the College sector fits in”

Filed under: DHI SPIF, Education, Scotland, Scottish Independence — derryvickers @ 10:44 am

On this auspicious day, 26 November 13, when the Scottish Government issued its White Paper on Scottish Independence  I cast my mind back only as far as the evening before to the David Hume Institute’s  seminar and Professor Keep’s realistic assessment of the evolving Scottish Labour market.  There is little he said that gave me any assurance that the situation would be any different whatever the Independence decision.  As I picked up, not only is the demand for jobs low and what there are for low skills, but that the demand for such jobs that there are, are over-subscribed.  One consequence is that there is little incentive for business managers to provide their low level low paid employees to any training.

He quoted statistics that 18% of Scottish employees are paid less than the ‘living wage’; just 2% better than for the UK as a whole.  Even managers in the catering business are paid no more than 25p – 50p above the national wage.  Somewhat surprisingly he stated that those on the lowest pay are complexed and uncertain of their future and subject to high risk. But then it’s a situation, which fortunately, I have never had to experience.  Despite this Professor Keep stated that  UK workforce is the 2nd highest qualified workforce in (Europe).

Both Professor Keep and Mandy Exley, Principal of Edinburgh College, the other speaker,  did agree that there could be hope in putting employees, managers and trainers together to see if there could be some synergy in creating training programmes that not only give job satisfaction to employees but increase productivity leading to more profitability.  In this respect they considered the Wood Committee report gives hope:

http://www.scotland.gov.uk/Topics/Education/edandtrainingforyoungple/commissiondevelopingscotlandsyoungworkforce.

Ms Exley quotes the very encouraging statistics that for the Edinburgh College 30% of the students come from the lowest paid 20% of the population.  She was particularly pleased with the College’s courses in engineering tied to the oil and gas and the renewables businesses  and would like to expand  the College’s experience to tackle the care, tourist and hospitality businesses, although she recognised that these are more ‘horizontal’ (which I take to be broad based) than engineering.

Nevertheless Professor Keep came back to the point that, despite the desire to increase job skills at the bottom end of the job market, there will always be the lowly jobs that have to be done by someone.

November 18, 2013

Supply-side position in the UK – a seminar by Nick Crafts – 14 November 2013 at the DHI

Filed under: Business Development, DHI SPIF, Politics, Scotland — derryvickers @ 7:34 pm

‘What kind of Supply-side policy for the UK and What implications for Scotland ‘

Nick Crafts is Professor of economics and economic history at Warwick University and appears to have advised many organisations across the world.

His lecture was interesting and much of his slides can be found at the following website

http://www.res.org.uk/SpringboardWebApp/userfiles/res/file/res_policy_slides.pdf

No doubt they will appear on the DHI website in due course.

Crafts covered a lot of ground and the points that got to me were:

  1. Industrial growth can be either sector based or horizontally oriented.  The UK has been best recently at horizontal and Crafts picks on Pharma, ICT application and finance as success stories
  2. Growth particularly in ICT has been by best application of other peoples innovations (mainly I suspect US).  In this respect Germany has not been nearly as good.
  3. What drove the 1900th century was Steam – ICT is driving the 21st.
  4. UK investment in Rand D is the worst in the western world. We are relying on Diffusion.
  5. Likewise development in Human Capital has been pretty low.  Crafts certainly gave the impression that education should be skills based.
  6. Inequality is growing; but exclude the 1% very rich – their wealth comes from the globalised capital markets not individual counties.
  7. The bigger the city the higher the output.  But this leads to urban difficulties and welfare loss.
  8. The UK has been bad in investment in infrastructure – roads are a prime example.
  9. Public capital should complement private capital.  Banks need to be the source of private capital.  He featured Germany.
  10. Private capital is short term but Government is worse.  Long term investment is needed on the supply side.
  11. Incremental steady investment.
  12. Productivity is difficulty to measure – not like in the past, coal dug per person in the pit.
  13. Regulation can encourage but can impede – regulation of land in England
  14. Don’t look back to 1970s; Save the High Street is doomed.  HS2 is vanity – remember Concorde.
  15. Tax revenue should come from general taxation on consumption rather than from industry.
  16. The UK is good at the service industry; even Rolls Royce was more value coming from the supply side than from the engineering.
  17. As to Scotland – Scotland should focus on the horizontal industries.
  18. Scotland is higher than the UK as a whole in service industries.
  19. The Celtic Tiger got it right before the crash with its low corporate taxation.
  20. Edinburgh is the 4th most prosperous city in the UK.
  21. Regulation can be a stimulus to innovation.
  22. Don’t yearn for the 1970s.

I found this all good stuff but I feel that Crafts time may well be fading as he considers the 1970s have faded.
Western civilisation is realising that continual growth may no longer be achievable and should not necessarily be the target for a future Scotland.

June 21, 2013

The Real Economy – the next in the RSE series on the Scottish Independence Debate

Filed under: DHI SPIF, economics, Politics, Scotland, Scottish Independence — derryvickers @ 5:21 pm

The Real Economy was defined loosely as making things and distributing them.  The seminar was wide ranging though each speaker talked mainly to his pitch although opening up in the discussion.

  1. Brandon Malone – Branding, Public Relations and Promotions would be stronger in an Independent Scotland.  Scotland has suffered under the UK through anti-Europe UK, Iraq and Afghanistan and Scotland has its own quality legal services
  2. Stephen Boyd – Labour market has not been much discussed in the Independence debate other than on pensions.  Scotland has a good labour position though there is a rise in self-employment and high youth unemployment.  He favours a move to a social partnership between the Government, management and labour.  He welcomed the Heseltine review of some months ago.
  3. Gordon Hughes talked only about energy. Energy contributes 15 – 20% to GDP in Scotland but utilises only 2% of the jobs.  Highly dependent on external investment and volatility of the oil prices. Investing in energy is a mixed blessing – drives up labour costs and prices us out of manufacturing (witness the total absence of car manufacturing in Australia).    Norway has the state owned StatOil  – Scotland doesn’t. Critical to balance spending oil revenues as in past and putting it into a sovereign fund – may be too late to start – no point in crying over the past.  Avoid the ‘Dutch Disease’.  Don’t expect a cosy relationship with rUK in energy – England will buy where it’s cheapest – French nuclear rather than Scottish wind!
  4. Jeremy Peat – Competition and Regulation – after Independence, regulation could be shared as much in common eg Electricity but Scotland has its own unique opportunities, Comms and Transport.  Possibly centralised Regulation a la the Dutch.  Good people are key
  5. In the discussion – Scotland needs to be open and globalised – a small country can’t act otherwise – difficult to compete with London as the centre of the world.  Freedom of choice much less than politicians make out. Received wisdom that equality makes for better work force.  Small countries need to buffer the shocks – requires flexibility.  There needs to be certainty in regulation – tight fiscal and monetary regime.  Scotland great at creating intellectual capital but rubbish at applying it.
  6. Real people in Real Jobs

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

Participants

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).

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