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Enforcer or villain? Perhaps the new Chancellor, George Osborne, should try out the Next Big Thing from Dundee's computer games industry.

APB, or All Points Bulletin, is an online interactive role-playing game that's been created on Tayside by Realtime Worlds. In the wake of Grand Theft Auto and Crackdown, the latest shoot-'em-up dystopia is soon to be launched on a global market that rivals Hollywood for its enormous commercial clout.

The new Chancellor could be the tough guy enforcer of a tough new spending regime, bringing order where financial meltdown threatened, though some see him as the villain whose tax raid and spending squeeze isn't as fair as he's claiming.

But he's decided to scrap the tax breaks promised by his Labour predecessor for the computer games industry. Outside Dundee and Salford, the two big British centres for the industry, it may be that no-one much cares if the jobs go overseas - to Canada for instance, where the industry is being offered significant tax breaks.

Free market

But the significance may go beyond one young industry. It appears to symbolise a change in philosophy running through today's Budget - a belief that government should not be picking winners or backing particular sectors.

It returns to a more Conservative and free market approach to the use of tax incentives. You could see it also in the announcement by Chief Secretary Danny Alexander that his predecessors' one-off supports for industry, such as Sheffield Forgemasters, are being axed. Indeed, the Yorkshire example goes further, suggesting a reluctance to prop up those in trouble.

Only two sectors got special treatment from George Osborne's first budget. Cider-makers saw a proposed duty increase taken away, though a review of alcohol duty more widely is under way. The Scotch whisky industry hopes that will highlight what it says has been a historically unfair bias against spirits.

The other sector is banks, facing a penalising levy for being the baddest of the villainous baddies - even though that makes it more difficult for them to lend and to generate the profits and shareholder value that we, as shareholders in RBS and Lloyds, want to see from them.

North of Watford

But once you look beyond the tax increases and spending cuts, the evidence of a growth strategy represents a giant gamble that private businesses will take up the economic and employment slack. They've been given the tools in tax incentives - now it's down to them to prove the free market credo works.

It has to do so while Britain's government sector is contracting, its household sector has switched from consumption to saving, and key European export markets are going through the same process, sucking demand out the economy.

One other new departure for the new government's growth stimulation efforts is in what used to be called regional policy. The idea is that newly-created businesses will get a payroll tax holiday for the first ten employees it hires, and significantly, it is only available to companies outside London and the English south-east.

There's an acknowledgement that the south-east is already much more successful at new business and job creation. So this makes the whole of the rest of the country into a giant enterprise zone.

It suggests that the new government may not be in the business of picking sectoral winners, but it is more willing than its Labour predecessor to pick areas of Britain that could do with more stimulation than others. That may help inform its approach to the new tax powers that the Scottish parliament is to get.

The bits north of Watford and west of Slough also happen to be the parts of the country that have been most dependent on the public sector for jobs, and which now face a disproportionate hit from the government spending squeeze that's now under way.

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• - What's this?

Has the second part of the double dip begun, even before the extent of the budget squeeze becomes clear?

Some signs are emerging that it has. Today, we've got that shows the recovery continuing, but its momentum stalling.

The survey is for the Bank of Scotland and brings together evidence from the official unemployment figures and a survey of more than 100 recruitment agencies.

It shows - unsurprisingly - that more people are looking for jobs.

Less obviously, more jobs are being advertised.

It also shows a slight increase in pay rates. Both full- and part-time jobs are being increased, though more so part-time.

That's all good. It supports other evidence that the British labour market remains flexible - not a welcome factor when jobs are lost, but helpful when they're needed.

Around a third of the people who turn up in the labour market survey and are counted as unemployed are not claiming Jobseekers' Allowance. It seems many who lose jobs are finding them fairly quickly.

Skill shortages

However, significant numbers are taking part-time jobs when they'd prefer full-time.

And in Scotland in particular, the Office of National Statistics survey has found significant numbers leaving the workforce altogether; such as students, those with caring responsibilities and those who can afford to do without a wage, if, for instance, they can depend on a partner's income.

So the Bank of Scotland survey, using the same methodology as KPMG research across the UK, finds there is still improvement in the labour market, but it's significant that it is slowing, and it's doing so more than in the UK as a whole.

It also finds that the most new vacancies are in executive and professional roles and in IT and computing.

Don't be surprised to find IT becoming an area of skills shortages.

In the past week, the evidence of a slowdown in the recovery has been gathering pace.

We've recently had the ITEM Club in Scotland warning of it, as well as the Purchasing Managers Index in Scotland.

The most recent Scottish Retail Consortium figures show a weak performance.

Last week, it was Nationwide consumer confidence taking a knock.

This morning, the most recent survey of household confidence, from Markit economic consultancy, shows a deterioration in people's expectations for the economy.

More than quarter of households say their finances have deterioriated in the past month, with only 7% saying they've improved.

Twice as many people expect finances to worsen in the year ahead - 44 to 22%, and the negative sentiment of public sector workers is spreading to the private sector.

Markit claims this is the worst case of pessimism since we were at the worst of the recession.

Fiscal Squeeze

What these all have in common is that they link fears about jobs and the public sector squeeze with an expectation of a downturn in the economy's prospects.

Less public sector spending in Britain, and in Britain's main export markets, means demand being sucked out of the private sector economy.

So the expectation of a fierce fiscal squeeze may be having an impact before it actually kicks in.

Alternatively, this may be a slowing up of recovery that could be expected at this stage anyway.

At the start of this year, economists warned the second half of the year would not look so good, and there was a significant risk of at least one more quarter of recession.

You could argue we've had a fairly solid upswing from the grim picture at the start of last year, and now we may be moving into that territory where the economy wobbles, and where weak progress can be matched from month to month by slight dips.

Back to the 1980s' future

Predicting and understanding the trajectory of this recession requires at least some understanding of recessions past.

And the experience of the 1980s is leaving a substantial legacy in handling this one.

It's partly that the people at senior levels of policy-making came of political age in the 1980s, and talk often of how they were affected.

You can hear it in the Labour leadership contest, with four similar male candidates who speak of seeing their classmates thrown on the economic scrapheap, some of them still bearing the scars.

It's David Cameron and Nick Clegg's generation too, though it's unlikely their school chums faced much of a scrapheap.

And it's Keith Brown's generation - not one of the big beasts of politics, but the Scottish skills minister, who has just announced an initiative to tackle a particular jobs problem coming out of this recession.

This is the 3,000 or so young people who decided, quite sensibly, to stay on at school or college last summer rather than head into the jobs market.

This summer, they're running out of road, and so the effort is being made to support them with training, placements, support in setting up businesses and voluntary work experience.

Youth hospitality

That's also the background to a further initiative, this time from the Scottish Council Development and Industry, which is brokering a Futures Skills Forum, including 60 young members and starting work on Tuesday in Linlithgow.

It's well established that the downturn has hit young people hardest.

Among those claiming benefits, the rate for those aged 18 to 24 is nearly double that of the population as a whole.

In Ayrshire and Lanarkshire, the young people's claimant rate is above 10%. Across the country, 71% are young men.

The economic think tank has spotted a decline of 7 percentage points in the proportion of school leavers going into employment - down from 25 to 18%.

Of those in work, fully a quarter work in the hotel and restaurant industry. That's a sector that hasn't been as hard hit as others.

But with evidence that an early experience of unemployment can have a lasting effect on salaries and on employment experience for decades afterwards, there's a strong case for supporting a group that SCDI has optimistically designated the Powerhouse Generation.

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• - What's this?

It is Scotland's biggest company, it is owned by the British public, and it is shedding weight fast.

A chunk of Royal Bank of Scotland is being forced onto the market by the European Commission.

The and it is understood to be the only bidder is no great surprise.

It was clear that Virgin Money was out the picture, BBVA failed to find the partner it was told it would have to find, and National Australia Bank, owner of Clydesdale and Yorkshire, backed out, arguing opportunities look rosier outside Europe.

The confirmation of Santander's interest does, however, remain concerning.

About 5% of the British business market is heading towards control by a Spanish banking giant, at a time when Spain's banks are in a whole lot of trouble, and when Santander can hardly claim to be a new entrant to the British market.

That sale doesn't have to go through until 2013, under the rules set by the European Commission as a condition of RBS's massive government bailout.

So it's possible RBS may hold fire until it can get more competition into the sale, as a means of bidding up the price.

But the bank's bosses are pushing ahead with sales of other parts of its empire.

They're not all that big, and they're a long way from Gogarburn headquarters, but it's worth noting that in the space of one week, it's offloaded its retail operations in the United Arab Emirates and Pakistan.

A totting up of recent activity involves RBS selling at least some of its operations in Vietnam, the Philippines and Taiwan, as well as retail business in Hong Kong, Singapore, Indonesia and New Zealand.

Much of this sprawling operation across Asia comes from the calamitous purchase of ABN Amro.

RBS aims to focus only on major financial centres, and if it's out of Dubai, it is clearly being restrictive in its definition of 'major'.

------------------------------------------

Meanwhile, towards the other end of Scotland's corporate spectrum, the news from Aberdeen's SeaEnergy is a worrying sign that small companies will struggle with the scale of challenge in making the offshore renewables revolution happen.

With RWE, owner of npower, pulling out of a joint venture with SeaEnergy on one of the vast UK North Sea windfarms, it reflects the need for developers and funders to prioritise between a rich array of options, given the constraints of finance, construction capacity and expertise.

SeaEnergy's executive chairman Steve Remp - an American who set up Ramco in 1977 and who was at the cutting edge of the Aberdeen oil industry's international reach into central Asia - has failed to convince investors that he can ramp up to the scale necessary.

So he's looking for a bigger fish to take over SeaEnergy Renewables, while he looks at the under-developed offshore turbine service sector.

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• - What's this?

Why has the Scottish government been so reluctant - until this week - to challenge the duopoly that controls most access to bank finance within Scottish business?

Royal Bank of Scotland and Lloyds Banking Group together account for comfortably over 75% of business lending in Scotland.

The Office of Fair Trading said - when it was asked in autumn 2008 - that it was not in the interests of good banking competition for Lloyds TSB and Halifax Bank of Scotland to have such a big share of the Scottish market on its own.

But that was overridden by the then UK government, in the rush to shore up HBOS.

What's hard to fathom is the slow pace at which the OFT has returned to the issue. And even harder to fathom is why the Scottish government has been reluctant to press for that, particularly after it went out of its way to highlight the problems the small and medium-size business sector is suffering from credit constraints.

There have been informal talks between officials and the OFT, and it was deemed more important to let structural change take place, such as the sale of the Lloyds TSB Scotland branch network, being forced by the European Commission on Lloyds Banking Group.

Until recently, there had been no ministerial contact on the issue.

As finance secretary John Swinney told MSPS in February:

"There may be a role at some stage for such an investigation to be undertaken, but the degree of change in the market at this particular time suggests that it is important to get the correct outcomes in encouraging competition from the process, and then to consider such questions."

So, clearly no enthusiasm there. It then got to a vote in the economy committee, in which SNP MSPs chose to dissent from the majority view that the OFT should be asked to carry out a new review of the banks' duopoly of business banking.

That's now changed. Economy minister Jim Mather wrote on 14 June to the OFT chief executive, Jim Fingleton, asking that it extend its current review of barriers to entry for new banks (and exit for older ones) in the retail and business sector across the UK market.

That way, the problems faced by businesses in Scotland could be fully addressed again - if the OFT takes up the request.

Meanwhile, with more banks wanted and with a major overhaul announced on Wednesday by new Chancellor George Osborne for the regulation of banks, one of the new entrants to banking has today set out its stall, with at least one unusual proposition.

Metro Bank is to operate from next month but with its branch network limited to greater London. It will offer easy-to-open accounts and branches that will be open seven days and for longer hours than usual.

The most unusual aspect of its offering is that the branches are to be dog-friendly, with water bowls and snacks for financial Fido.

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In newspapers, it's called a "reverse ferret" - argue one thing with great vigour and panache one week, and when public opinion turns, follow the herd by arguing the precise opposite the next week, with similar vigour.

This is not quite hypocrisy, which involves holding conflicting views at the same time.

This is more a U-turn in response to changing circumstances, and it can be a noble art.

Several reverse ferrets are going to be required at Holyrood.

Budget pressures are going to force Scotland's political parties to prepare the ground for cuts from next April, and the Holyrood election in May.

By next summer, there should be some sacred cows getting barbecued.

The pressure is financial, and the difficult bit is managing the politics.

Time-honoured tradition, and good practice, requires outriders to prepare the ground for difficult and unpopular decisions.

That's why I'd expect George Osborne to set up a number of independent reviews as part of his Budget statement next week.

In Scotland, we got two of these outriders at work today.

CBI Scotland set out its manifesto for the parties, hoping to influence them when they're struggling to figure out a way of constructing manifestos for austere times.

The employers' organisation doesn't seek to go with the grain of Holyrood opinion. It prefers to challenge it, which is making the CBI more of a political football.

It's calling for a wider range of public services to be commissioned from private firms, and says it's no longer sustainable to avoid compulsory redundancies.

Publicly-owned companies from Scottish Water to Highlands and Islands Airports would be sold off.

While there's a call to tackle pay, pensions and absence rates, an intriguing proposal is to put more incentives into public sector pay as reward for outsourcing and sharing services across organisational boundaries.

That looks like introducing more of a bonus culture into the public sector, when it's under much criticism in the private one.

Then there's something called "re-evaluating student contributions to fees".

This is an unusually mealy-mouthed wording from CBI Scotland. What it means is fees or a graduate tax.

Much clearer is the call today from the Reform Scotland think tank.

It shares the bosses' belief that the state's got too big. It also thinks it only fair that graduates should pay a contribution to the cost of their tuition - above all, if the same money could be used to sustain essential public services elsewhere.

How, for instance, would you choose between nursery school provision or student fees, if one of them has to take a squeeze?

But as there's concern that fees could put people off going to university - and particularly from low-income families - the Reform Scotland proposal is to defer the fees to the point at which graduates start earning more than average earnings.

At present, that's £23,000. Only above £35,000 would the re-payments rise to a top rate of 5% of income.

The argument is made from a fairness point of view, rather than the pressure on public finances.

That may be one of its weaknesses, as the cost to the government of covering that tuition up-front, and only getting repayments starting six or seven years later, doesn't deal with the challenge of balancing books in the short term.

But the fact that the argument is being made at all is important for forcing Holyrood politicians to start addressing the issue. There was a widespread consensus when they voted in 2002 to abolish student fees and replace them with a graduate endowment.

The consensus continued in 2007, when the graduate endowment was abolished. The rhetoric was about making education "free", though it's obviously not free to the taxpayer.

And is that consensus holding three years on? No. The reaction to the Reform Scotland proposal saw three of the four main parties today showing signs of looking to reverse the ferret.

Lib Dems are showing few signs of changing their tune. At Westminster, they've got got an agreement to abstain if Tories want an end to the £3,300 per year cap on English students' fees.

Scottish Tories have been calling for an independent review of all aspects of higher education.

Labour has joined that call, though it's more limited to the question of finance. Spokeswoman Claire Baker said today she's against student tuition fees, but that doesn't rule out the Reform Scotland idea of deferring them for graduates to pay.

The SNP's education secretary, Mike Russell, is similarly against a "kneejerk reaction" of piling the government's financial pressure onto students.

But the administration is now beginning to acknowledge there's a challenge on university finance that needs to be met, and it's opening up to new thinking.

It's worth noting that universities are doing likewise. Today's report says nearly half of their income comes from sources other than block grants for tuition.

That includes grants from UK research councils, commercial research finance, commercial spin-outs of their research, conference income and student rent, along with tapping alumni for donations.

Dependence on core public funding has fallen in 20 years from 80% of combined budgets to 51%.

That partly reflects the high quality of what Scottish universities can offer their commercial partners. Significant parts of the sector represent a world class resource.

If the knowledge economy is the future, and if universities will help create it, then they'll need long-term funding stability.

After four fundamental changes to student finance over the past 12 years, leaving no direct contribution to tuition from students or graduates, that stability is now very much in doubt.

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• - What's this?

Iceberg Alley, or the Baffin Basin separating northern Canada from Greenland, is an unlikely international flashpoint.

But a belching fuel pipe far to the south in the sweltering Gulf of Mexico has made two drillships in the more northerly seas the focus of a contentious issue.

The company at the heart of the dispute is Cairn Energy, based in Edinburgh.

It was one of those to take another tough-going day on the London Stock Exchange on Tuesday, as BP's nightmare on the bayou spreads it sticky slick of corporate horror onto distant financial shores.

The industry operating closer to home faces a strengthened inspection regime, after the new UK government announced more resource to check on offshore operations.

Cairn has leased two drillships and it's positioning them in the Disko field this summer, where it's to the fore in prospecting for oil.

Precautionary measures include trawlers hired purely to haul icebergs away from the hugely valuable floating kit.

Chief executive Sir Bill Gammell has cited US Geological Survey viewing this as one of the big 10 oilfields in the world, but the only one that's not been exploited.

More than that, it's not even explored.

Uncharted waters

Even the outdated maps and charts are needing updated, with help from the Danish government, meaning the increased amount of shipping around Greenland is navigating barely charted waters.

Cairn Energy has told the stock markets its chances of striking black gold are around 10%.

For Greenland, the world's largest island with a population below 60,000 (lower than that of Inverness), the possibilities are unimaginable.

But for its Canadian neighbours, the possibilities of environmental damage are also epic.

Ironically, it's no stranger to international controversy itself, concerning the environmental impact of its tar sands extraction in Alberta.

In Canada's Arctic waters, drilling has been suspended, as it has around American shores.

True, there are fewer communities could be devastated if there's a big spill in the Arctic.

But there are fewer bases from which ships can try to control it, and a very limited range of equipment is in place.

Iceberg peril

Cairn's view is that it's a bit premature unless and until its drillships actually locate the oil.

Getting it as far as the seabed is some way off.

The company's hugely successful adventure in the Rajasthani desert of India took five years from discovery to the start of production.

A Cairns spokesman stresses: "We've got a robust strategy, and we're conscious of our responsibilities. Greenland is also conscious of its responsibilities."

The corporate line is helped by WWF environmental group arguing standards are more stringent in Greenland than in Canada.

All this comes to a head this week at a meeting of environment ministers on the Arctic Council, meeting in the Greenland township of Ilullisat.

Convened by the Danish, offshore drilling is not formally on the agenda.

It is meant to be more about safety and security in Arctic shipping lanes, not only for freight but for cruise liners in iceberg peril and getting dangerously close to the wash from collapsing glaciers.

But Canadian minister Jim Prentice has made clear he wants to talk about drilling, at least with his north-east neighbour.

He's demanding to know what precautions Greenland is taking. However, he's not demanding the Greenland government (semi-independent of
Denmark) stop the offshore drilling, as Canada and the US have done.

Not yet anyway.

Serious incident

The answer from Greenland is that it's taking its safety manual from Norway, which has a pretty good record.

It has, however, had an unusually long scare since May 20, when the Gullfaks C rig, between Shetland and Bergen, had to be closed down and partially evacuated as drilling mud and then cement were pumped into an unstable well on which one of two safety mechanisms had failed.

Described by Norway's safety supervisor as a "serious" incident, operator Statoil has only just said it may soon re-start production.

The depth of Greenland waters above the Disko field is far less than BP's Deepwater operations, so it's within the technical know-how of those who have had 40 years of practice in the North Sea.

The big difference is what to do with the kit and potential spills when the ice comes.

That's one of the areas where Ottawa is demanding answers.

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• - What's this?

Either Dundee points the way to Britain's economic recovery, Scots are going to struggle more than others to get out of recovery, or Scots'
lack of business zeal points the way to economic decline.

Those are three takes on the state of the economy published yesterday and today, and all of them could be right.

The National Endowment for Science, Technology and the Arts has set out scenarios for the future of the UK economy and what they would mean for growth.

The status quo is quickly dismissed, depending on the financial sector to drive growth. Even closing part of the manufacturing gap with European neighbours is seen as ensuring the best outcome in growth and employment, but impossibly ambitious in what it would require.

So are seen as the keys. And what Dundee's life scientists are doing to rejuvenate a city that had lost its main industries and much of its purpose is held up as a model to the rest of Britain.

Over the recession horizon

But however much clever science Scotland does, it's not going to pay the mortgage and fuel bills if it isn't translated into business start-ups and business growth.

And that's where the Global Entrepreneurship Monitor comes in, with a particularly worrying message. It looks beyond the ITEM Club's warnings () about slow Scottish growth out of recovery, partly due to its dependence on public sector jobs. No great surprise there. The GEM survey has bigger implications beyond the recovery horizon.

It measures , and across 20 similar economies, to feed into an index. Through Strathclyde University's Hunter Centre for Entrepreneurship, Scotland first joined the research project 10 years ago. And it's shown Scotland's relative position declining.

Faced with recession and retrenchment in the public sector, that gap becomes all the more significant, because it's business start-ups and growth that will have to fill the gaps.

So how do Scots see opportunities for new business? Pessimistically.
Of those who are not active in entrepreneurial activity, only 20% see good opportunities, down from 33% in 2008. That much is in line with the UK.

But look at comparable Scandinavian countries (known, for research purposes, as the Arc of Prosperity - a term that has fallen out of favour elsewhere). Some 40% of people there see good business opportunities, even after the recessionary experience last year.

One explanation may be that last year's results suggest comparable countries were quicker to sense the impact of recession on business opportunity, and that Scots have now caught up.

Scotswomen lag

There's a similar gap in the proportion of Scots and others who know someone who's been setting up a business in the past two years.

Scots are far less likely to chip in investment funding for a friend or family member. The survey shows only 4 in 1,000 of us do so, while in England, it's 12 per thousand, and in Scandinavia, it's 40.

And what about those actually doing the start-ups? The proportions are so small that you have to wonder at the accuracy of the data, but the GEM survey does trawl very large numbers of people.

The index in Scotland has fallen by 18% between 2008 and 2009. The new figure is 3.6%, while in the UK, it's 5.6%. Out of 20 comparable countries, only Belgium and Japan do worse.

This is the lowest index rating since the survey began in 2000. That goes for both men and women, while there's another big gap between the genders. The entrepreneur activity rate for Scotsmen is at 4.8% and for Scotswomen it's at 2.5%.

A much bigger gap exists in Yorkshire and Humberside, where men are the most entrepreneurial in Britain, but the women among the least.
I'm not going to pretend I can explain that one.

Wage culture

The obvious first question for Scotland is why this problem persists, decades after it was identified and became a priority for government and its economic development agencies.

(Incidentally, the Strathclyde report says the Scottish government's counter-recession strategy "overshadowed" this previous priority, giving precedence to replacing private sector activity with public
sector.)

So could there be a particularly Scottish aversion to financial risk?
Or that our recent economic past has featured big industries with wages, and that's the way we'd prefer things to stay?

Is there a cultural mistrust of the entrepreneur, or of those who want to get rich? (This survey found Scots setting up a business are much less likely to be motivated by raising their income than those from Scandinavia - more common among Scots is a combination of necessity and opportunity.)

National mindset

Perhaps you have better explanations for why this is. Some, for instance, are convinced the business mindset stems from the national one, as a small part of a big country.

A group of prominent business leaders last week launched their campaign for more tax powers in the Scottish Parliament, convinced that could set the necessary incentives for business to locate and grow in Scotland.

But would it spark a different attitude to start-ups? Are there thousands of Scots who would set up in business, but only if Scotland were independent? Discuss.

Short of a constitutional solution, what can be done to change perceptions of business start-ups, and to get more of them on the road?

One of the answers may lie in one part of this GEM report that focuses on those with business experience from watching their parents. Better still from those who worked for their parents' companies.

They are two-and-a-half times more likely to set up in business than the Scottish average. This is a particularly important opportunity for women generally and for men with low qualification levels.

Immigrant role models

The explanations are perhaps obvious: start-ups and fear of failure are less daunting among those who have seen it done close up, there are role models and advice handy, and often family finance too.

And which group is most likely to have worked in their parents'
businesses? Immigrants, or at least, those defined as "not born in Scotland". They are more than three-times as likely as someone born in Scotland to have worked for their parents' firm.

So perhaps one solution to Scotland's low business start-up rate is a controversial one - more immigration.

If this matters - and there really isn't much doubt that it does - then the failure to figure out what's going wrong and how to fix it now needs more radical solutions.

Education, taxation, independence, immigration, risk-taking, mindset?
Perhaps you have better ideas...

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• - What's this?

And then there was one. Santander is now the only serious bidder for the 319 branches of the Royal Bank of Scotland in England that the European Commission has required it to sell.

Though there's no comment from National Australia Bank (it never said it was in, so it's unlikely to confirm it's out) it's now clear NAB is out of the running, having looked hard at the possibility of putting the RBS branches together with the Clydesdale Bank and Yorkshire Bank - its linked British operations.

Safe and conservative

There's at least three big problems this presents for the UK government.

One: NAB's Yorkshire and Clydesdale operations are the kind of safe, conservative banks that policy-makers want to see expand in Britain.
That's partly because they are answerable to Australian regulators who have been similarly conservative.

It's worth remembering Australia escaped recession, as its resource base is so well-placed for Asian growth.

And if the bosses in Melbourne have looked at the books, and looked at the state of the British market and economy, and concluded they would be better focussing their attentions elsewhere, that bodes ill for the future of Clydesdale and Yorkshire in NAB hands.

Expanding banking empire

NAB is trying to expand its Asian operations through acquisition of AXA business, and it's reported this weekend that a troubled lender in Nebraska is being taken under the wing of its Great Western Bank, the US Midwest subsidiary which underlines NAB's strength in agricultural lending.

If you're Cameron Clyne, the NAB chief executive, sitting in Melbourne and wondering where to expand your banking empire, neither Europe in general nor Britain in particular look attractive options. And selling off those existing British assets might free up resource for expansion elsewhere.

Who to? Well, there's one report today that the Spanish bank BBVA is interested in buying NAB's European operations, though I'm told that's one of the more speculative Sunday stories.

But if there's interest there, it would bring another competitor into British banking, and quite a big one.

BBVA, as it happens, submitted a bid for the RBS English branches (rebranded Williams and Glyn, and including the five NatWest branches in Scotland). But it was told to come back with a partner bank, and it's not yet clear if it's going to do that.

It hasn't been ruled out. But it's not pursuing due diligence with the, well, diligence, of Santander or - until very recently - NAB. And time is running out, with the next round of bids due during June, and a decision likely in the by October.

Spain pain

BBVA's interest in RBS branches, and potentially in Clydesdale and Yorkshire, brings to mind problem number two: Spanish banking.

In recent weeks, several of the smaller lenders have either been rescued or rapidly merged to shore them up.

The nation's public finances are in a particularly bad way, with banks exposed to its sovereign debt. And its property sector is even more troubled than the British one.

So is this really such a good time to link British banking ever closer to Spanish banks?

New banks for Britain

That brings us to problem number three for the UK government: Santander.

It's Spanish (see above re BBVA). It's already got a significant presence on Britain's high streets, through the rebranded Abbey, Alliance and Leicester and a bit of Bradford and Bingley. So the intention of the Labour government to expand choice in British banking would hardly be achieved.

We're still not quite clear what the intention of the new coalition government is on that score, but it's very likely that the Chancellor, George Osborne, shares at least that aspiration with his predecessor, Alistair Darling.

And if Santander is the only serious contender left in the race to buy the RBS English branches, then it can bid down the price.

That's bad news for RBS, in trying to maximise the proceeds from what has been quite a strong retail and business banking operation.

And it's bad news for RBS's majority shareholder - which is, of course, the British taxpayer and George Osborne.

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• - What's this?

Elias Elia. Remember him?

In the depths of a cold winter, he was the .

And as £34m of that was owed to FlyGlobespan and its parent company, for which E-Clear provided credit and debit card transaction services, it was a compelling explanation for why Scotland's biggest airline - at that time - was grounded permanently, costing more than 600 jobs and stranding thousands overseas.

It now seems E-Clear is under investigation by the Serious Fraud Office.

It's not confirming that, but it has gone from saying it's making informal inquiries, some months ago, to saying now that it can't confirm or deny anything.

Others are reporting that E-Clear's administrators are helping the SFO with their inquiries.

So are we any clearer about Mr Elias's account of his accounts? He's proved elusive.

But persistent Â鶹Éç colleagues at Radio 4's Face the Facts programme have got him to talk - sort of.

He's disputing the administrators' account of what happened to tens of millions of pounds withheld by his firm.

He says suggestions he used money due to clients, including FlyGlobespan, to cover debts in his own business are "absolutely not correct".

But, frustratingly, he refused to explain why.

This is after four months of being asked to do an interview, and repeatedly saying he would do one.... but then failing to commit to a date and time.

He sent a statement in which he claimed FlyGlobespan's collapse was not due to E-Clear and would have happened anyway.

But it didn't answer key questions about E-Clear's finances.

So he was called out of the blue and questions put to him.

He wouldn't say much - but what he did say is at odds with what we've been told so far.

E-Clear's service to Globespan, and to other low fare airlines, was in processing customers' electronic payments and passing it on to the airline, minus commission.

But towards the end of 2008 it started holding money back and clients started to complain that their payments were not arriving as smoothly as before.

The accountants appointed to act as E-Clear's administrators have provided an explanation.

Two of E-Clear's other clients, the Scottish-based airline, Zoom, and the package holiday group, XL, had failed in 2008 blaming high fuel prices.

In a report sent to creditors, the accountants, BDO, stated that E-Clear became liable for £57m of refunds for holidays which had been paid for in advance but not taken:
"As the Company did not hold significant retention monies, it had insufficient resources to meet these liabilities other than by utilising receipts in respect of other solvent merchants".

So in other words, E-Clear started using payments coming in from its remaining clients to pay back credit card companies who had refunded consumers.

Yet when 'Face the Facts' spoke to Mr Elia, he said that is not what happened at all.

So what had happened? He wouldn't elaborate.

Neither did he explain why - as discovered in February - money from E-Clear had been loaned to another of his business interests, Allbury Travel Group Ltd.

It ceased trading when, in December 2009 and after Globespan's collapse, it suddenly lost the financial support previously provided by a parent company belonging to Elias Elia.

While there are travel trade reports of Mr Elia pursuing E-Clear's administrators for losses he himself incurred in his own companies' collapse, perhaps the Serious Fraud Office will be luckier in getting straight answers from him.

You can hear the results of the latest Face the Facts investigation onYou & Yours on Â鶹Éç Radio 4. The programme is available on the Â鶹Éç iPlayer until Friday 13 June.

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Amid the recessionary mayhem, one sector that's held it together has been tourism.

The same can't be said of its chief executive and new chairman. Mike Cantlay has returned to the boardroom, now as chairman, and seems unable to get on with Philip Riddle as chief executive.

So nine years after joining VisitScotland, and calming it down from a very rocky patch of political controversy, Philip Riddle's stood aside while negotiating his severance package. On a salary at £160,000, plus bonus, the figure he's due looks likely to be explosive in the current public sector pay environment.

So the controversy's back. Was there political interference in all this? The air in the Scottish Parliament debating chamber was thick with conspiracy this afternoon. Tourism Minister Jim Mather had been forced into making a statement to MSPs, and conceded ministers have been in touch with Messrs Cantlay and Riddle in recent weeks.

He didn't actually deny having had a hand in Riddle's departure, choosing instead to stress that it's a personnel issue for VisitScotland's board, and he's a respecter of the arm's-length principle when it comes to quangos.

Even if it were ministers doing the pushing, or if it's merely a clash of boardroom personalities, is there more that's been going wrong with Scottish tourism that might explain this?

The figures don't look all that bad. Through last year, visitor numbers were up 2.5%, and spend was up by more, helped by the staycationers, many of whom were deterred from foreign travel by the weakness of sterling.

Foreigners were attracted into Scotland for the same reason. But that doesn't explain why visitor numbers to the rest of the UK fell during last year.

However, it's a long way from the kind of growth necessary for Scotland to reach a target of 50% revenue growth between 2005 and 2010. Perhaps it is the slow progress towards that goal that has brought Mike Cantlay in with renewed vigour.

He's already announcing 'guerrilla marketing', using £5m of funds to lever in an ambitious £100m extra spend. The campaigns target those who are leaving it late to book their holidays, both in Britain and in nearby continental markets.

And he's claimed there's a great untapped market of roughly 40% of Scots who have never holidayed in their own country.

Two other underlying questions may provide a better explanation to what's going wrong at VisitScotland headquarters.

Philip Riddle is seen by some as the kind of boss who dictated the marketing strategy to the industry. And with some sectors and regions organising in consortia, there's been a resistance from the quango to working alongside them.

The other issue is Homecoming. Organised in a rush, and widely seen as a politically-tinged marketing campaign, there's another one on the way in 2014.

That's not just for the Commonwealth Games and Ryder Cup, but for the 700th anniversary of the Battle of Bannockburn.

Could it be that Philip Riddle was insufficiently keen on pursuing another such marketing splurge with nationalist overtones?

If so, it seems he's being sent homeward ... tae think again.

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We're back to open season on the banks. The regulation is piling up, with more being proposed today by the European Commission.

It's aiming its regulatory fire at boards of directors and at credit ratings agencies, which have done so much to pile pressure on Greece and other Mediterranean debtors.

There's pressure in Washington as well, where mega-investor Warren Buffett is testifying before the Financial Crisis Inquiry Commission on the role of credit ratings agencies.

There's an independent review of Britain's banking to be published next week.

It drives towards the G20 summit later this month, and the intention of the Obama administration to sign off reform legislation within a month.

But there are mixed signals from the new government at Westminster.

With both coalition parties promising, pre-election, either a full break-up of the banks (LibDems) or something rather less drastic (Tory), they've decided to do neither and have a review instead.

Utility banks

It looks like the long grass, but Business Secretary Vince Cable in Edinburgh yesterday has reverted to his party line that a break-up is necessary, however much the review might produce the many difficult implications of such a break-up. The status quo, said Mr Cable, is "dangerous".

More dangerous than breaking up the banks without thinking through the implications?

And where does this leave Scotland and the Scottish banks? If you look at the Scottish government's policy, you'd be lucky to find one.
They're not clear what they want to do with Scotland's banks and bankers.

According to Jim Mather, ministers are refraining from taking a position on the future of banking, instead stating their interests - though he seems to want to see banks taking their place beside energy and water utilities, so that looks like quite a drastic break-up.

Battering the banks

The dilemmas ministers face centre on the prospect of a broken-up Royal Bank of Scotland seeing headquarters power moving swiftly out of the country, probably leaving parts of it vulnerable to takeover, and potentially leaving no Scottish-based banks.

The dilemma - particularly in Britain - is also the choice between battering the banks, demanding public anger is translated into pain for bankers, reducing their past risky behaviour, but at the same time demanding they make loans they wouldn't otherwise make, and that they become profitable, with higher share prices, so that we - with large stakes in RBS and Lloyds - turn a profit on our risky investment.

If the banks are to be broken up, the question is: which way? Along which fault lines?

To break up the banks and somehow build a new, narrow bank out of the wreckage, getting ahead of others and building it up to an international utility operator: that's the trick being suggested at a forum of bankers and MSPs organised by the Scottish Parliament's futures forum today at Holyrood.

One eminent expert in banking suggested, under conditions of anonymity, separating out the personal, business and business advisory role of banks from the trading parts. But he added that he doesn't foresee that being done any time before the next banking crisis. The political appetite for such change has gone.

Another senior figure in Scottish finance made the telling point that to maintain major headquarters power in Scotland will require a pool of talented non-executive directors, with doubts that those skills currently exist in sufficient numbers. RBS, for instance, only has one board member based north of the border - Sir Sandy Crombie.

Scottish duopoly

The main message coming out of the forum is being repeated by MSPs debating the future of banking as I type: the pressure for the Office of Fair Trading to carry out a review of the effective duopoly in Scottish corporate banking in which RBS and Lloyds Banking Group (including Bank of Scotland) control more than 75% of the market.

The OFT last week launched an inquiry into personal banking across the UK - particularly barriers to new banks coming into the market, barriers to expansion and even barriers to exit. It's looking for evidence, and soon, with publication of its findings in autumn.

But that's not seen as enough, both because the UK market has four big players instead of two, and because personal or retail banking appears to be more flexible (or much less of a problem) than business banking.

To be fair to the OFT, it did raise precisely that issue when it had the statutory duty of reporting on the proposed takeover of Halifax Bank of Scotland by Lloyds TSB in November 2008. But in the rush to save HBOS, its advice was ignored, and Lloyds Banking Group was born.

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