Fear of the unknown has been the dominant theme of the independence referendum campaign. But warnings from the mega-banks have an empty ring
Will the last bank to leave Scotland please turn out the lights? That’s what the unionist Better Together campaign has been saying with undisguised glee after a succession of large finance houses including Royal Bank of Scotland, HBOS, Standard Life and Alliance Trust have threatened to leave Scotland over ‘uncertainty’ caused by the independence referendum. The Scottish Labour leader, Johann Lamont, taunted Alex Salmond at question time by paraphrasing the Scottish pop duo The Proclaimers: ‘Standard Life no more, RBS no more...’
However, the flight of the banks may not be quite what it appears, and the Yes Scotland campaign believes that the unionists have made a mistake allying themselves so closely with big business. The climate of monetary uncertainty is, of course, largely a result of the announcement in February by Chancellor George Osborne that Scotland would not be allowed to use the pound after independence. That was the cue for a range of big companies to declare that they were considering their position. The Edinburgh insurance company, Standard Life, said that it is making contingency plans to move much of its business to London.
However, Standard Life made similar warnings in the early 1990s about Scottish devolution, so its threat carries an air of familiarity. As for RBS, it has already left – at least as far as the European Union is concerned. Under an obscure 1995 EU directive, unearthed by BBC economics editor Robert Peston, banks are supposed to register their headquarters in the country where most of their business is located. For RBS and HBOS, this is and has been for many years England. RBS is also NatWest and HBOS is Lloyds Banking Group.
This neutralises one problem for Yes Scotland. The chairman of the unionist Better Together, Alistair Darling, has repeatedly warned that an independent Scotland would be unable to cope with a banking crisis, so great are the assets and liabilities of the Scottish banks. What, he asks, would have happened in 2008 if Scotland had not been able to rely on the Bank of England and the UK?
Well, now we know: it would have been pretty much what did happen in 2008, when the Bank of England organised a trillion pound bailout of RBS and the rest of the big banks to prevent a collapse of the UK financial system. There has been an erroneous, but near-universal, assumption that an independent Scotland alone would have been landed with sole responsibility for the toxic debts of its two mega-banks. This is not the case.
However, this is a pretty rarified argument in a referendum campaign where fear of the unknown is the dominant theme. There is little doubt that the warnings from the banks, and from other businesses like Aggreko, BP and Sainsbury’s, which have dominated the Scottish press, have heightened anxiety about the economic consequences of independence. As have warnings from the UK government that mortgage costs would rise and pension values fall if Scotland votes Yes.
Curiously, it doesn’t seem to have dented the Yes vote in the opinion polls very much. At the time of writing, Professor John Curtice of Strathclyde University says that Yes has increased marginally in the poll of polls from 39% before Christmas to about 42%. It might be there is a modest backlash against the banks and big business for appearing to hijack the referendum campaign.
The Yes campaign is still far behind, but it will now seek to paint Better Together in Tory blue. The only way to make Scotland a fairer society, they’ll say, is is to wrest economic control from Westminster. And tell the bankers where to go.
Iain Macwhirter is political commentator on the Sunday Herald
