No-one should be surprised that Standard Life has warned it might leave Scotland should the country vote for independence later this year. It is not exactly a secret that Edinburgh’s financial services industry is concerned by the possible – indeed plausible – implications of independence.
The suggestion – sorry, the threat – that it might leave Scotland is already being characterised by nationalists as yet more bullying, this time of the corporate rather than political kind. No doubt this is a blustering bluff too.
But what if it isn’t? The sorry truth is that Edinburgh’s financial sector is not quite what once it was. The Bank of Scotland is a small part of the Lloyd’s group. So is Scottish Widows. Standard Life, being listed on the London stock exchange, is less of a Scottish company than it used to be. As for the Royal Bank of Scotland, it is these days largely a Scottish company in name only. This is not simply because the British government is its majority shareholder but more a reflection of the fact – sorry or inconvenient as it may be – that the bank no longer feels any great allegiance to, or belonging in, Scotland.
RBS is, to a very great extent, run from London these days. Even if the government sold its stake it seems improbable that real power will ever return to Edinburgh. Ross McEwan, the newish chief executive, rarely ventures north. The bank remains – properly you may say – chastened by its near-death experience. Even so, there is something melancholy about its retreat, something sad about the narrowing of its horizons and the limiting of its ambitions.
One of the things Iain Martin’s splendid, merry, romp through RBS’s disaster made clear was the extent to which RBS’s rise was fuelled by a certain kind of nationalism. George Mathewson and his colleagues wanted to make a statement: a Scottish company, a Scottish bank could become a global player. The company would not be limited by its supposedly humble, even provincial, location and history. It would show the world that a Scottish bank could be quite something. I suppose they succeeded.
But today’s RBS feels little such loyalty to Scotland. It is no longer run by Scots. If the bank survives – which is not altogether certain even now – it will survive as a Scottish bank in name alone. It is not difficult to find RBS executives who assume the bank will move to London and that it may do so whether Scots vote for independence or not.
Standard Life, readers with long memories will recall, has previous form in these matters. As long ago as 1992 it warned that devolution – never mind independence – might cause it to relocate south of the border. Well, devolution happened and Standard Life remained in Edinburgh. So nationalists will argue – and hope – that today’s warning is a comparably empty threat.
And perhaps it would be. Like so many other aspects of the independence argument this is an imponderable matter. A known unknown, if you will. Much would presumably depend on how independence was arranged.
Nevertheless, Standard Life’s warning cannot be easily dismissed. The company will make a calculation of where its interests, not Scotland’s, lie. Moving to England, where it has many more customers than in Scotland, might well be a rational decision. Emotion – or, to put it in terms nationalists might favour, patriotism – may not be worth very much. It’s just business.
Still, this intervention – this threat, if you will – is a test for the nationalists. It makes clear the great gulf between existential and utilitarian nationalists. The former will shrug off Standard Life’s warning; the latter will be worried by it. I have never quite believed there are as many utilitarian nationalists as some SNP figures suggest.
As I write this, Alex Salmond is answering questions in the Scottish parliament. As you would expect Standard Life is dominating the agenda. The First Minister has a slightly hangdog, even despondent, look this afternoon.
Yet he has at least a partial point: Standard Life already operates in many countries around the world (it has a large Canadian operation for instance). It probably could manage fine as a Scottish company after independence too.
But placating or reassuring Scottish business is one of the reasons why an independent Scotland will not be the kind of high-tax state many of its leftist admirers dream of. It cannot afford to be. For the risks of capital and corporate flight are so great – and the flitting is merely a matter of a couple of hundred miles – that business will in many cases be able to write its own legislation and regulation and those bills and regulations will be friendly to corporate Scotland.
Even so, it is hard to avoid the thought that this is another blow to the nationalists. Scaremongering? Perhaps. Cold, hard reality? Perhaps that too.
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