ALISTAIR Darling fears a Yes vote next week will see Edinburgh’s big financial institutions go the same way as brewers Scottish & Newcastle, a historic city firm which quit the Capital.
In an exclusive interview with the Evening News, the Better Together leader dismissed claims that warnings from Royal Bank of Scotland, Lloyds Banking Group and Standard Life about moving their registered offices south of the Border were “technical” procedures about moving their “brass plate” headquarters and would not affect jobs.
“I think it’s far more than technical,” said the former chancellor. “Keeping headquarter functions in Edinburgh is critically important for the city’s future prosperity.
“Years ago we had this argument over Scottish & Newcastle and I remember saying then ‘Lose the headquarters and you lose the company’ – and that unfortunately is what eventually happened.
“What you need in a city like Edinburgh are the people taking the decisions and once you move the head office what you’re increasingly left with is a back office. And the trouble with a back office is that companies can decide to move it somewhere else.”
Mr Darling, Labour MP for Edinburgh South West, added: “I really don’t think Alex Salmond can shrug this off. Not so long ago he said headquarters mattered and they do matter, but he has shrugged his shoulders and is trying to laugh it off and say this won’t make any difference.
“As a city MP I’m extremely worried about this. I’m worried when Standard Life, also a major employer in the city, says it’s going to have to move some of its business down south. The key point is we don’t have to take on these risks. Once we force people to think about moving the problem is you open a door that you can never shut.
“It’s one of the massive risks the city faces. As we all know we are facing a challenge over the next few years to generate jobs. The banks and Standard Life are good employers, these are good quality jobs.”
Referring to a memo from RBS chief executive Ross McEwan saying there was “not an intention to move operations or jobs”, Mr Darling said: “I do understand why the bank is trying to reassure its staff, but once you start this process you never know where it ends up.”
He disputed the claim by Alex Salmond that Edinburgh’s financial services sector would flourish in an independent Scotland.
“There is no doubt about the talents and skills of people employed by firms like RBS and Standard Life,” he said. “The problem is in an independent Scotland you would have a different financial services regulatory regime and a different tax regime.
“When you bear in mind, in Standard Life’s case something like 90 per cent of the products it sells is to the rest of the UK, they would have a border which would add to their costs and that would make them uncompetitive with firms based in England.
“It’s no accident that in Europe there is very little cross-border pension trade.”
Mr Darling said Standard Life had shed some jobs in recent years. “What possible advantage could come to Edinburgh through provoking them into moving or thinking about moving? No other country in the world would do this. This is utter madness.”
And he told how he had had the Capital in his mind as he dealt with the 2008 financial crisis. “What worried me when I was chancellor and the banks collapsed six years ago, I thought to myself ‘what will happen in the city I represent if these banks go down?’. I care passionately about this, It’s so important to Edinburgh’s future. We can’t afford to do anything that would cast a single doubt on the future of these companies in the city.”
So what would the pro-UK parties’ promise of more powers mean for Edinburgh?
He said staying in the UK meant the threat of the banks and finance companies quitting would disappear immediately.
And greater tax powers – already on their way – would give the Scottish Parliament more scope to act as it saw fit.
“One of the crucial powers it will have is it will have to fix an income tax and obviously it could tailor that to the needs of the financial services industry.
“One of the things the financial services industry is desperate for in Edinburgh is people who are skilled and trained, particularly in maths. With greater power over tax, if it needs to raise money to improve education it can do that.
“Edinburgh is a centre of excellence for health. By staying in the UK you keep the research money. but in addition to that if the Scottish Parliament felt it needed to do more it could do that.”
So did Mr Darling expect taxes to rise once Holyrood had the extra powers? He was noncommittal: “At any Scottish election, parties will go into the election with their proposals.”
And he pointed out the parliament would also have the power to borrow. “That means, for example, if it wanted to build more housing it could do so. One of the big problems in Edinburgh at the moment is there is not enough affordable housing, either social housing or housing for first-time buyers. I would like to see a major housebuilding programme in the city because we desperately need housing for rent as well as housing to buy.”
He also dismissed Mr Salmond’s claim that being the capital of an independent country would bring extra status to Edinburgh with lots more embassies.
“It’s got a lot of consulates now,” he said. “The idea that a handful of diplomats can take the place of thousands of jobs – if it wasn’t so serious it would be laughable.”
He acknowledged the current UK Government’s immigration policy presented a problem for universities recruiting overseas students and said Jack McConnell’s “Fresh Talent” scheme – allowing graduates to stay on and work here for a couple of years – should be reinstated.
But he said: “The problem is if you have an immigration policy that is radically different from the rest of the UK there will be a border. Otherwise what will happen is someone could arrive in Edinburgh then get on a train straight down to London.”
If independence carried risks, did staying in the UK not do so too – including a referendum vote to leave the European Union?
“Just as I think we will win this referendum I think we would win a European referendum if it ever comes along – and that’s by no means certain because I don’t think you can possibly say the Tories are going to win the next election. If you go by the latest opinion polls they won’t.”
Mr Darling said the narrowing of the polls had helped galvanise No support.
“We have been inundated with calls offering to help because people realise this is the biggest decision they will ever take in their lifetime. People understand the stakes could not be higher.”