If you thought the visits to Edinburgh of Bank of England Governor Mark Carney and Chancellor George Osborne were nothing other than mere obtuse technicalities or Tory bluff and bluster then fair enough, that’s your right. You may just shrug your shoulders and say: “Hell mend them, who are they to tell us what to do.”
And indeed, who are they, a mere Canadian and an Englishman, what right have they to tell us what currency a free independent Scotland can use?
If they place limitations on us having a formal agreement on using the pound then we can just use it anyway without their agreement. Like Panama or Ecuador uses the dollar.
Well, Standard Life has now spoken and it is an Edinburgh company. A very successful one. It’s not foreign, not from the Home Counties or the dreaded City of London – it’s as Scottish as Edinburgh Rock.
It has been so successful that it has built up a huge business selling pensions, savings and other financial products – to English people. Some 90 per cent of its business is outside Scotland and mostly in England.
So, for it, issues of which currency to use, what regulations to work under are very, very important and can be quantified and considered in a non-political, non-partisan and objective way.
Standard Life can say what it wants without any intention to bully, without any agenda to bluster and it cannot afford to be bluffing. Standard Life is not telling anyone how to vote and has made that clear; it is simply respecting its shareholders, customers and employees in that it has a fiduciary duty to report what it sees as the risks to its operations and therefore its profits (and thus its dividends), its investment growth (and therefore its customers pensions and savings) and its future competitiveness and sustainability (which is what underpins the thousands of jobs it provides).
It has to be honest and frank about these things now or face legal actions from those stakeholders in the future – just as RBS faces legal action for what it did or didn’t say before its rights issue related to the cataclysmic ABN-Amro takeover.
Let’s get this straight; there will be no formal currency union, it is not in the UK’s interest to have one. Period. Some people have said that the currency issue is too highfalutin to matter – but it goes to the heart of what an independent country is about. Being independent.
Carney came to Edinburgh and told us the technical methods for sharing any currency would require the mutual sharing of sovereignty or it would not work. Osborne came to Edinburgh and told us that those technicalities would involve a ceding of English sovereignty that his permanent secretary could not recommend and that he could not accept. Labour and the Lib Dems agreed.
Now, in the absence of that shared pound being available Standard Life is saying that – as a British company – it would have to relocate much of its operations to, where else, but somewhere in Britain. Using the pound without Carney’s central bank and having different regulations is too risky for its business – it will lose customers that will want guarantees of security.
The implications of all of this go beyond Standard Life; now that it has had the courage to speak out others will do so too. The idea that RBS will stay headquartered in Scotland is difficult to square-off. The revival of the Nat West brand that it bought with an HQ in London, is far more likely. It is, after all, owned 83 per cent by the UK, which means 72 per cent is owned by England, Wales and Northern Ireland taxpayers.
All the commercial issues that affect Standard Life (regulation, customer base, oversight of governance, currency) affect RBS – and TSB, Lloyds (BoS & Scottish Widows) and many others as well.
Take them out, or even just reduce them in scale of operations, and Edinburgh changes from being a financial centre with a highly attractive balance between private and public sector employment – and all the spending that comes with it from the former – towards being a government, legal and education centre funded out of the public purse. Look for big shops shutting, private schools closing and investment finding more attractive locations (Leeds and Manchester). Scotland’s economic growth will be concentrated in Aberdeen (so long as the oil lasts).
We owe Standard Life a debt of gratitude for telling it as it sees it. We can still vote for independence if we judge it worth the risk – but at least we now know some of the cost to the Edinburgh and Scottish economy in earnings, spending on local services and jobs.
Edinburgh will become a museum piece – a nice museum piece – but little more than a testimony to the good times of the Union after the Enlightenment. Edinburgh used to be the world capital of publishing – not any more it’s not. It used to be an international centre for brewing – not any more it’s not. It is still a highly attractive financial centre – but after independence of the type Alex Salmond is selling it faces mass emigration of its business base. Will the last fund manager please switch off the lights?