Thursday, 27 February 2014

Shock! Horror! Er, Not Really...

I really can't remember much about what stance Edinburgh-based financial services giant Standard Life has taken towards Scottish self-government in the past. However, I do remember the view which my old employer, Scottish Widows, (or rather its then Chief Executive Mike Ross) took in advance of the 1992 General Election.


© Stefan Schaefer
If Scotland voted for devolution or independence, the public were told, then there was a good chance that Scottish Widows, or at least parts of it, would be up and off to England. Twenty-two years later, there's a Scottish Parliament, Scottish Widows is still in Edinburgh and Mike Ross is long-gone, arguably a casualty of having squeezed too much money out of Lloyds TSB for the demutualisation and merger back in 1999 which saw Widows trade its mutual status for life as a plc.*

I had great plans for a career at Widows and for a time, at least a part of it seemed to have plans for me as well. However, the reality of the day job was pretty mundane and after seeing a set of interview notes which concluded that instead of moving into management I should spend years studying to provide expert guidance to IFAs and benefit consultants who'd then be paid many times more than I ever would for capitalising on my knowledge, I decided with reluctance that it was time to pursue interests elsewhere.

Being politically active, those occasional hours of boredom at Widows gave me a chance to think a bit about financial services and self-government. In particular, with somewhere in the order of 90% of your customer base outside of Scotland in the rest of the UK, just how on earth would you make independence work if that's what Scotland ever voted for?

Despite the lurid headlines offered up today by a salivating BBC, that's exactly the sort of exercise which Standard Life seems to have been undertaking in private. Good for them – any well-run business should always be 'scanning the horizon' for potential economic, political and legislative 'risks' [in this context, risk means any potential change to 'business as usual', be that good, bad or indifferent]. I'd expect nothing less from anyone looking after my money, whether as policyholder, shareholder or both.

Now, to the facts. Standard Life has NOT said that it will leave Scotland in the event of a 'Yes' vote in September [Company statement here] What is being reported relates to a very specific set of circumstances – namely, if there's no agreed currency union post independence and no shared regulatory environment. It should be noted that this is not the favoured outcome of the Scottish Government and as John Swinney said earlier today, if anything, it underlines the wisdom of having a currency union post independence for people on both sides of the border.

Standard Life employs nearly five thousand people in Edinburgh to administer life policies, pensions and investments. Just think for a moment what moving the business wholesale would mean for the company. Overnight, it would lose thousands of years of corporate experience. It would have to find suitable premises and then start recruiting from scratch, all while trying to maintain business as usual. Such an exercise would be the stuff of nightmares for those charged with having to make it work, which is why it will never, ever happen. Period. Anyone who tries to tell you that it might (take a bow Nick Clegg and Alistair Darling) either doesn't know what they are talking about or is deliberately trying to mislead.

Instead, what the company is talking about is that under a particular set of circumstances (of which Independence by itself is not one), the company may decide to operate certain aspects of its business through new business vehicles which are registered in rUK and which fall under the UK regulatory regime. While that probably means some new jobs for elsewhere in the rUK, it doesn't have to mean the subsequent loss of existing jobs - the policy servicing, actuarial work, underwriting, sales and marketing, investment decisions, legal and compliance work or even the HQ functions which underpin the operations of a life and pensions office.

The bottom line is that the jobs don't need to be in the jurisdiction being served. Don't let anyone try to tell you otherwise.

* Isn't it remarkable how the rhetoric of today's this-far-and-no-further devolutionists sounds so similar to the rubbish which Iain Lang used to try and deploy against any kind of home rule at all? Just sayin'.

Wednesday, 26 February 2014

In (Partial) Defence of Johann Lamont

Take careful note of the words in the title of this post. They are words which I don't think I've ever arranged on page or screen before and which I certainly can't envisage ever doing so again. However, just this once, I'm going to defend Johann Lamont from the mockery for her 'genetically programmed' comment in last night's STV debate with Nicola Sturgeon.

If you don't have a clue what I'm talking about then you probably missed last night's debate, in which case all I can say is “lucky you”. However, if you've been on Facebook today and doubtless Twitter as well, you'll probably have seen more than a few links to Youtube, as well as to some hastily drawn posters of JoLa alongside a quote from her that “We're not genetically programmed in Scotland to make political decisions.”



Half-watching the debate last night, I have to say that remark completely passed me by. However, having viewed the section back on the STV Player, there's no doubt that she did say it. No selective editing was required. It's there for all to see. Whether she meant to say it like that or not, it's there, caught for posterity and entirely in its context. She's been done bang to rights.

So what defence could there ever be be for saying something so daft? Well, quite simply, I think she meant to continue saying something else afterwards but didn't. Something like “We're not genetically programmed in Scotland to make political decisions which are automatically different to those taken in the UK.” And if that's a sentence which she completed in her mind but not in her mouth, then she'd have been quite right, on her own narrow terms at least.

As she said earlier in the debate, there's nothing about Independence which means that arguments about equality or anything else will then automatically have been won as they need to be. However, the nationalist (and surely winning) rejoinder to this is that there's no point in winning these arguments in Scotland if you always have to be looking over your shoulder to Westminster to get permission to act as you would like.

Now, resuming normal service at this point, I have to say that the debate wasn't particularly edifying. Having witnessed Nicola skin, gut and fillet two Lib Dem Secretaries of State in previous STV debates, it's hardly surprising that JoLa tried to get under Nicola's skin in the questioning and to drown out her cross-examination with white noise. As a spectacle, it probably didn't do much to endear itself to either partisans or persuadables. To that extent, I think Derek Bateman gets his assessment of it pretty well bang-on.

Having persevered with it, though, I'm giving Nicola a clear points victory. In terms of presentation, she was so far ahead it was embarrassing to think that JoLa is the best Scottish Labour have to offer for now. In terms of content, I thought the first half was pretty evenly balanced. However, in the cross examination section in the second half, JoLa wasn't up to much at all. She failed to land a single blow on Nicola and found herself outscored on two areas which Better Together in general and Labour in particular consider to be amongst their strongest topics.

Attacking Nicola on possible shipyard closures at a time when they are already set to happen was, frankly, beyond stupid. It allowed Nicola to make the point that rUK doesn't have the capacity to build its own warships and if Scotland becomes Independent, future Royal Navy orders can't possibly be fulfilled in rUK, which still leaves Scotland as the front runner. It also let Nicola turn the possible closure of the Govan yard, which she used to represent at Holyrood, into a constituency issue against the current MSP, one Johann Lamont.

Lamont's second blunder was to try to attack Nicola on Trident, claiming that Nicola only supported scrapping British nuclear weapons as a tactic to win Independence. Nicola pointed out smartly that she'd been a member of CND before she was a member of the SNP – something which JoLa clearly failed to grasp had holed that particular jibe below the waterline. Had Nicola reverted at this point to the earlier argument about the need to win political arguments by pointing out that if JoLa couldn't even win the argument for nuclear disarmament within the Labour Party then she could hardly expect to win it anywhere else in the UK, then it really would have been Taxi for Lamont.

Last night, Nicola did better than anyone else on the Yes side could have done at dealing with JoLa's truculence and aggression. Her restraint should remind us that in all of our engagements with this debate, we need to keep it positive, no matter what level of argument or discourtesy we might encounter.

Monday, 24 February 2014

P&J Poll-Axed

When I worked for the Ellon Times, one of our regular features was to compile something called 'Bus Stop Blether' for the top of page 2. It wasn't anything particularly clever or fancy - just a good old fashioned vox pop on whatever question we'd managed to dream up that morning.

While we did our best to pick 5 different kinds of people, since we were always short of time we only ever used the first five people who would 1) speak to us 2) answer our question and 3) let us take their picture. As such, there was a very definite bias towards pensioners (we were generally doing it in the morning after 10am) as well as towards photogenic young women who were prepared to talk to men with cameras.

Consequently, it was little more than a bit of fun and so long as everyone treated it like that, everyone was happy. Which brings us to this morning's Press and Journal, and its splash opinion 'poll' which purports to find a slump in support for independence across the north of Scotland.

Firstly, some caveats. I have no criticism of the market research company which carried out the survey. They do what they do and no doubt do it very well. I similarly have no criticism of the reporter who was handed the results of the survey and told to make a story out of it.

Instead, I'll confine myself to the obvious flaws in the poll. Firstly, unlike recognised polling companies like ICM, YouGov and Panelbase, the company behind this survey is not a member of the British Polling Council. As such, there is no requirement for its methodology to comply with the council's rules.

Secondly, the sample size at just over 500 leaves room for a very significant margin of error. A sample of 1,000 generally gives an error of ±3%. Anything less, and even the most meticulous methodology can still lead you to errors of ±10% or more. This survey had a sample size of just over 500.

Thirdly, for a political poll, you need to make sure that your sample is representative politically. A good way to do this is to check your sample against how participants say they voted at a previous election.

Accordingly, any representative sample from the north of Scotland should have in the order of 50% SNP support from 2011. If you end up with a sample showing 35% Tory or 20% Labour or 25% Lib Dem, then you've got a problem with your sample. As the P&J has declined to publish the data tables, there is no indication how representative the sample turned out to be, or if the sample was weighted to any extent at all.

So, what we have here is the opinion of just 500 people, who may or may not be representative of the population of the north at large. A solid basis, then, for the articles which it spawned? I'll leave you to judge that one for yourselves. Meanwhile, here's a picture which I found this morning on an old memory card...



Wednesday, 12 February 2014

So, what's the UK's 'Plan B', then?

It's a busy week for me this week, with committee meetings on Tuesday, Wednesday and Aberdeenshire Council's budget setting meeting tomorrow (Thursday). However, today's heavy trailing of a speech from Chancellor George Osbourne which purports to rule out a formal currency union in the event of independence can't be allowed to pass unremarked upon.

We hear a lot of rubbish, frankly, from our unionist friends about the need for a 'Plan B' from supporters for independence in the event that representatives of the rUK Government decide that they're going to, for want of a better way of putting it, 'take their ball and go home' after a 'Yes' vote. It all begs the question, or at least ought to in any sentient adult observer, of what the rUK 'Plan B' for currency, debt, defence and international representation really is. And saying on repeat that you won't 'pre-negotiate' really doesn't cut it either.

I don't pretend that the following article I wrote c. 5 years ago is in any way comprehensive when it comes to answering every aspect of these questions. Nevertheless, it hopefully makes it clear in advance of Osbourne's speech that when it comes to negotiating the terms of independence, if rUK is disinclined to 'play nice', it too can end up with a set of outcomes for its people and its political elite which are, to put it mildly, sub-optimal.

The Independence Impact - On Everyone Else
We all have our own arguments about what Independence would mean for Scotland. In the SNP, it's rare to find a point of view falling short of it being a good thing in every conceivable respect. However, there's one rather significant side-effect of independence which we often overlook – the impact it would have on our nearest neighbours.

Scotland going her own way requires us to establish the identity of a Scottish state and to obtain international recognition. It's often forgotten amidst the spurious claims of isolation which arise from this that the rest of the UK, or rUK, would find itself in a completely new position as well, with the idea that all continues as before left open to serious challenge.

First of all, let's follow the money, or perhaps even the lack of it. The UK national debt is set to reach £1.4tr over the next five years – something which  Scotland will have to take its share of  the SNP has indicated it would be prepared to see Scotland take a share of. However, with independence, what remains of the UK will have lost 8.5% of its population and nearly 10% of its tax revenues. It will also lose a large proportion of one of the UK's most obvious economic assets – North Sea oil and gas

Potentially, that is eyebrow raising stuff for the markets, leading to the prospect that rUK credit status may be downgraded. There's no reason why, handled sensibly, this should of itself be a huge problem. However, it carries with it the hint of the prisoners' dilemma – the optimum position is for Scotland and rUK to co-operate and emphasise continuity, but it one side 'defaults', for example, by rehashing previous spats about who subsidises who, it potentially leaves both sides in a poorer position in the eyes of the markets.

The creation of a new tax regime north of the border also creates a dilemma for the rUK Chancellor. As an English speaking country with a well educated population, fully integrated into EU law with good transport links and a well developed market in professional and legal services, Scotland is an attractive place to do business. Every change in the Scottish tax code which gives Scotland a potential advantage will, as with the Irish Government guaranteeing savers deposits in the early days of the banking crisis, put great pressure on the UK Government to follow suit.

But if the economic impact is potentially significant, the military impact is huge. Trident is the UK's main expression of military geo-political power and rUK could certainly afford to maintain son of Trident if it chose. Indeed, it might feel that doing so was necessary to maintain status as a world, rather than a mere regional power. However, rUK would face an immediate difficulty in the event of independence, since the deep water submarine base and armaments depot necessary for its operation would henceforth be based in a foreign country hostile to their presence.

A lack of access to these facilities would be even more debilitating to the integrity of the Trident 'deterrent' than any withdrawal of US support for the system. The facilities at Faslane and Coulport would take years to replace elsewhere, but even then, where could they go? And where would they be welcome? As such, it's not beyond the realms of possibility that independence would also mean the end of an independent UK nuclear deterrent.

Then there is the loss of Scottish service personnel to UK forces. While Scottish Defence Forces would undoubtedly find themselves serving alongside those of rUK from time to time, it is inconceivable that they would be used, as they have been in the recent past, in operations such as those in Iraq. With the UK already stretched, if Scotland's conventional military capabilities were to be lost, rUK would find it impossible to fulfill its present commitments.

All of this would have a diplomatic impact. Nuclear weapons or not, the inevitable consequence of a reduced military capability and ability to deploy it would be a diminished status internationally. At the UN Security Council, it would become increasingly hard to justify continued rUK presence in the permanent 5, particularly when a nuclear armed Indian democracy of 800m sits outside. Although it would be fiercely resisted by the French, pressure may build to have a single European seat, or at the very least expand the number of permanent members.

Then we come to Europe, and votes in the European Parliament and Council of Ministers (CoM). Scotland would see an increase in her number of MEPs, and would for the first time gain representation at CoM level. The impact is on rUK, which given a population loss of 5m, would snap into sharp focus the fact that Germany with a population of 80m would still have the same number of votes as rUK, on 55m.

One solution might be to increase the weight of German votes, although this would likely be unacceptable to the French. Accordingly, the most likely option would be to see a reduction in rUK voting power to the same number of CoM votes as Spain – something which, strange but true, would see Scotland and rUK with a stronger combined influence than the UK at presence.

But how much does this really affect England, Wales and Northern Ireland, rather than a British political class which boasts endlessly of 'special relationships' and 'punching above our weight'? Without Scotland, many of the traditional ties for Northern Irish unionists to the UK become less meaningful. Wales, which frequently looks to Scotland politically, would see that the British state was not indivisible, and may perhaps decide that the 'full national status' accorded to Scotland and advocated by Plaid Cymru is something both attainable and desirable after all.

So whither England, when so much of English identity has been tied up in 'Britishness' for the last 3 centuries? If we Scots seem further down the road to resolving outstanding issues of politics and identity in the world, it's probably because we've been obsessing about it for far longer. England, once de-colonised from the British State, can see a progressive, civic identity emerge, which is able to reflect itself politically and sit comfortably alongside the emerging independence of Scotland and Wales. A nation, hopefully, at ease with itself and its inhabitants, and able to look confidently to the future, without feeling diminished by contrasts with the past.