Big Business and its warnings of a Yes Armageddon


  By Lesley Riddoch
So LLoyds Banking Group, Barclays and Shell have joined RBS and Standard Life to warn that Scottish independence could destabilise business.
Lloyds annual report fears an independent Scotland might have a poorer credit rating than the rest of the UK so the cost of borrowing on international markets might rise.  A bit rich you might think, coming from a company whose disastrous management has meant massive borrowing from the domestic taxpayer – but let’s leave that to one side.

  By Lesley Riddoch
So LLoyds Banking Group, Barclays and Shell have joined RBS and Standard Life to warn that Scottish independence could destabilise business.
Lloyds annual report fears an independent Scotland might have a poorer credit rating than the rest of the UK so the cost of borrowing on international markets might rise.  A bit rich you might think, coming from a company whose disastrous management has meant massive borrowing from the domestic taxpayer – but let’s leave that to one side.

One can only presume that good news about iScotland’s possible triple A credit rating didn’t reach them before Lloyds went to press.  Credit rating agency Standard and Poor’s reported last week that an independent Scotland would “qualify for our highest economic assessment” after a thorough survey of the economy – including those dangerously changeable oil revenues — and the risk that some banks might leave.

The agency didn’t take that risk very seriously and observed that losing large, risky ventures might even help iScotland – though of course no government would welcome the loss of thousands of jobs however “volatile” the sector.

While he’s at it the chief executive of Lloyds Group, Antonio Horta-Osorio — who’s already based in London despite the bank’s Edinburgh HQ – could take a closer look at the list of most secure economies. 

The majority of countries rated triple A by Standard and Poors are small, social democracies like Denmark, Finland, Sweden and Norway or liberal-ish, market economies like Hong Kong, Singapore and Switzerland – all with populations of five to eight million people – or large federal nations like Germany, Canada and Australia with genuinely devolved governance.  That’s not to say an independent Scotland would be an automatic slam-dunk for triple A status.  But it would need mismanagement of RBS proportions to miss that open goal.

Nonetheless Shell also waded in.  Chief executive Ben van Beurden said, “We’d like to see Scotland remain part of the United Kingdom.  Given a choice, we want to know as accurately as possible what investment conditions will look like ten or 20 years from now.”

It might seem churlish to point out that for decades Shell preferred to see apartheid South Africa remain intact in the interests of business stability.  But once again, let’s put that aside.

The security-seeking Anglo-Dutch oil giant missed not one but two relevant and optimistic reports last week.  The first, by the Financial Times, concluded, “An independent Scotland could expect to start with healthier state finances than the rest of the UK.”  The second, by retired oil tycoon Sir Ian Wood concluded that an independent Scotland could start life with another mini oil boom.

Sir Ian’s report — commissioned by the UK Government – estimated there’s as much oil left in the North Sea as has already been extracted.  Sure it will be harder and more expensive to remove.  Certainly there is a good green case for leaving much if it in situ or extracting it slowly.  But there is no doubt Shell would be acting against the interests of shareholders by opting to quit Scottish operations over constitutional change alone.  Only changing world conditions or public opinion towards fossil fuels could make further extraction undesirable or unprofitable.

The calmest voice in yesterday’s melee was Barclays whose chief executive said last month “I can make it [constitutional change] work either way.”  Barclays report noted that Scottish independence was far from being the only political game-changer in town citing the EU referendum and aftermath, the possible exit of countries from the eurozone and a decline in residential prices in the UK, western Europe and South Africa as factors which might all affect the group’s risk profile.

That list of big changes – missing the sudden economic threat posed by President Putin’s invasion of Ukraine – served as a useful reminder that big business lives in globally “interesting times” with few “safe havens” immune from democratic change.

Nonetheless, such an orchestrated roll-call of negativity from some of Scotland’s biggest employers and most powerful economic players is bound to be having an impact on smaller Scottish businesses – isn’t it?

Au contraire.  Despite this onslaught of top companies complaining about the disruption of the referendum and questioning the desirability of independence, business confidence amongst Scottish companies is at a record high.

The latest survey by ICAEW/Grant Thornton UK recorded a confidence index of +38 among Scottish firms for the start of 2014 compared to +28.5 in the previous quarter. The Scotsman reports Scotland’s score is slightly above the UK average of +37.2.
Well, well.  In the midst of this swirling independence-generated fog of uncertainty, the domestic business outlook seems to be sunny.  How can this be? 

The survey attributes Scotland’s “strong” performance to rising customer demand and the expectation of rising salaries.  But surely that too is strange.  Even in public sector-led Scotland, private business generally foots the wages bill.  So how can a rise produce sunny optimism amongst bosses?

Maybe they realise that what goes out by way of higher wages comes back by way of higher demand for goods and services?  Or maybe, just maybe, the whole process of rethinking Scotland’s future is invigorating for dynamic owners of smaller businesses with a long-standing commitment to Scotland?
Maybe, just maybe, business knows that the certainty the big boys apparently crave comes gey close to stagnation, rubber-stamping and an ultimately corrosive “good enough” approach in civic life and political decision-making.  Maybe a nation with a game-plan, a sense of purpose, destiny and some drive is a better bet for those who plan to invest their own energy, cash and ingenuity in this country?

But who are mere mortals to second guess the intentions of Business?  Many commentators have pored over Standard Life’s statement to discern its “true meaning”.  Even Standard Life didn’t actually threaten a move to London lock, stock and barrel.  The company did suggest some assets and staff might be shifted south to “ensure assets and liabilities remain well matched.”  Those in the know suggest that might mean fewer folk actually leave than the pessimists expect.
For one thing, the HQ function of banking is shrinking all the time – the bulk of staff are employed in branches.  Why should the branch configuration change just because of independence?
Secondly, moving to London means higher salary, office and staff housing costs, longer journeys to work, and lower retention of relatively less qualified staff.  As one fund manager wrote; “In a people business, the wholesale relocation [of Standard Life] would not only be enormously costly, it would require the near-reinvention of the company.”

A Scottish insurance broker living in Bath told me recently, “I get the 5.30 train to London every day.  It’s the only way to guarantee a seat – in first class.”  That’s life in the fast lane folks.  No wonder so many fund managers prefer a house in the leafy suburbs and a quick jog across the Meadows to work instead.

Indeed, if we are concerned about keeping the tiny elite of big earners north of the border post-independence, then the uncomfortable or reassuring truth is that Aberdeenshire contains more multi-millionaires per head than anywhere else in the UK – including London.  Only the relatively young or those who haven’t spent time in the UK capital lately, regard a move to the south of England as the automatic passport to riches and a better lifestyle.

The trouble is most Scots live here — not in the market-driven, competitive, fast-moving, “deil tak the hindmost” society that’s normal in the south of England.  And those stay at home Scots have an old adage ringing in their ears.  The grass must be greener on the other side and no-one would choose to stay in backwater Scotland given half the chance — especially not those mysterious, free-roaming, superior beings who populate Big Business.

This is the negative self-talk that actually anticipated and now perversely clings to the destructive myth behind Standard Life’s “offski” narrative.  And it’s that negative, confidence-destroying self-talk which we must confront to put this welter of wavering industry opinion into perspective. 

Why do we rate the political opinions of business leaders so highly?

The love affair with high flyers ended very quickly in Iceland once they discovered what their “banksters” had done in the pursuit of personal riches.  In his brilliant and prophetic 2006 book Dreamland — A Self-Help Manual for a Frightened Nation, Andri Snær Magnason suggested humble, once penniless Icelanders “worshipped these titans like Gods”—and expected little accountability, conscience or loyalty. 

But that suspension of disbelief ended when the financial bubble burst, the people reasserted democracy, and corrupt bankers and politicians were jailed.  Iceland grew up and recovered a sense of its own worth and values almost overnight – testimony to the resilience and independent-mindedness of these admirably thrawn people.

In Scotland, the dreamland and the frightened nation persist – even though our financial services industry has had an equally bad track record.  Chief Executives have lied, cheated, risked, failed and behaved like pumped up boy racers.  Yet despite the odd retrieved knighthood and lucrative early retirement, Scots still defer to banking leaders — even in areas like politics, democracy and self-determination which are clearly out-with their collective ken.
Indeed we seem to treat top industrialists like a precious only child – inconsolably anxious about change, beset by doubt and insistent on the same cup and plate at every meal-time to avoid a stramash. 

Even intelligent, outgoing adults eventually adopt absurd, self-limiting outlooks to placate that needy, uncertain being – “please don’t even breathe — he’s finally asleep.”  In the same way, Scots are in danger of abandoning deeply-held values, common sense and their own intuitive understanding of the risk inherent in all life to placate Big Business and its nightmarish Worst Case Scenario.


Quite simply because big business creates jobs and jobs are precious.  Thus business appears to wield the ultimate power — especially in Britain where zero hour contracts have caused society to regress to the destructive piece-work labour and harsh judgmentalism of the Victorian era.

We fear big business because the prevailing “us v them” attitude in the workplace makes business owners and high-flying chief executives appear slightly alien to the average employed, PAYE-paying Scot.  Fundamentally folk with money, prospects, suits, big pension pots and choices are not us. They can go – we will not.

This feeling of distance from the big money men and women is partly explained by Scotland’s recent history as a twig on the branch economy where international companies invested and then suddenly disappeared without explanation.  Timex, Lee Jeans, Caterpillar, NCR ….the list has been long and dispiriting.  But Scots feel no closer to the home-grown magnates and patriarchs whose canny investments and cartels created modern Scotland through the steel, ship-building, coal-mining and banking complex of the Victorian era.  The legacy of their total power is with us still.  So too their British loyalties and remoteness from ordinary Scots.

In old-fashioned, antagonistic, first-past-the-post, winner-takes-all Britain, labour still fears capital has other priorities and will not follow any democratic change of direction or “tolerate” different ways of doing things on these British Isles.

This intolerance of diversity, this “my way or the highway” high-handedness, this huge power imbalance between bosses and workers – all of these are reasons why Britain does less well in terms of GDP, child well-being, educational performance and health than many of our more flexibly minded north-European neighbours. 

They are also the reasons many Scots want out of the straitjacketed UK.  The confrontational Anglo-American “us v them” approach has been more or less abandoned by every Triple A rated country in favour of a more productive, consensual, cooperative way of working.  Not here.  Not yet.

Business behaviour mirrors political outlook.  So it should come as no surprise that big business in Scotland mirrors the views of the present Westminster Government and the prevailing Westminster system.  It may be daunting to think of a future without these “titans” at the helm – though in all probability a flourishing independent Scotland will see no more than a small shift of staff to English head offices to comply with EU regulations.

In the rest of Europe it’s normal to have close neighbours, land borders, several languages, ultra- local tax-raising and many ways of doing things.  So business, people and governments have learned to respect diversity.  Sadly for Britain, the dominance of the English language and the barrier of the North Sea have allowed us to sail into the cul-de-sac of Splendid Isolation – a mono-culture where only one language, one government, one way of doing things and one master – the profit motive – is thought viable.
We can continue to live like this, or step back, consider the respective risks of stagnation and change.  As the late great feminist, economist & indefatigable Yes supporter, Professor Ailsa Mackay would have said.  Feel the fear – and do it anyway.


Lesley Riddoch is the author of ‘Blossom – What Scotland needs to flourish’
Blossom can be bought in bookshops, online at or on kindle