DCSIMG

Comment: Threats to quit are calls for reassurance

Terry Murden. Picture: Ian Georgeson

Terry Murden. Picture: Ian Georgeson

  • by TERRY MURDEN
 

THERE was always going to be a point where the independence campaign became dirty. I mean really dirty. But maybe not so soon. At least not until the Scottish team were emblazoned with their clutch of Commonwealth gold medals and Scotland was ready to re-enact Bannockburn.

Well, the English have already marched north and pointed their pikes at the tartan army. Not only that, but some within the Caledonian ranks are turning against their own. The phoney war is over and the battle has begun. This war of independence is now being fought in the boardrooms of Britain. And as with all wars, truth has been the first casualty.

The current furore began with concerns raised by BP boss Bob Dudley swiftly followed by talk of TSB “moving” to London. The too-hot-to-handle baton then passed through various hands, including Ben van Beurden, Dudley’s counterpart at Shell, and Gerry Grimstone, chairman of Standard Life. Further pressure has mounted in statements from Aggreko, Alliance Trust, Barclays, Lloyds Banking Group and the Royal Bank of Scotland.

The Yes campaigners linked metaphorical arms against this corporate onslaught and called their bluff, claiming that similar sentiments were expressed in the run-up to devolution and that no one left. But could some of the biggest companies in Britain be guilty once again of collectively blackmailing Scotland into accepting the status quo?

Amid the squabble over “quitting” Scotland it is important to understand the difference between a headquarters and a brass plate registered office. One is where the company operates and where its management is based, the other is a legal requirement of incorporating a company. These are often in different locations and although attention was drawn last week to an EU directive on the need for them both to be in the same country, this dates back to 1995 and nothing much seems to have been done to implement it.

Indeed, companies continue to operate like this. TSB Bank, for instance, is not quitting Scotland, despite headlines to the contrary. It has already been carved out of Lloyds Banking Group and is being prepared for a flot­ation, or initial public offering (IPO), on the London Stock Exchange. Its statement, issued on 20 February, said that “as part of the process for preparing for the IPO, Lloyds Banking Group has established a new holding company for TSB called TSB Banking Group plc. The new company replaces an existing company which currently holds TSB Bank in the LBG corporate structure and like this existing company will be registered in London at TSB’s main office.” (my italics).

In other words, TSB Bank itself will continue to be registered in Scotland and, in any case, the change of structure has nothing to do with the independence debate.

None of this is meant to understate the seriousness of the “threats” to take at least some business out of Scotland. But it is a requirement of listed companies – and these are all listed companies – to declare to shareholders any issue that may represent a risk to their business, and a change of sovereignty is clearly one such risk. They all declare they are not taking sides, although this is harder to swallow. Aggreko laughably said it did not want to enter the political debate before outlining a list of concerns about costs, double accounting, taxation, employment rights, and so on. Its outgoing chief executive, Rupert Soames, has been a vocal critic of independence.

Mark Wilson, chief executive of Aviva, Britain’s biggest insurer, caused a stir of a different kind by declining to get involved, but one newspaper was forced into withdrawing a report suggesting he was “relaxed” about independence. The nationalists leapt on this as evidence that independence was “not an issue” for the company, which is not what Wilson said. The episode did, however, highlight the sensitivities of the situation.

So, are companies bluffing or not?

Standard Life, which according to one newspaper last week was threatening to move 5,000 jobs out of Scotland, stated that Scotland has been a good place in which to do business and “we very much hope that this can continue”. It warned that should anything threaten this it would take “whatever action we consider necessary”. This was tough-talking. But is it sensible to think a company of this size could up sticks and move elsewhere?

Fundamentally, any Scottish government in an independent state would be barking mad to impose any measures that would frighten its key companies into desertion. Look what happened when Chancellor George Osborne hiked tax levels in the North Sea in 2011. Companies stopped investing.

To that extent, these “threats” are a further call for stability and certainty, and that begins with ensuring companies operating in Scotland – independent or not – are not put at a competitive disadvantage. Even higher costs may be bearable to some companies if they outweigh the benefits of moving their business elsewhere. What is important is knowing what to expect, and it is incumbent on the Yes campaign to make that perfectly clear.

 

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