Standard Life’s concerns over the implications of a vote for independence have turned up the heat to near boiling point. As one of Scotland’s financial powerhouses, the company is crucial to its well-being. In commercial value and reputation, Scotland without Standard Life would be like Edinburgh without its castle.
However, its statement does not constitute support for the No campaign, nor did it amount to a threat to “quit Scotland”. Well, not quite. It said that Scotland has been a good place in which to do business and “if anything were to threaten this, we will take whatever action we consider necessary – including transferring parts of our operations from Scotland”.
While the ultimate option is clear, the reference to “parts” of its operations is quite crucial and throws the ball back into the company’s court. It has not stated which parts it may move or how many, and in the interests of a fair debate it should reciprocate the transparency it is demanding from First Minister Alex Salmond by revealing more about the contingency plans it has put in place.
We have been here before, of course. Back in the 1990s Standard Life and Scottish Widows weren’t too keen on devolution (although Standard Life subsequently agreed to accommodate staff wishing to stand for election).
Independence, however, is of a different order. Businesses in general are uncertain about, and increasingly agitated by, the prospect of a whole new set of regulations, corporate laws, taxes and the need for separate payroll systems, not to mention credit rating risks together with the currency and European Union membership issues that lie at the root of these concerns.
Standard Life may have grabbed attention yesterday, but Royal Bank of Scotland also issued a barely concealed expression of concern. On Wednesday, Weir Group, another FTSE-100 Scottish firm, revealed it has commissioned a report. We also know that Lloyds Banking Group is likely to make a statement – probably in the summer – and that TSB will say something about independence in its flotation prospectus due around May.
The move by companies to issue risk assessments around independence was revealed in Scotland on Sunday on 9 February when it reported that the Financial Reporting Council would insist on disclosure “if boards consider that a vote in favour of Scottish independence is a strategic issue or a principal risk”.
To that extent, Standard Life – and other companies – are merely complying with good corporate governance rules. Most big companies operate across a number of jurisdictions and to deal with one more should not present any unusual challenges. Even so, companies are reluctant to trade where they feel uncomfortable about the regime or where the cost of doing business would not be to their advantage.
As things stand, it would be safe to bet that Standard Life will still be in Edinburgh and still employing a lot of people even if the country does opt for independence. Why? Because it would be too disruptive to move lock, stock and pension plan from a city where its skills are in plentiful supply and where it would be plain stupid for a future Scottish government to do anything to damage it.
Salmond must, however, convince Standard Life that its business will not be threatened if Scotland splits from the UK, so that there would be no need for it to relocate “parts” of its operations. He clearly cannot let key issues remain unresolved for much longer and risk losing all credibility. Twitter: @TerryMurden1