Analysis: This is not just about business, but politics – and Alex Salmond knows it

Published on Sunday 29 March 2009 23:30

JIM Faulds could not have been more effusive had he been taking part in an SNP political broadcast. "Alex Salmond has been absolutely magnificent, without looking for political gain," he said, praising the First Minister yesterday for standing behind the troubled Dunfermline Building Society.

But the remarks by the Dunfermline chairman left many in the Scottish Parliament (including some in the SNP) scratching their heads in bemusement – Alex Salmond not looking for political gain? Surely it must be a different Alex Salmond Mr Faulds was talking about, because the one thing that is clear in this whole murky mess is that it is all completely steeped in politics.

A Scottish building society is in trouble. The Scottish Government offers to help, and even puts 25 million on the table to keep the institution independent and Scottish. The UK government rejects that approach, warning that any such bail-out would be unsustainable, and instead offers to sell off the profitable parts of the business to a bigger, English-based institution.

There is no doubt that Mr Salmond wanted to intervene to help the staff who work at the Dunfermline, as well as the institution's savers and borrowers – but it also suited the First Minister's political purposes to be standing against the UK government on this issue.

Mr Salmond now gets to challenge the big, bad UK government for undermining Scottish jobs and organisations, and can also point to the inadequacies of the devolution settlement which prevent him from doing more himself.

As far as Alistair Darling, the Chancellor, is concerned, he certainly believed that the Dunfermline was not in a position to repay any government loan and was simply not sustainable.

But there may have been other factors impinging on his approach. Mr Faulds is not the only member of the UK financial sector to believe there is more bad news to come from the country's mutuals.

If he is right, then Mr Darling may have been determined not to set a dangerous precedent in the government bailing out the Dunfermline.

This may be about business but it is also about politics and all those involved know it – including Mr Faulds.