Salmond plays banker in vital election battle

Published on Friday 16 March 2007 01:05

Key quote

"It's difficult to forecast the future, but I see no circumstance where independence would be a serious [economic] disadvantage" - Sir George Mathewson

Story in full SIR George Mathewson, one of Scotland's most influential business leaders, today declares his support for the Scottish National Party and independence, handing Alex Salmond a huge political boost ahead of the Holyrood election.

The endorsement by Sir George, who helped transform the Royal Bank of Scotland into the world's fifth biggest bank, will play a crucial role in cementing the nationalists' economic credibility.

Labour was planning to make it a key election issue, trying to paint the SNP as a party whose policies would force financial institutions and other big firms to flee the country, destroying the Scottish economy. Tony Blair, the Prime Minister, was expected to repeat such warnings at a party rally in Aberdeen today.

But Sir George's intervention deals a potentially devastating blow to the Labour strategy. In a letter to The Scotsman, he praises Mr Salmond as the "outstanding candidate" to be the next first minister and accuses Labour of scaremongering about the SNP and of creating a "fear culture" about independence.

Speaking to The Scotsman last night, Sir George said: "The reality is I have been somewhat disappointed for some time with work of the Scottish Parliament. Alex Salmond and the SNP offer the best choice.

"I have never really seen myself as a political figure, but all I will say is I don't share the fear culture that some people think we should have."

In one of his most devastating comments, he dismisses as "absurd" claims that Scotland should remain in the UK to retain English investors - an argument used in the past by Gordon Brown, the Chancellor.

In his letter, Sir George delivers a withering assessment of Holyrood under Jack McConnell as First Minister, saying the Scottish Parliament has "consistently disappointed since its creation" and decrying the "lack of high quality leadership".

In contrast to other business leaders, who last month delighted Labour leaders when they questioned the impact that breaking up the Union would have on Scottish investment and employment, Sir George said he had no fears about independence. "It's difficult to forecast the future, but I see no circumstance where independence would be a serious [economic] disadvantage," he said.

In his letter, he dismisses the SNP's political rivals whom he accuses of wanting to keep the status quo for their own self- interest.

In an interview with The Scotsman in January, Mr Brown warned that the disintegration of the United Kingdom could threaten the 125,000 Scottish jobs in the financial services sector, as nearly three-quarters of its work is for English clients.

He and Mr Blair have consistently warned independence would be "disastrous" for Scottish jobs and economic growth.

However, Sir George dismisses the argument that Scotland's financial services would lose investment from England under independence, saying that Scotland had embraced globalisation.

He writes: "I do not share the fear of independence which is currently being fostered by those who have most to lose by a change in the status quo and those who see Scotland as a source of safe seats, thus guaranteeing their rule over the UK.

"In addition, comments that have been made on access to the English market are patently absurd. Currently, a huge proportion of the English financial services market is supplied by companies in the US, in Holland, Germany, Ireland, etc. Globalisation is here and Scottish companies have embraced it and indeed have benefited from it."

He also makes it clear that personality matters in the battle for Holyrood, saying: "The outstanding candidate must be Alex Salmond."

Sir George, who masterminded RBS's 20 billion takeover of NatWest in 2000, is the most prominent business leader to endorse the SNP. The Perthshire-based businessman, is a director of Scottish Investment Trust, on the board of directors of the Institute of International Finance and the president of the International Monetary Conference.

Business support for the SNP mirrors the party's growing popularity among the more prosperous AB socio-economic group. In the latest ICM poll for The Scotsman, the SNP was backed by 35 per cent of top earners - more than any other party.

Mr Salmond, a former RBS economist, told The Scotsman he was "absolutely delighted" to secure the endorsement of Sir George, whom he described as "a figure of outstanding achievement and enormous influence".

He said: "Sir George personifies success in business and public service that we want to see for the whole of Scotland.

"He speaks with great knowledge, authority and credibility, and I am enormously encouraged that he has decided to make his views public."

The SNP leader said his party had spent the past year seeking feedback on its Let Scotland Flourish campaign to boost the economy, and Sir George had given support to the proposals.

"His achievements in Scottish business over the last generation are extraordinary, and his support is indicative of the SNP moving forward across every part of Scottish society," he said.

Sir George's public backing will be provide a welcome curtain-raiser for the SNP ahead of its spring conference this weekend, the last before the elections.

The party still hopes to reach its target of raising 1 million in donations before May.

MAN WHO WAS 'NEVER A BANKER AT HEART' MADE RBS A GLOBAL BRAND

SIR George Mathewson is arguably the greatest Scottish businessman of modern times, the man who transformed a respectable staple of national life north of the Border into one of the world's biggest and most profitable companies.

For all the renown Sir George earned in the banking industry, colleagues say he was never a banker at heart, having enjoyed a remarkably diverse career before entering the financial world.

Born in Dunfermline in 1940, the son of an engineer, he earned a PhD in electrical engineering at St Andrews University. He lectured for six years before moving to the United States in 1967 to work in research and development for an aircraft manufacturer. But the lure of North Sea oil drew him back to Scotland, and in 1972 he was in Aberdeen working for the firm that would become 3i, the venture capital giant.

In 1981, he became chief executive of the Scottish Development Agency, attracting inward investment to Scotland and is credited with creating "Silicon Glen". Friends say he is as proud of his record there as of what he achieved at RBS.

In 1987, he joined the Royal Bank of Scotland as strategic planning director, and was appointed chief executive in 1992, when the bank was in dire straits, battered by a UK recession and a collapsing housing market. His response was Project Columbus, a cost-cutting overhaul of the bank's management and operations.

Nearly one-third of senior RBS managers were sacked immediately, and 60 per cent of the bank's staff left in the next three years.

But both shareholders and the Treasury were to reap the benefits as the bank returned to profit. In 1998, RBS was the first Scottish company ever to report a 1 billion annual profit. The following year, Sir George was knighted for services to Scottish business.

Sir George recorded his greatest coup in February 2000, when RBS successfully bid 20 billion to take over the much larger National Westminster bank.

The deal transformed RBS into a global player: today, 30 countries are served by RBS and its subsidiaries, and the bank makes more profit in the US than McDonald's makes from its worldwide operations.

In 2001, Sir George stepped down as chief executive and became RBS chairman, overseeing the bank's global strategy. In the five years after 2001, RBS completed another US takeover and expanded its Chinese banking operations. More than 40 per cent of its profits are now made outside the UK.

He retired from RBS last April, but remains an adviser to the bank he built, which last year made 9.2 billion in pre-tax profits and has a market worth in excess of 65 billion.

Parties bring out big names to back claims

IF PREVIOUS election campaigns have seen the political parties vying for the support of eye-catching celebrities, the must-have endorsements of the 2006 battle for Holyrood have been those of Scotland's business leaders.

The shift in emphasis is a result of public opinion, and strategies being pursued by Labour and the Scottish National Party.

Polls last autumn startled Labour planners by showing strong public support for Scottish independence, and set up this year's battle for economic credibility.

With the Nationalist surge suddenly making independence a serious topic of political debate, Labour leaders drew up a plan to persuade Scots voters that breaking up the United Kingdom would put their jobs and savings at risk.

Gordon Brown fired the first shots in an interview with The Scotsman in January, arguing that the Scottish financial services industry could shrivel in an independent Scotland, with English investors withdrawing billions of pounds from Scottish banks, insurance firms and investment houses.

The Chancellor has also repeatedly warned that the SNP's plan for an independent Scotland to go on using the pound sterling would be economic folly.

But even Mr Brown's words have only so much weight in this debate, and Labour has mounted an intensive effort to persuade business figures to make the argument against independence.

That campaign has enjoyed some notable successes: Sir David Murray, the former Rangers chairman, and Willie Haughey a former director of Celtic FC, have both publicly backed Labour's attack on the SNP this year.

And last month, Labour strategists believed the SNP had been dealt a serious blow when the CBI publicly challenged the Nationalists to answer 11 "key questions" about the economy of an independent Scotland.

The intervention provoked a furious debate, with SNP backers accusing the CBI of violating its proclaimed political neutrality. And rumours persist that the CBI move came after Mr Brown put personal pressure on several key Scottish business leaders.

Labour insiders insist their strategy is working: private focus groups show that independence-supporting voters often change their minds when asked about the economic and business consequences.

To be fair, the SNP has also scored several significant hits of its own. Last November, Sir Tom Farmer, the Kwik-Fit founder and one of Scotland's richest men, agreed to donate 100,000 to the party.

And last month, Crawford Beveridge, the former chief executive of Scottish Enterprise, declared he would be backing the Nationalists, saying that independence "would translate to better jobs, higher wages and stronger communities".

Ben Thomson, the chief executive of investment bank Noble Group, has also backed Alex Salmond, the SNP's leader, as first minister.

But none of those endorsements has cheered the Nationalists or disheartened the Labour Party quite as much as today's statement of intent is sure to.