In early October 2008, I took the scariest call of my life. It was the height of the banking crisis. The night before, I had met the UK’s chief executives to set out our plans to shore up the banking system.
But next day there was a run on a bank. Not just any bank. It was RBS, then the world’s biggest bank, about the same size as the whole of the British economy. And it was headquartered in Edinburgh.
The caller phoned me in a panic. RBS was haemorrhaging money and what was I going to do about it? I asked how long the bank could last. He replied that they would run out of money in the early afternoon.
As we put in place steps to prevent its collapse, I also thought about what this meant for Edinburgh, my home and the city where I was an MP.
Today thousands of people work for banks in Edinburgh but things have changed. The guiding minds, the bosses, are not in Edinburgh any longer. They are in the City of London.
The financial crisis of ten years ago had a profound effect on the industry – things were already changing long before the arrival of Covid-19.
Today we face an even greater trauma. No-one can be sure what’s going to happen and when. I believe the effects will be long lasting. Many predict that the recovery won’t fully come before 2025.
We do know our economy will be smaller but we can’t be certain when and in what shape the recovery will come. I am confident it will recover but only if we take the necessary steps and start doing that now.
This of course comes on top of Brexit. We are about to enter a fifth year of uncertainty. We’ve also got to contemplate possible constitutional upheaval here in Scotland. Neither offer fertile ground for investment.
So what is to be done? The UK Government must do all in its power to avoid 1980s levels of unemployment. The furlough scheme and other steps to protect workers has been a success. I believe it now needs to be targeted. Many people will be able to go back to work but very many won’t.
I groan when I hear government ministers say there are new opportunities. Maybe. But in the 1980s for too many the opportunity turned out to be life on the dole. The UK Government has the financial strength to support the economy and should use it. The Scottish Government too has a role to play. Clearly healthcare is paramount. Until we have total confidence in the test-and-trace scheme – especially if there’s another flare-up of the virus this autumn – confidence will be slow to return.
And in education we must do something about the appalling gap in attainment levels. It really is a scar on our nation. A highly educated workforce is vital for our future.
What about Edinburgh itself? What should we be doing? We have a very strong foundation on which to build. We remain a major financial centre, not just banks but asset managers, lawyers and accountants and an outstanding workforce.
We are a major data centre. We have world-class universities. We are home to the largest arts festival in the world. And more than four million visit every year. Edinburgh is second after London in the top UK tourist destinations.
Having lived in Edinburgh most of my life, I am aware that too often we rest on our laurels. We cannot assume that everything will come back to the way it was. Tourism won’t fully recover until confidence returns. The hospitality industry which simply didn’t exist in its present form 30 years ago will recover but it will be painful. We have to prepare for a different world. Large, inflexible office blocks will probably go. New businesses, many of them small, will want different types of accommodation with the ability to support them as they grow. I guess many people will continue to work at home, at least in part. Many will be reluctant to travel long distances to go to work. But as a city we also need to remind the world of what we can offer.
Perhaps we could learn from other cities who faced similar changes in the past. Glasgow and Manchester were built on the back of the industrial revolution. After the Second World War they faced massive structural changes. By the 1980s they realised that they had to reinvent themselves and they did so with a vengeance. Both cities are now flourishing. What’s more they, and others like them, are fighting for every job they can attract.
Edinburgh, despite its many advantages, will simply have to do the same. There is no shortage of plans and strategies. Some of them are good and aspirational. But in themselves they don’t produce jobs. I know from my own experience that announcing a project is the easy part. Delivery is much harder.
That needs action on the part of the government and the city. Time is short. If we are to get through this we must start now.
Alistair Darling was Labour MP for Edinburgh South West and Edinburgh Central and Chancellor from 2007 to 2010.