Michael Kelly: Companies may shun an independent Scotland

THE threat hanging over the BAE Systems shipyards which produce warships for the Royal Navy on the clyde could turn out to be the SNP’s worst nightmare. That may explain why the party’s Deputy Leader, Nicola Sturgeon, who is also the MSP for Govan, has called for the other parties in Scotland to put aside their political differences and unite to fight the possibility of closure.

The SNP is normally as contemptuous of Labour as Labour is of it. Old-fashioned, out-of-touch, impotent, a power of the past – all of these insulting epithets have been slung at Labour years before the nationalists won a majority in Holyrood. So, why isn’t the SNP relying on its self-proclaimed competence in government to fight this battle with the company and the UK government on its own?

Could it be because since it was transformed from a minority to a majority government its reputation for the smooth administration of Scotland has taken many severe knocks? It has tried to introduce minimum pricing for alcohol, praiseworthy in itself, but through a means which has left its legality open to challenge by the drinks’ lobby.

This week the newly appointed most senior police officer in Scotland, Stephen House, confessed that he was “gobsmacked” by the imprecision of the legislation setting up the single police force and the Scottish Police Authority, which is intended to supervise it. Both sides have been forced to seek legal advice to clarify the boundaries between them.

There is then the revelation that the number of nurses employed by the NHS has fallen by 2,000 since the SNP came to power. Plus, the Czech President has warned that in his country’s experience it would be impossible for Scotland to retain the pound after independence. And, of course, there is the current industrial dispute with lawyers over proposed changes to the system of legal aid.

These policy setbacks, added to the rows over misleading the press and parliament, have generated a mountain of criticism which has sapped the confidence of this government. So Nicola Sturgeon’s call for an all party front to dissuade BAE Systems from closing a yard in Scotland is a sign of weakness. It is also naïve and hypocritical. The other option for the company is to close its yard in Portsmouth. How can a government on course to break up the United Kingdom demand, with a straight face, that a British company favour it before an English yard? Before devolution, a united Scotland could always be effective. Such a campaign could rely on the fighting assistance of the Secretary of State for Scotland from his position in the Cabinet and the civil service skills of the Scottish Office. Irrespective of who held political power at Westminster, Scots saw it as their job to protect Scottish interests. It worked. Harold McMillan in the early sixties split a new steel works between Scotland and Wales instead of building the more efficient integrated plant in Wales. Sir Alex Douglas Home ordered the Savings Bank to Glasgow in the teeth of establishment opposition. Even Margaret Thatcher was thwarted for a while in closing the interventionist Scottish Development Agency, although she eventually got her way as she proceeded to destroy Scotland’s heavy industries. There are numerous other examples which caused many English and Welsh MPs to complain about the power of the Scottish lobby.

This ability to punch above her weight was weakened by devolution, which has drawn out the divisions in Scotland and has split the country into camps. The fight for independence is threatening to destroy it altogether. The strongest argument that the Portsmouth yard will stay open – because it does appear to have the weakest financial case – is that, given that Scotland may soon vote to break away from the United Kingdom, favouring the English yard is the strategically correct choice. No UK government has ever ordered such military equipment from a foreign yard and the present coalition has made it clear that policy will continue.

Thus, on this issue, the Scottish lobby is immediately divided in two. The nationalists have to try to convince the company that independence will make no difference – and how do they do that? Unionists, on the other hand, must allay the company’s fears by demonstrating that the No campaign will be effective in holding the UK together. Given the stability of opinion polls in demonstrating a majority in favour of staying together that argument can be made much more convincingly. But it won’t be helped by having nationalists as part of the delegation.

This is the first test which the public can readily grasp about the impact of independence. There will be more to follow over the next two years. More and more evidence will be produced to indicate that foreign (English and other) companies will choose to leave Scotland if independence is on its way.

In any country that really wanted to throw off the shackles of a foreign power, these consequences would merely be seen as part of the cost of breaking free. Any other independence party would shrug them off, declaring there to be offsetting gains. But in Scotland neither is there any great desire for separation nor are the economic benefits of leaving the United Kingdom clear.

As a result the SNP has developed the false image of an independent Scotland where things carry on more or less as before. The arguments over industrial location give the lie to that scenario. Scotland will lose out to England at least as far as public sector contracts are concerned.

This is the opportunity for unionists to show the validity of their case. At the same time this crucial issue should convince the STUC and other unions to come out of their Kenny Dalglish “mibbies aye. mibbies no” approach to the referendum and start campaigning against independence. They are part of the only united front that can save these jobs for Scotland while the SNP looks on from the sidelines.