Terry Murden: Edinburgh needs a strong Tesco Bank to emerge from its troubles

TESCO may have a grand plan to be all things to all men, but it is clearly not having all its own way when it comes to banking. It had already ruled itself out of the auctions for high street branches that the established banks were being forced to sell, preferring to rely on its ubiquitous chain of supermarket stores to sell a range of financial products. But that confidence took a knock when in March we revealed how the pilot branches in selected stores were shut down with the loss of almost 40 jobs amid claims that customers were not keen to mix their weekly grocery shop with sorting out their savings and loans. Tesco promised another pilot scheme this year but so far there has been no news.

Earlier this summer, a technical glitch in its IT system upset hundreds of online customers, prompting further damaging headlines. Now it has been forced to delay the launch of mortgages because the group’s new boss, Phil Clarke, wants assurances that the IT system is robust enough to take it.

To a degree these delays and setbacks are symptomatic of a new venture, but Tesco Bank was supposed to be a totem of the “new banking” era to emerge from the catastrophe of 2008-9, a trusted and reliable brand that would offer the customer the sort of service allegedly no longer available at the big banks.

To add to his concerns, Clarke has lost Andy Higginson, the man who brokered the deal to buy Tesco Personal Finance out of Royal Bank of Scotland and has overseen the nascent banking division, now employing several hundred staff in Scotland.

There were rumours, denied of course, of some behind the scenes bickering. Whatever the facts, it’s hard to imagine that somebody at the top isn’t getting just a little ruffled and impatient over these slippages at a time when Tesco should be taking advantage of troubles elsewhere in the sector.

Tesco Bank is headquartered in Edinburgh and surely has the firepower and the talent to ensure that it emerges as a success story for Scotland.

With the city still haunted by the scandal over the cost of the parliament building and the trams, as well as the near-collapse of its two big banks, it can well do without another crisis.

Swinneyscores an own goal with tax raid on private sector

SO, JOHN Swinney knows how to turn or, to be precise, U-turn. After promising not to reintroduce the supermarket tax that he tried to impose last year he’s now plotting another raid on the big retailers who sell tobacco and alcohol.

This one, however, appears more cunningly designed as it no longer looks so much like a straightforward tax grab.

He can dress it up as a health measure and argue that those who sell the demon booze and fags should pay for the damage they cause.

Aside from blaming the seller rather than the buyer, the problem this time is that it looks like a selective targeting of the retailer while everyone else in the supply chain is excluded from the levy. Specifically, there is no mention of the manufacturers of alcohol and tobacco (ironically, Imperial Tobacco yesterday announced it was expecting a 2 per cent rise in revenue).

It would appear that whatever the moral and health-related arguments the finance secretary presents for this tax, he has put them ahead of the economic case: that for all their other sins and shortcomings the big retailers – in particular supermarkets – have been among the bigger job creators. As such, this looks like a cynical plundering of the profits they are making and once again risks making these companies think twice about their investment into Scotland.

There is another own goal in the Scottish budget with the reduction of empty property relief in the belief that it will hasten the occupation of these premises. Evidence from south of the Border, where this has been done, is that it doesn’t work.

These issues apart, the Scottish Government continues to promise us that it is putting the economy at the top of its agenda and there were items in yesterday’s statement to indicate that it is prioritising the economy in some areas: on youth employment and apprenticeships, on switching resources into capital projects and investing in modernising the country through improved broadband, and so on.

But the over-riding issue is the need to balance the budget and tackle a cut in funds available. Tackling the bloated (and still free spending) public sector is long overdue, although Swinney has to tread carefully when it provides salaries for such a large swathe of the working population.

The real test of his budget will be similar to that facing his counterpart at Westminster: to shift the balance of the economy from public to private sectors and for that reason he should not be tempted to see the business community as an easy target for raising funds.