View the article online at http://citywire.co.uk/money/article/a736688
‘Stranded Life’ shows Scottish referendum is flawed
Standard Life’s intervention in the Scottish independence debate shows the referendum is flawed and needn’t involve unnecessary angst about currency and regulation.
Standard Life’s warning that it could move parts of its business out of Scotland if Scots vote for independence is widely reported as a blow to the nationalist cause.
The sight of one of Scotland’s biggest businesses planning to decamp south of the border in the event of a ‘Yes’ vote hardly inspires confidence in the prospects for an independent Scotland. Many more businesses could follow this symbolic move.
Of course Standard Life insists it is being ‘strictly apolitical’ and has no wish to influence the vote in September. Its decision to register new companies outside Scotland into which it could transfer its operations is, it says, simply a response to the political uncertainties thrown up by the referendum.
Risks of separation
Notwithstanding its 189-year history in Scotland, the company does not want to be stranded in Edinburgh when it’s unclear what currency the independent nation would use, what its monetary and tax policies would be and question marks hang over the strength and effectiveness of its financial regulation.
These are huge uncertainties and millions of Standard Life’s customers will be relieved to see it has contingency plans in place. There’s no need to sell your Standard Life Sipp just yet.
David Nish, chief executive (pictured), says it is a ‘precautionary measure’ to ensure Standard Life can continue to look after the interests of its customers, staff and shareholders.
Nevertheless, this is a risky move for Standard Life, which employs 5,000 people in Scotland, some of whose jobs may now be at risk.
There’s also the danger of a backlash if the company is seen as lining behind a pro-union, English establishment. The Conservatives, Liberal Democrats and Labour have ganged up to refuse Scottish National Party leader Alex Salmond’s proposal for an independent Scotland to share the pound in a currency union.
Salmond, Scotland’s first minister, insists the Whitehall parties will change their mind and open negotiations if the Scots vote for independence.
Last month Bank of England governor Mark Carney stressed the difficulty of a currency union and pointed out Scotland would have to surrender some sovereignty in return for using the pound.
It’s not clear what effect this war of words will have. The financial uncertainty that perturbs Standard Life could scare voters away from independence. Equally, it could rouse a rebellious streak and encourage more Scots to take the plunge.
Polls have shown the ‘yes’ vote gaining ground on the ‘no’ camp with 37% to 47% in a recent count. It could be the intransigence of the Westminster parties is backfiring.
What about 'devo max'?
Significantly, however, another survey showed two thirds of Scots would vote for another option, if they could.
This is the so-called ‘devo max’ idea mooted a few years but rejected by David Cameron when negotiating the terms of the vote with Salmond. In this the Edinburgh parliament would increase its tax and spending powers under devolution but Scotland would remain within the United Kingdom, sharing defence and foreign policy.
Given the difficulty for voters to weigh the financial risks of Scottish independence it’s a shame the referendum is framed the way it is, with a simple yes/no vote on complete separation.
Much better, surely, would have been some sort of ‘devo max’ proposal. This would have given Scotland the chance to take more power without having to break the union and unleash, not only the currency and regulatory demons that Standard Life has highlighted, but also the nationalist passions which make many Britons nervous.
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What others are saying
- The Scotsman: most Scots back 'devo max'
- Reuters: Standard Life warns it could quit independent Scotland
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by Gavin Lumsden on Dec 19, 2014 at 17:24