When is a Scottish Bank not a Scottish Bank?

In 2008, Alex Salmond hailed RBS as the pride of the "Celtic Lion" economy that he envisaged for an

Is the Royal Bank of Scotland a Scottish bank? The answer, you might think, is in the question.

Technically, of course, RBS is a British bank, majority-owned by UK taxpayers, although the shareholding is kindly managed on our behalf by something called UK Financial Investments Ltd, which is, according to its founding mandate, run "at arm's length" from the Treasury.

In more buoyant economic times, however, when RBS was a private sector champion, it was a potential source of pride and financial clout for Scotland, should it decide to dissolve its union with England. (This was back when Scottish Nationalists looked westward to the dynamic performance of Ireland and considered whether there wasn't a "Celtic Lion" economy ready to be unleashed in imitation of the big cat over the sea. People don't talk so much about the Irish "Celtic Tiger" model these days.)

Channel 4's Faisal Islam published an interesting document on his blog last night showing how Alex Salmond cheered Fred Goodwin on in his takeover bid for ABN Amro - the a deal that ultimately broke the bank. As late as March 2008, Salmond was still selling Edinburgh's financial services buccaneers as evidence that Scotland could stand on its own as part of an "arc of prosperity" alongside Ireland, Iceland and the Nordic countries. The SNP leader told an audience in Harvard:

With RBS and HBOS - two of the world's largest banks - Scotland has global leaders today, tomorrow and for the long-term.

Or not, as it turned out. When RBS needed bailing out by the UK government, its balance sheet assets were equivalent to 2,500% of Scottish GDP. So the question naturally arises, how would an independent Scotland have coped? The SNP answer is to blame Westminster (naturally) and the Labour government for the regulatory failure that allowed the crisis to build in the first place. In that respect, I supposed he agrees with David Cameron.

Alistair Darling, the Chancellor who oversaw the bail out (and a Scot who will be playing a lead role in Labour's anti-independence campaign) has attacked Salmond today for being "slippery" on the issue of RBS exposure. Why should the SNP claim Scotland's oil revenues, Darling asks, but not its share of debt incurred to keep his former financial champion afloat? It is a decent question.

Meanwhile, RBS has announced 3,500 job losses as part of plans to shrink its investment banking operations. That is partly because the bits being scaled down weren't making enough money and partly in anticipation of restructuring to be enforced by the government over the next five years. Under proposals set out by the Vickers Commission on banking reform, high street and retail functions (the bits ordinary people use and trust) must be separated from investment functions (the dodgy casino bits everyone blames for impoverishing us all).

The Treasury had initially resisted the idea of enforcing separation too rigorously on the grounds that it would be a complex, time-consuming procedure that would necessarily delay the process of re-privatising UKFI's banking shares. George Osborne would have liked to sell a few tranches of RBS ahead of the next election to build up a war chest for a populist pre-polling day budget. That doesn't look too likely now. A source inside RBS tells me that this time last year, the bank was fully expecting to see some of its government shares floated in 2012, but the downturn in the economic outlook in the second half of 2011 killed that idea. Now everyone is resigned to the fact that HM Government is the boss for a long time to come.

Eventually, the reformed and restructured banks will be sold off. Then a whole new question arises. How much of the proceeds of that sale belongs to Scotland?

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.