Would Scotland really suffer if RBS moved after independence?

Any relocation would be largely symbolic but the Scottish economy desperately needs to be rebalanced.

Vince Cable became the latest UK government minister to warn (or imply, at any rate) that the financial crisis would have sunk an independent Scotland when he gave evidence to the Business, Innovation and Skills Committee at Westminster yesterday. In response to a question from Labour’s William Bain about the consequences of removing the Bank of England as lender of last resort to the Royal Bank of Scotland, Cable said: "I think if you were managing RBS you would almost certainly want to be in a domicile where your bank is protected against the risk of collapse. I think they already have a substantial amount of their management in London and I would have thought that, inevitably, they would become a London bank, which would be symbolically quite important."

You can see the Business Secretary’s point. RBS, which is headquartered at Gogarburn, just outside Edinburgh, has a balance sheet roughly ten times the size of Scotland’s entire economic output. Had Scotland been independent in 2008, when the bank imploded under the weight of its own reckless lending and acquisition practices, the Scottish Treasury would have gone bust trying to keep it afloat and the Scots, like the Irish, been forced to seek a hefty EU/IMF rescue package.

But the problem with Cable’s argument – an argument which has featured heavily in unionist rhetoric over the last five or six years – is that RBS is a British bank, not an exclusively Scottish one. At the time of the crash, RBS had more customers and employees in the rest of the United Kingdom than it did in Scotland, as well as a majority of its capital assets in the City of London. Today, as it edges back into private ownership, it still has 24 million customers across the UK and, as Cable acknowledges, "substantial" management in the British capital.

On what grounds, then, would the rest of the UK have insisted that Scotland take responsibility for the full cost of the £45bn RBS bail-out?  Moreover, what obligation would an independent Scotland have had – or currently have – to guarantee the deposits of RBS customers south of the border? That was – and would remain were Scotland to leave the UK – the role of the British government.

Cable’s position is further undermined by experiences elsewhere. Not long after the near collapse of Britain’s financial sector, the Netherlands, Belgium and Luxembourg joined forces to salvage Fortis, a major European bank. Bail-out costs were divided according to the proportion of Fortis’s operations in each of those countries. National boundaries, it seems, matter little to financial institutions capable of straddling continents.

Yet Cable has, however unwittingly, raised one interesting question. To what extent would Scotland suffer if RBS did move its headquarters from Edinburgh to London after independence? RBS employs about 12,000 people in Scotland, while the financial sector as a whole employs roughly 85,000 people and accounts for between 7 or 8 per cent of Scottish GDP. Only a small number of these jobs – most likely those at Gogarburn – would be at risk were RBS to relocate down south. It’s difficult to imagine what reasons the bank would have to further reduce its Scottish operations. Indeed, Cable himself concedes any such relocation would be little more than "symbolic".

And what would that symbolism amount to? Finance capitalism, particularly of the sort practiced by RBS in recent years, is predatory, monopolistic and crisis-prone. It’s hardly a coincidence that those countries, such as the UK, Ireland and the US, which allowed their economies to become heavily leveraged on financial services in the run-up to 2008 also suffered the longest and most severe post-crash downturns in the developed world.

The Scottish economy desperately needs to be rebalanced. It currently exports more in financial goods and services than it does in manufacturing (the underlying weakness of its trade balance is disguised by strong oil and whisky exports). Were its banks to run into more trouble, it would lack a robust manufacturing base to fall back on. RBS won’t flee an independent Scotland. But if it did, the long term effects would probably be beneficial. 

A general view of RBS's company headquarters at Gogarburn on December 12, 2011 in Edinburgh. Photograph: Getty Images.

James Maxwell is a Scottish political journalist. He is based between Scotland and London.

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Jeremy Corbyn supporters should stop excusing Labour’s anti-immigration drift

The Labour leader is a passionate defender of migrants’ rights – Brexit shouldn’t distract the new left movement from that.

Something strange is happening on the British left – a kind of deliberate collective amnesia. During the EU referendum, the overwhelming majority of the left backed Remain.

Contrary to a common myth, both Jeremy Corbyn and the movement behind him put their weight into a campaign that argued forcefully for internationalism, migrants’ rights and regulatory protections.

And yet now, as Labour’s policy on Brexit hardens, swathes of the left appear to be embracing Lexit, and a set of arguments which they would have laughed off stage barely a year ago.

The example of free movement is glaring and obvious, but worth rehashing. When Labour went into the 2017 general election promising to end free movement with the EU, it did so with a wider election campaign whose tone was more pro-migrant than any before it.

Nonetheless, the policy itself, along with restricting migrants’ access to public funds, stood in a long tradition of Labour triangulating to the right on immigration for electorally calculated reasons. When Ed Miliband promised “tough controls on immigration”, the left rightly attacked him.  

The result of this contradiction is that those on the left who want to agree unequivocally with the leadership must find left-wing reasons for doing so. And so, activists who have spent years declaring their solidarity with migrants and calling for a borderless world can now be found contemplating ways for the biggest expansion of border controls in recent British history – which is what the end of free movement would mean – to seem progressive, or like an opportunity.

The idea that giving ground to migrant-bashing narratives or being harsher on Poles might make life easier for non-EU migrants was rightly dismissed by most left-wing activists during the referendum.

Now, some are going quiet or altering course.

On the Single Market, too, neo-Lexit is making a comeback. Having argued passionately in favour of membership, both the Labour leadership and a wider layer of its supporters now argue – to some extent or another – that only by leaving the Single Market could Labour implement a manifesto.

This is simply wrong: there is very little in Labour’s manifesto that does not have an already-existing precedent in continental Europe. In fact, the levers of the EU are a key tool for clamping down on the power of big capital.

In recent speeches, Corbyn has spoken about the Posted Workers’ Directive – but this accounts for about 0.17 per cent of the workforce, and is about to be radically reformed by the European Parliament.

The dangers of this position are serious. If Labour’s leadership takes the path of least resistance on immigration policy and international integration, and its support base rationalises these compromises uncritically, then the logic of the Brexit vote – its borders, its affirmation of anti-migrant narratives, its rising nationalist sentiment – will be mainlined into Labour Party policy.

Socialism in One Country and a return to the nation state cannot work for the left, but they are being championed by the neo-Lexiteers. In one widely shared blogpost on Novara Media, one commentator even goes as far as alluding to Britain’s Road to Socialism – the official programme of the orthodox Communist Party.

The muted and supportive reaction of Labour’s left to the leadership’s compromises on migration and Brexit owes much to the inept positioning of the Labour right. Centrists may gain personal profile and factional capital when the weaponising the issue, but the consequences have been dire.

Around 80 per cent of Labour members still want a second referendum, and making himself the “stop Brexit” candidate could in a parallel universe have been Owen Smith’s path to victory in the second leadership election.

But it meant that in the summer of 2016, when the mass base of Corbynism hardened its factional resolve, it did so under siege not just from rebelling MPs, but from the “Remoaners” as well.

At every juncture, the strategy of the centrist Labour and media establishment has made Brexit more likely. Every time a veteran of the New Labour era – many of whom have appalling records on, for instance, migrants’ rights – tells Labour members to fight Brexit, party members run a mile.

If Tony Blair’s messiah complex was accurate, he would have saved us all a long time ago – by shutting up and going away. The atmosphere of subterfuge and siege from MPs and the liberal press has, by necessity, created a culture of loyalty and intellectual conformity on the left.

But with its position in the party unassailable, and a radical Labour government within touching distance of Downing Street, the last thing the Labour leadership now needs is a wave of Corbynite loyalty-hipsters hailing its every word.

As the history of every attempt to form a radical government shows, what we desperately need is a movement with its own internal democratic life, and an activist army that can push its leaders as well as deliver leaflets for them.

Lexit is no more possible now than it was during the EU referendum, and the support base of the Labour left and the wider party is overwhelmingly in favour of free movement and EU membership.

Jeremy Corbyn, John McDonnell and Diane Abbott are passionate, principled advocates for migrants’ rights and internationalism. By showing leadership, Labour can once again change what is electorally possible.