As I See It
Holyrood must show it cares for big business
While Scotland’s politicians continue to scrap over the constitutional issue a few important matters have barely gained a passing mention.
Nicola Sturgeon managed 4,200 words in her independence-laden speech to the SNP conference. I’d wager that some of our MSPs have strung a sentence together on the biggest ever takeover between two Scottish companies, announced a fortnight ago.
It was at least 48 hours after Standard Life and Aberdeen Asset Management confirmed their tie-up that senior politicians had anything at all to say about the proposed £11 billion deal.
When they did, it was to check out the impact on jobs. Important, of course, given that the combined group will seek £200 million of savings, but there are other factors in this deal that a mature body of politicians ought to be taking into account and actually celebrating.
Assuming it goes through (and in an interview today Standard Life CEO Keith Skeoch says “it’s very unusual for a deal of this nature to fall over”) it will create a financial behemoth with global scale.
It will have £660 billion of assets under management, and while this arguably leaves it needing one more bolt-on to enter the trillion club, it means Scotland will have a powerhouse of the sort that the nationalists in particular should be cooing about.
But was the deal and the potential for building this huge Scotland-headquartered company mentioned during the weekend “Indy-Fest”? Was anyone prepared to speak out for big business at all?
Hardly a whisper.
There may be one obvious answer to this. Standard Life claims to be neutral and apolitical (as most companies do when issuing public statements), but in the 2014 campaign it became a standard bearer for the UK, threatening to relocate key parts of its business if Scotland voted to leave.
In response, the nationalists launched into a tirade of ridiculous, misguided and ill-informed abuse. They made a huge mistake. Instead, they should have been embracing Standard Life and offering assurances. If they want to build an economy independent of the rest of the UK they are going to need Standard Life and many more like it.
Since the Aberdeen tie-up was unveiled, both companies have said the new business will based in Scotland. It is almost certain to choose Edinburgh, and for many reasons: it is the largest employment base for the two companies. Standard Life Investments (the real driver of this deal) is due to expand into newly-built offices in St Andrew Square this year. Crucially, Edinburgh is the country’s financial capital.
The decision to headquarter the new company in Scotland has inevitably been seen as something of a softening in Standard Life’s position and should be comforting to those who feared it would up sticks and head to London.
However, in the modern world, business is much more footloose and mobile. Ties no longer bind in the way they once did. Executives who were once drawn from a local pool now tend to be international. Just like those executives, companies are globally minded and, thanks to technology, able to position themselves wherever they need to be. Just ask HSBC, WPP and the City institutions still looking at Frankfurt or Paris as Brexit-influenced alternatives.
Boards cannot afford sentimental attachment to their location. They will base their operations where they can achieve the level of competitiveness they require and this will be based on tax, cost of labour, regulation, and so on. They also need to feel welcome.
Standard Life Aberdeen, or whatever it will be called, has big plans and it is important that Scotland does not upset the applecart.
In his “first interview” today (he actually spoke to all the media soon after the deal was announced), Mr Skeoch – who will be co-CEO with Aberdeen’s Martin Gilbert – gives away few details on the deal.
His most telling comment is: “My own view is that over the next 10 to 15 years, the big winners in asset management will have scale.”
The question now, is what sort of scale? Just how big can the new company become?
The prospect of a third party gatecrashing the deal is low, but the chances of even this giant being acquired cannot be ruled out as others seek to raise the stakes even higher.
Nicola Sturgeon likes to see herself as a stateswoman leading a mature nation. The opposition like to claim that she has become a one-eyed monster obsessed with a single issue.
Poverty and education are two issues which the SNP government has been accused of ignoring. Important, of course, but also typical of a parliament which is also obsessed with public services.
Take the news that Edinburgh is increasing its appeal to the international investment community. It has broken into the world’s top five cities within a global property investment index.
That’s a fantastic achievement. So how do Scottish politicians respond to the property sector’s plea for low and stable taxes to keep this vital source of funds open? The Scottish government jacks up business rates, imposes higher tax on the sale of top-end residential properties and at least two parties promote increases in personal taxes.
If Scotland is to prosper as a nation it needs to support its businesses, small and large. Instead, too often they are seen as a cash cow (witness the rates row) – a resource to be plundered for politicians’ pet projects.
When will an MSP stand up in parliament and propose a motion congratulating two Scottish companies on creating a world class business with thousands of valued, skilled employees bringing wealth to the country (which helps to pay for the government’s social policies)?
It would have been a welcome sign if Ms Sturgeon and her cabinet colleagues had organised a meeting (and a photocall) at Standard Life HQ soon after the deal emerged.
Not only would this have helped in the process of reconciliation, it would have shown the world that Scotland cares about its big companies and is proud of what they can achieve in the world.
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