Financial Services Inquiry

My contribution to part of the Economy, Energy & Tourism Committee's Financial Services Inquiry is below.  I hope you find it of interest.

-RG

Rob Gibson (Highlands & Islands) (SNP): The discussion that the Which? commission started is a good template for looking at the issue from the consumer point of view. However, amid all the views of commentators on the subject, I am still baffled by how the restructuring of the banks can be achieved. The nub of the argument seems to be about making commercial banks more competitive, but that fails to answer the question about where they will get their assets from in order to be able to lend. If we look back to models from the 1990s and earlier, we can see that the balance between debt and deposits was much more equal. However, in this day and age, how are we going to get from where we are to where might be a good place to be? I would like us to develop that issue.

The second point that I would like us to consider is how UK Financial Investments is operating. It was clear that the future of banking commission was unhappy with it, as we were, and we need to keep a watching brief on ways in which we can encourage it to be more proactive, because its hands-off approach has not worked from the point of view of the consumer in Scotland.

Numerous proposals have been made about remuneration. I do not know whether we will see anything of that sort from the wider banking commission that the UK Government is creating, but I would like us to have an input and to think about the matter in more detail. Given the ideas that we heard from Angus Tulloch and others about ethics and banking, and the suggestion in the Which? report about having a code of conduct in the banking industry, we should look to make an input to the UK commission about the Scottish experience.

Lewis Macdonald: I agree with much of what Rob Gibson said.

We must remember that all war is hell

‘Help for Heroes’ parades and Armed Forces Day approaches in the next week or two. As I write this the 70th anniversary of the surrender of the 51st Highland Division and their French Army comrades took place at St Valery en Caux in Normandy. It was a military catastrophe that touched nearly every Highland and NE Scottish home from Caithness to Oban and from Stornoway to Aberdeen.

We should also recall the bravery of present day troops in Iraq and Afghanistan and the wounds to mind and body inflicted there and remember that all war is hell, so much so that the same bewilderment haunts each generation. Last week a journalist posed the question, “How can we stop wars happening?” and a St Valery veteran said, “I don’t know, does anyone know?”

I’ve been asked to join the reviewing officer with other community leaders at the Help for Heroes march due in Tain on Saturday 19th June. Memories and thoughts rush to mind at such times. I visited St Valery three years ago and wrote of the experience and feelings of pride for these brave men following Churchill’s orders to divert the crack German divisions away from the Dunkirk rescue mission. I also think of my future son-in-law who will marry my step-daughter in early July. He has done tours of nail biting duty in Basra and Helmand as a TA volunteer. Thankfully he survived and did his duty. Back home on each of these six month tours of duty the family could barely watch the box as the casualties mounted.

Imagine the numbing pain of not knowing the fate of loved ones in World War 2 as a looked-for letter was the only means to know if your relative or friend had reached the ‘safety’ of a POW camp. But even worse think again on the lingering hopelessness of those left behind when their loved ones paid the ultimate price for freedom.

Can we stop wars? I believe the United Nations needs a radical overhaul 65 years on from VE Day. It should not rest on the nuclear powers that were victorious decades ago. In parallel, the most powerful nations have had to expand the economic club from G7 to G20 to acknowledge the shift in power to the developing world. Can war be stopped? We must never give up on trying by peaceful persuasion and fair trade. Meantime the most powerful need is to stop nuclear proliferation and for the ConDem UK Government to scrap Trident as the first step in that direction in its defence review instead of cutting ground troops and air sea rescue planes. But will the LibDems insist?

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You would think that Labour leadership candidates would show a bit of humility following their part in the biggest recession the UK has seen since the 1930s. Not a bit of it, barring Diane Abbot. Incredibly poll leader David Miliband, former Foreign Secretary wants Scotland to be a test bed for Labour welfare policies to roll out south of the Border.

Meanwhile the real debate is about the engagement between the Scottish Government and the UK ConDem Government. It revolves around financial responsibility. This was ignored and vetoed by the previous Labour cabinet and failed to be addressed by the leadership contenders in their Glasgow hustings.

An impressive array of Scottish business leaders, academics and social activists has lined up behind the non party Campaign for Financial Responsibility CFFR. They include Jim MacColl CEO of Clyde Blowers, Campbell Christie, former STUC chief and Highlander Dan MacDonald, CEO of MacDonald Estates, property developers and many more.

Ben Thomson, chairman of the independent think-tank Reform Scotland and spokesman for CFFR, said: “The initial response to the campaign has been extraordinary. It would appear there is a real groundswell of opinion in favour of giving Holyrood responsibility for raising as well as spending the money it receives. Over the next few weeks and months we are confident the campaign will continue to gather strength and help stimulate the debate.”

They see the Calman Commission’s recommendations on tax-raising powers, which were backed by the main opposition parties in Scotland, as a possible damage to the economy. Therefore a Scottish Parliament with greater responsibility for raising the money it spends would lead to better government in Scotland.

The CFFR claims financial responsibility would make politicians more accountable for financial decisions taken and give both the incentive and the fiscal tools that are vital to improve public services and stimulate real economic growth with a bonus of a healthier relationship between Westminster and Holyrood.

Jim MacColl believes that Scotland is standing at the crossroads of an enormous opportunity. He said, “Across civic society, within the business community and among all political parties, there is a broad consensus that we must enter into a new era of economic responsibility.”

As the building blocks are put in place to develop the Far North economy post-Dounreay I urge local business leaders concerned citizens and academics to explore the CFFR campaign. We know that a healthy economy is needed to support a proper public sector such as health and education. Sir Tom Hunter the retail millionaire has backed the fiscal responsibility argument and it’s a lesson for us here.

He endowed the Centre for Entrepreneurship in Strathclyde University which reported that new business start ups declined in Scotland by 18 per cent between 2008 and 2009, taking it to 3.6 per cent – behind the almost static UK estimate of 5.8 per cent last year. Yet countries in the "arc of prosperity" – the Scottish Government's term for nations such as Norway, Denmark and Iceland – fared better.

While Labour is navel gazing real progress can be made by the Scottish Government and by us locally. I believe that we need to understand just how urgent it is to get Scotland moving through borrowing powers and tax powers in this competitive world for example right here in Caithness and north Sutherland.

Remember the 51st, remember St Valery

This Saturday I'll be joining the Reviewing Officer at the Tain 'Help for Heroes' ceremony (19th June) to honour present day soldiers wounded in action in today's wars.

Last Sunday (13th June) I supported calls for the history and heroic bravery of the 51st Highland Division to be better known.

The division, who were ordered by Churchill to fight (along with the French) a regard action against elite German Divisions to defend the retreat of the British Forces at Dunkirk 70 years ago, was marked at the weekend at ceremonies in the Normandy town of St Valery En Caux.

My Parliamentary colleague Alasdair Allan, SNP MSP for the Western Isles, lodged a motion praising those of the 51st who deserve greater credit than they have been afforded, which I holeheartedly signed and support.

Their selfness at helping the French defend the retreat and slow up the German advance allowed 100,000 others to get back over the channel at Dunkirk.

The Scots and in particular the Highlanders have had a long and proud military history, but the story of St Valéry is one of the most heroic and heart breaking that there is. For many there was only capture and a death march across Europe or hiding in the nearby countryside.

In France, their heroism is well known but I fear that the story needs to be taught in schools to be remembered. I visited the poignant memorial on the cliffs above St Valery several years ago. The plaque in French, Gaelic and English is very moving. The Highland Division took in soldiers from Caithness to the Western Isles and beyond. Just like the under recognition for the brave seamen on the Arctic convoys, the men of the 51st should be honoured, never forgotten.

Guesting with Cowboy Celtic

Here's me at Edinburgh folk club singing 'Buffalo Farm in Achiltibuie' with Cowboy Celtic last week.  What a show!

Coalition has opened up a real debate

The new ConDem coalition in London has set out its stall for the start of a five year term. The watchword on all lips has been financial responsibility after an era of soaring personal debt that was fuelled by a regime of light touch regulation and unprecedented gambling in the stock markets. Indeed the responsibilities for the worldwide financial crash in the autumn of 2008 had its origins in the UK and US model of the free market.

Since I wrote two weeks ago the Holyrood Parliament has now debated both the prospects for Scotland in the new ‘respect’ agenda launched by Prime Minister Cameron and the enquiry done by the Economy, Energy and Tourism Committee into the future of financial services in Scotland.

Last week produced clear evidence that relations between Scotland and the UK can be much less of an impasse compared to New Labour days. In a Tory motion amended by the SNP, the Tories, LibDems and SNP made 79 votes to Labour’s 45 and 2 Green abstentions. It reads:

“That the Parliament welcomes the commitment of HM Government to establish a positive and constructive working relationship with the Scottish Government and Parliament to tackle the problems facing the country and, in particular, welcomes the commitment in the Queen's Speech to introduce legislation to implement recommendations from the final report of the Commission on Scottish Devolution and the willingness to consider matters in relation to the Fossil Fuel Levy and fiscal responsibility issues.”

This crucially opens up real debate about how Scots can both raise taxes ourselves, or cut them and be accountable in Holyrood for the decisions we make. It’s a big prize for negotiations at the highest levels between Edinburgh and London in the next very few weeks.

There is no mistaking the threats of deep cuts across the land, due to unprecedented borrowing in ‘peace time’. That is Labour’s legacy to all of us for having to bale out the big banks. It hits every area of public spending from potholes on the roads to jobs in schools and hospitals.

But to get this in perspective we heard at a meeting of NHS Highland that a proposed cut of a hundred jobs would be needed to help meet £15m cut backs this year. Importantly people should know that the annual turn over of staff in the Health Board is between six and seven hundred. So, even deeper cuts if postponed till next year, as proposed by Cabinet Secretary John Swinney, would have to be very swingeing indeed to reduce health service delivery, such as new dentists, increased ambulance staff and nurses. New treatments, where patients stay for far less time in a hospital bed, will change staffing needs and can improve the patient journey at this time.

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My duty in the banking debate in Parliament was to give the closing speech for the EET Committee. It’s a sort of battle with the surrounding noise of MSPs arriving in the chamber for voting time at 5pm. Often the Presiding Officer has to call for order to let those with an interest hear the conclusions.

We interviewed among others Stephen Hester, CEO of Royal Bank of Scotland, the BBC’s reporter Robert Peston, Gillian Tett, the Financial Times commentator, Mervyn King, Governor of the Bank of England, Lord Adair Turner, Chair of the Financial Services Authority, and the UK committee on Climate Change. This gave the Scottish Parliament unrivalled access to key players, which was urgently needed due to three of the biggest failures in Britain being based in Scotland, namely RBS, HBOS and the Dunfermline Building Society.

Thanks to expert knowledge, our committee adviser Philip Augar helped us produce a most creditable report. Suffice to say the work by the Westminster Scottish Affairs committee continually referred to our evidence in its hurried work. The Scottish Parliament does many things well and more thoroughly than Westminster. This is report that looks at the strengths of Scottish financial bodies such as asset management and insurance with a 300 year old pedigree. It lambasts RBS and Lloyds Banking Group on whom so many of our small borrowers rely.

Suffice to say the new ConDem coalition in London has its job cut out to avoid Philip Augar’s parting shot in his book The Greed Merchants – here’s to the next time!

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As part of the work of the Economy Energy and Tourism Committee we have been enquiring how to promote Scottish exports and encourage inward investment. I had the chance to join the committee delegation earlier this week to Düsseldorf and Brussels to see how North Rhine Westfallia and Flanders do the same job.

Our meetings show us that big utility partners such as E On, Scottish Power and Scottish and Southern Energy who have won Pentland Firth wave and tidal sites can be major partners with local businesses that develop prototype wave and tidal machines. The European Union will back Scottish developments and I see considerable openings for German companies like E On and our own power utilities who stand to gain big prizes from backing local firms in the marine renewables field. It’s a story of hope for Scotland and particularly for the Far North that shows the work of the Scottish Government and Parliament to back our renewables windfall requires national borrowing powers to underpin the international interest in our marine resources.