Losing the Heid
While the big guns of the Scottish and UK media were trained (quite rightly) on the axe hanging over the Grangemouth oil refinery and petrochemical works, two stories crept out under the radar. Neither, it’s fair to say, were as dramatic or as consequential as the events being played out on the south bank of the Firth of Forth, but I thought they were significant enough. One was the news that the English insurance company London Life had decided to ditch two venerable brand names, Scottish Life (founded 1881) and Scottish Provident (founded 1837) both of which London Life had acquired a dozen or so years ago. Between them the two brands looked after the pensions of 1.4 million people.
A bottom-of-the-page story in The Times business section pointed out that this decision `…will leave Scottish Widows, owned by Lloyd’s Banking Group, as the only sizeable life insurance brand with a “Scottish” prefix that references its heritage north of the border.’ And as the word in the City of London is that Lloyd’s is seeking a buyer for Scottish Widows, who knows how long that `prefix’ will last? It might be that the name Scottish will disappear entirely from the insurance sector which Scots did so much to create
In the same week it was announced that the Nationwide Building Society, which had swallowed the Dunfermline Building Society in 2009, was cutting back drastically on the number of branches displaying the Dunfermline colours. Nationwide declared it was also ditching those Dunfermline branches which were judged too close to existing Nationwide offices, something that will cost more than 90 jobs. Small beer compared to the potential job losses at Grangemouth, but a miserable Christmas and New Year for the folk involved. t goes.
All of which has induced in me a strong feeling of déjà vu. More years ago than I care to remember I helped put together a programme for Scottish Television which we called `Losing the Heid’. The idea (or at least the hope) was to give Scotland some notion of the way industrial, financial and commercial power was being drained out of the country by sell-outs, buy-outs and takeovers. Among the many concerned people we talked to was Bruce Pattullo (the boss of the Bank of Scotland then Britain’s best bank) who stressed the dangers of seeing company head offices drift away over the border and elsewhere.
Not only did that mean the loss of top-level decision-making in Scotland, he said, but it also dealt a crippling blow to all the companies who serviced corporate headquarters: lawyers, accountants, PR firms, bankers, surveyors, designers, printers, engineers, architects etc. even the caterers which supply company boardrooms with lunches. Even more worrying, Pattullo said, was that takeovers usually meant saying goodbye to research and development operations, the vital sparks that keep companies alive and growing. Pattullo was adamant that Scotland couldn’t afford to lose too many of its head offices.
Well, that was back in the early 1990s. Since then Bruce Pattullo has retired from banking and the situation has got much, much worse. There was a time when the Scottish establishment (Left and Right) would send round the fiery cross to try to fend off a hostile takeover. They didn’t always succeed, but they did try. Not any more. There’s no point. Successive British governments have stripped Scotland (and indeed Britain) of any defence against predatory foreign buyers. As a result, the futures of most of our biggest and most crucial industries are being decided in board rooms in England, Europe, North America and, increasingly, Asia.
I couldn’t help feeling dismayed to be told time after time in October that the great sprawling refinery/chemical site at Grangemouth was vital to Scotland’s industrial welfare but that its fate lay in the he hands of Ineos a company run from Switzerland (for the usual tax reasons) and another owned by the People’s Republic of China. For most of its 89-year life the Grangemouth refinery was the property of British Petroleum (BP) the majority of whose shares were owned by the British Government (at the behest of Winston Churchill) for strategic reasons. But strategic reasons cut no mustard with modern Tories who sold our slice of BP leaving the company free to sell the ageing refinery at Grangemouth to exiled Yorkshireman Jim Ratcliffe and his Communist Chinese partners.
But the sad fact is Scotland has very little control over any of our strategic assets such as Grangemouth. Consider this: our nuclear power stations at Torness and Hunterston are now owned by Electricite de France (prop. the French government); our remaining coal burning station at Longannet in Fife belongs to Scottish Power which is part of the Spanish energy giant Iberdrola; the networks that bring us the electricity are owned run by National Grid of England. Only the hydro-electric schemes in the Highlands, once owned by the North of Scotland Hydro Board which mutated into Scottish and Southern Energy (SSE), are controlled from Scotland.
Ditto our main ports and harbours (with the exception of Aberdeen). All the harbours on the Firth of Forth (Leith, Granton, Grangemouth, Rosyth, Burntisland, Methil, Kirkcaldy) along with acres of prime waterside land are owned by the Australian operation Arcus European Infrastructure Fund. The shopping/cinema/eating emporium in Leith docks known as the Ocean Terminal (nearest neighbour the Royal Yacht Britannia) was sold to Resolution Property, a London-based private equity group.
At the other side of the country the Clyde Port Authority which was privatised into Clydeport plc has fallen into the hands of the English group Peel Holdings. That company now owns and runs the King George V Dock in Glasgow and the docks and harbours in Greenock, Hunterston, Ardrossan and Corpach. Its subsidiary Peel Energy has plans to build a new coal-fired power station at Hunterston..
Scotland’s more important airports have gone the same way. When the state-owned British Airports Authority (BAA) was put on the market it was bought by the Spanish firm Groupo Ferrovial. At a stroke Scotland’s four biggest airports – Glasgow, Prestwick, Edinburgh and Aberdeen – became assets in the Spaniards’ portfolio. Edinburgh airport has now been sold on to the American fund Global Infrastructure Partners for a handy £807 million (almost twice what it was expected to make). The airport at Prestwick was rescued from closure by a Canadian enterpeneur called Matthew Hudson who sold it to the Perthshire firm Stagecoach who sold it on to Infratil of New Zealand. The Scottish Government are now talking about taking Prestwick back into public ownership – more than two decades after it was privatised.
And so it goes on. Control of our once vigorous financial sector has also disappeared furth of Scotland. The Bank of Scotland (founded 1685) was first `merged’ with the Halifax and is now part of the huge Lloyd’s Banking Group based in London. The Royal Bank of Scotland (founded 1727) built itself into the fifth biggest bank of the world until it imploded from corporate overreach and had to be rescued by the British tax payer. The Clydesdale Bank has long been a subsidiary of the National Australia Bank. The only big, Scotland-centred player left is the Standard Life group which, according to one fund manager of my acquaintance `is forever looking over its shoulder for hostiles.’
Not that Scotland’s big-ticket strategic companies are the only ones falling prey to takeovers. For example: Grampian Country Foods (Vion International of the Netherl
ands); Guardbridge Paper ( Curtis Fine Papers of the USA); Glasgow Herald Group ( Gannett Company Inc. of the USA); House of Fraser (Baugur Group of Iceland); Scottish & Newcastle (Heineken/Carlsberg of Germany and Denmark); United Biscuits (Blackstone/PAI of the USA and France); W&R Chambers (Lagardere group of France). The list is long and ever growing.
What is particularly galling about all this is that no other European country flogs its strategic assets in this way. When the US drinks giant PepsiCo tried to buy the French yoghurt maker Danone the French government stopped the deal on the grounds that yoghurt was a `strategic’ asset. When one of the Spanish railway companies tried to buy a slice of the German railway system the Federal government stepped in waving the same `strategic’ stop sign. The Germans also stopped a Russian telecoms company from even taking a stake in Deutche Telekom. The ultra capitalists of the USA refused to allow P&O to sell American ports and harbours to Arabs, even friendly ones from Dubai..
But Britain – and with it Scotland – doesn’t have companies it regards as strategic. To the free marketeers of the City of London there is no such thing as a `public’ or `national’ interest. And as things stand there’s nothing that the Holyrood government can do about it. Everything we have – our land, power stations, railways, airports, financial institutions, newspapers, docks and harbours – is up for grabs, so long as the price is right. That dismal process will continue so long as we are run by British governments who seem to know the price of everything and the value of nothing – the classic definition of the cynic.