Two Fantasies and a Fact

thatcherbrown_450x300

It is worth remembering what Gordon Brown actually said in his first intervention under the Better Together banner (22nd April, and already almost forgotten), which was seen by most commentators last week as principally about pensions; but which produced a notable summation of Brown’s Unionist ideology, discovered in this heartfelt remark: “the patriotic vision I share of a Scottish Parliament …. …. is part of a system of pooling and sharing risks and resources across the UK”. The mechanics of scale is at the core of Better Together’s whole appeal: 60m people are (fairly obviously) more than 5m. The dazzling power of numbers, of quantification, of reductionism seems to work as an argument, at least at a first-glance, a naive presumption, or a simple-minded level; until you ask two simple questions. First, whose resources are being pooled; second, whose risks are being shared?

North Sea Oil has certainly been a pooled UK resource from the 1970s; but while the Shetlands, with commendable spirit, managed to ensure there was a fund established to allow it to invest some modest share in its own long-term future, neither Scotland nor even the UK received a prudent, husbanded share of the rewards; instead the UK taxation of oil resources raised historically exceptional revenues that were squandered by Margaret Thatcher in the 1980s to further her political ideology, including the cold dismantling of Scotland’s economy. Whatever benefits accrued to London or more vaguely the UK; both in reality and perception Scotland did not thrive at the cutting-edge of 1980s material success; much of it generated by the North Sea. At the same time Scottish regiments (most now in turn dismantled) have been ‘pooled’ to fight in the Falklands, Iraq (twice) and Afghanistan.

Scotland’s great banking system was first ‘pooled’ in 1986 with the implementation of Big Bang. The leading Scottish retail banks, RBS and the Bank of Scotland (BoS), hitherto an integral part of the elaborate, complex and delicately balanced ‘Union’ of Scotland and England that had long allowed the traditions of Scottish banking to develop with considerable freedom and autonomy from London; had indeed ensured that a different, distinctive and more cautious culture of banking had developed and thrived in Scotland within the Union; which incidentally, had produced a Scottish banking sector with a negligible presence in investment or merchant banking as that risky and aggressive area had grown in the increasingly loosely regulated environments of either Wall Street or the City of London. All this changed with Big Bang; Scottish banking lost its distinctive character, its independence from London. Scottish banking was driven into the City financial conglomeration mania for vertically integrated banking (ironically at the very time in the late 1980s and 1990s that conglomeration was being abandoned in virtually every other business sector, as a redundant model following the globalisation of industry, trade and markets). At the same time the City of London drastically deregulated itself under the (risible) Thatcher theme of ‘light-touch regulation’; which we can now see, without any surprise, proved to be the application of no effective regulation at all; ending with the seduction even of New Labour by the City and a new, nugatory regulatory regime.

Perhaps most critically of all, however Scotland lost its hard-earned, long valued and distinctive banking culture: a calamity that was scarcely noticed at the time. The combination of Scotland losing its banking culture, with City deregulation proved, in retrospect, to have been catastrophic for the major banks in Scotland. It may be said of the demise of so much of the traditions of Scottish life and business in the 1980s, that few in Scotland embraced Thatcherism so warmly as the accountants or other non-banking parvenus first entering Scottish banking from this time, and who rose to pre-eminence in the post-Big Bang banking world. This radical transformation of Scottish banking was done in the name of Britain – of the Union; and it serves as a timely reminder that Unionism has not conserved the Union, as Better Together so often and blindly claims; but has actually slowly undermined the Union.

Following ‘Big Bang’, RBS and BoS were faced with the prospect of being taken over by far larger, aggressive, integrated, City of London financial predators; or becoming City of London predators themselves. The rest, as they say, is history; although while RBS used BoS’s move for NatWest (1999) to snatch the prize, it is now conveniently forgotten that BoS in consequence immediately became identified as vulnerable prey; ripe for takeover, in the event by Halifax (called in the political euphemism of the time, a ‘merger’). Scottish banking as developed by the Union was effectively being extinguished by the imposition of Big Bang in 1986, and what we had in consequence is that all UK banking was relentlessly incorporated into the City of London, a surreptitious union within a Union: the triumph of a City State over an old Union.

The City of London marched to the beat of a different drum, stridently marching into the Credit Crunch abyss, to the tune of the Financial Instability Hypothesis; with all the appalling consequences we have seen in the Credit Crunch: consequences still incongruously (inexplicably) being played out in further losses made or provisions revealed, if not in fines and penalties in the US (large) or UK (derisory) by the authorities, no less than seven years after the Crash; with the final, grim account still being quantified. When it is stated that on Independence, all that will happen to RBS is that a brass plate will shift to London, this is nothing more than recognition of longstanding reality: the Death Warrant of Unionist Scottish Banking had been signed not in the Credit Crunch or the bail-out, but in October, 1986 with Big Bang.

This is what Gordon Brown and Better Together actually mean by ‘pooling resources and risks’. The City of London takes the risks; and in the UK (including Scotland) we all pool our resources in order to stand behind the risks by London for returns nobody sees and on which little or no tax is paid (since it will be set off first against astronomical losses), or we all invest in London’s infrastructure; in either case everyone finances London’s future no matter the return it provides, which we are supposed vicariously to admire – as sufficient reward; alternatively, we can all move to London – but if you wish actually to have a home, prices may drive you to live as far away as Southampton, and commute.

Such is the nature of the Union today. It is not only Welfare or the NHS (in England) which are being dismantled by Westminster Governments (past and present), but the Union itself; and we may advisedly ask, for what – the hegemony of London?

Comments (0)

Join the Discussion

Your email address will not be published. Required fields are marked *

  1. tartanfever says:

    Interesting article john, Thanks.

    I’d add a follow on – here we see the exact reason for the building of HS2.

    The City of Birmingham Business Chambers wax lyrical about bringing investment and jobs to their neck of the woods. Thats clearly not going to happen.

    Birmingham, like Manchester, will eventually become suburbs of London.

    House prices are so astronomical in London thats it’s far easier (and preferable) to build a fast railway that can get commuters into the capital for 9am. The last thing or London centric government want to do is lose any city jobs to surrounding areas.

    Job creation is to remain the sole property of London, nowhere else.

    1. johnmc says:

      Shetland

  2. setondene says:

    Useful piece on the London takeover of Scottish banking. Thanks for this.

  3. cesira128 says:

    A very useful short history of the absorption of Scottish banks into London city banks. From a global perspective, it is useful to bear in mind the simultaneous (big bang reasons) for the absorption of London’s city banks by NYC money center banks. There is no longer a distinctive English banking sector (e.g. the building societies). HSBC, for example, is not an English bank grown large but a refugee from the aborption of Hong Cong into the PRC. It got its banking license in Britain via its takeover of Midland bank–the key bank servicing industry in and around cities like BIrmingham. Midland bank was a takeover target because it entered the US market via takeover of Crocker bank (California) and thus gained the dubious honour of taking over Crocker’s participation in the Latin American debt crisis. These and other events mean there is no longer a British banking sector with allegiances and felt duties to the ‘home country.’ Instead, we have branch plants of global predators who have no intention of investing in the real economy here (or anywhere for that matter) finding Casino Capitalism more lucrative. There is no benefit in the union. None

  4. Free Scotland says:

    David Cameron is known to have claimed that the referendum is for the people of Scotland to decide. Why, then, do newspapers based in England devote so much time and attention to trying to interfere with Scottish democracy? When David Cameron visited Scotland a few months ago, he announced a massive investment for the North-Sea gas and oil industries, and patronisingly told Scotland that it needed the “broad shoulders of the UK” to deal with the exploitation of these great resources. Just days later, realising that their leader had let something slip which could make Scotland suspicious of Westminster motives, the English press started talking down North-Sea oil reserves, telling us they would soon dry up. On 18th September, the people who live in Scotland will have the opportunity to notify the beleaguered UK Treasury that Scotland’s resources, which extend well beyond mere mineral reserves like oil and gas, will in future be considered an all-Scottish affair.

  5. John mcgrory says:

    I keep on thinking to myself, why do they need us so much? My reckoning is that we have everything they need as they have F-ck all but corrupt politicians and bankers. Would they like to buy water from my garden, let’s say £15 a litre as the hose pipe ban is getting near. Gordon Brown is and always has been a twat. The so called Labour Party should hang their heads in shame.

  6. yerkitbreeks says:

    Aha, but these banks and their tax – directed offsets have been a model for our very own Scottish princes – see how the Buccleuch empire has managed to make a £750000 loss this year

  7. It would be lovely if the contributors to Bella, Wings, Newsnet et all would finally get it through their skulls that Shetland (and Orkney) ought to be referred to as such and NEVER as “The Shetlands” or “The Orkneys”

    That will get you a skelpt lug.

  8. Wullie says:

    Meanwhile, Glasgow Council leader Mathieson announces that he has “More in common” with the big English cities than parts of Scotland! He doesn’t say which parts of Scotland or why, but considering that Glasgow shares the same law, police, taxation, education system, health service, transport network, culture & history as the rest of Scotland, this statement needs further investigation.
    I’ve been listening to similar guff from Labour careerists for half a century, why Ansterdam, Oslo, Copenhagen, Dusselforf etc’, etc’, are not included in this parochial picture, he doesn’t explain.
    He doesn’t explain either why his party has “More in common” with the Tory toffs that they share a platform with, than they do with the rest of us.
    To think that this individual will be fronting the city’s team at the Commonwealth Games is nothing short of a disgrace.

Keep our Journalism Independent

We don’t take any advertising, we don’t hide behind a pay wall and we don’t keep harassing you for crowd-funding. We’re entirely dependent on our readers to support us.

Subscribe

Don’t miss a single article. Enter your email address to subscribe for free here and receive Bella direct to your inbox.

 
Bella Caledonia