Economics of Independence

Facts versus the “don’t know campaign”

Gordon MacIntyre-Kemp CEO of Business for Scotland

Gordon MacIntyre-Kemp CEO of Business for ScotlandThe Scottish people deserve the truth from the No Campaign but they are not getting it.

Business for Scotland has recently been the subject of increasing media coverage by way of articles in major news publications and appearances on leading television programs.  While our evidenced and content based approach to communicating our message on behalf of business has been well received, our representatives have faced a barrage of misinformation from No Campaigners.

Scotland Tonight

On STV’s “Scotland Tonight”, Lord John McFall, the former chair of the Treasury Select Committee, repeated the No Campaign’s totally outdated myth about the banking crisis bail-outs.

Business for Scotland Chief Executive, Gordon MacIntyre-Kemp, explained that “Banks are not bailed out by the nation in which they are headquartered. They are bailed out by where the contagion from their failure hits.”

McFall went on to reply: “You ask Alistair Darling from where he got the call from Royal Bank of Scotland.”

As previously explained by Business for Scotland, banks received a bail-out based on the location of their principal economic activity rather than the location of their headquarters. Barclays received £552.32 billion in special funding from the US Federal Reserve because of the risk of contagion to the American financial system.

This was the biggest bailout package for any UK based bank and came on top of a £6bn capital investment from Qatar. There are numerous other examples of such cross-border arrangements, including the packages put in place to bail-out RBS, which had a larger sum from the US Federal reserve that from the UK government.

An independent Scotland would not have had to bail out the Scottish headquartered banks on its own.  Either Lord John McFall is unaware of the international conventions governing international bank rescue or he was deliberately misleading viewers by suggesting a nation’s banking system is wholly dependent upon their domestic Central Banks and Finance Ministers. The facts prove otherwise and Lord McFall should be straight with viewers.

Conclusion

For a fair debate on Scottish independence the public deserve the truth from the No Campaign.  Negative unsubstantiated scare stories blurted out on live TV are not worthy of such an important democratic process. If the No Campaign continues to mislead we will call them out. Business for Scotland will continue to provide factual economic information and call others to account when they fall short of this standard.

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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

16 Comments

  • I honestly cannot believe how much the No side interrupt! You guys did pretty well keeping your cool amongst all of this- I’d have wanted to strangle them!

    The scare stories they keep using are obvious, and its mainly about not keeping the Pound and dissing Alex Salmond. It’s abmismal!

    You guys make things so much clearer and shows that the Yes campaign is not just SNP sensationalism, like how the No campaign is painting it to be. You guys have facts and reasons to be an independent country. All the Better Together campaign have is scaremongering, and its wearing really thin.

  • I simply wanted to congratulate you on your cool demolition of Lord McFall and, this morning, Ian Grey. I hope as many people as possible were able to hear how the Union’s protagonists had absolutley nothing worthwhile to say.

    Keep up the good work!

  • I do wonder how Lord McFall acquired the status he enjoys in the British Establishment. A few years ago I asked him why Dumbarton for whom he was the MP was not a Stamp Duty Exempt Area given that it was the third most deprived area in Scotland, and many other more prosperous areas enjoyed the exemption.

    In his charming response he referred me to the then English Minister for Housing, Margaret Beckett despite Housing being a devolved matter. I wrote back to him pointing out his error but heard nothing further from him or Mrs Beckett.

    I did however contact HM Treasury who explained that the Scottish exempt areas had been chosen based on UK government statistics of deprivation in 1988. This seemed odd since the Stamp Duty Exemption Area was introduced by Gordon Brown around 2000. So data was used which was 12 years out of date.

    Incidentally Dumbarton was not classed as deprived in 1988 but has been throughout the 2000s. Throughout this period John McFall was it’s MP. Some legacy!

  • Gordon can you clarify something for my not particularly economic brain please? On ‘Scotland’s Talk In’ on radio a couple of weeks ago they had a debate between the Blairs. Jenkins was doing fine until McDougall shouted over him when he was explaining Scotland’s exposure and the US’ s input to the RBS bailout exactly as above. McDougall shouted that the US section was just liquidity and so Jenkins was ‘wrong’. Unfortunately Jenkins clearly wasn’t expecting that and so he was shy with facts as the debate went on and McDougall pulled it back a bit by shouting louder.

    Am I right in thinking that the ‘liquidity’ support McDougall was referring to was just a red herring because it’s just another name for the short term loans you describe above? Surely it actually doesn’t matter what it is called – if they hadn’t taken the money in from the US as a loan they would’ve needed it as capital and vice versa (ie all money from all sources were there to keep it afloat)?

    Thanks

    • Yes the overall bailout package included liquidity from US fed reserve and capital investment from UK – one would not have been successful without the other. Barclays is London headquartered and its liquidity came from Fed reserve and capital came from Qatar as they didn’t want the UK Government to take a stake. Ipso facto the UK did not lead the Barclays bailout – go figure!

      • Thanks for that Gordon,

        Next stupid question – some Belter Together die hard in my tutorial at uni today said that becoming like Norway would mean unaffordable prices and higher taxes. I immediately pointed out that it wouldn’t be unaffordable if you were paid at Norwegian levels (otherwise Norwegians wouldn’t be able to afford the cost of living) and did a quick calculation that put Scotland’s total tax revenue as a % of GDP that put Scotland at 38% with Norway at 41% so it wouldn’t be an earth shatteringly huge jump anyway on a macroeconomic level. That shut him up enough for me to go back to much more familiar territory around £1700 more tax per head etc, but left a nagging issue for me because I don’t really understand what that comparison tells us – it’s likely a fact I’ll never use again but it got me past the ‘no, no, no’ response (he was trying to tell me at one stage that the recent town hall/school debates have gone BT’s way and that my list of examples to the contrary were wrong, that’s the level of wilful ignorance we’re dealing with).

        Any thoughts?

        Thanks again

      • You’re right it wouldn’t, but the political implications are massive as US taxpayers would not have sanctioned a capital investment on that scale to a foreign country…just as German taxpayer are balking at the capital investment they have had to make in Greece, Ireland and Portugal. Liquidity was an ‘international’ banking gamble they HAD to take, not a national gamble. And there’s the rub, this conflation suits you, to blur the lines in the responsibility of the rUK taxpayer for the unwieldy Scottish financial sector in a Plan A currency union…or do you disagree?

  • The No side, so it appears, have used up their scare stories and are now going through them all again. Simple. And, just like last time, the scare stories will be shot down in flames.

    The big difference this time, however, is the demolition will be done by tens of thousands of people all across Scotland, each armed with the solid facts and information provided by Business for Scotland.

    Well done this excellent site!

  • Alisdair Darling continues to dispute this. At a recent public meeting in Currie he insisted “I can assure you that EVERY PENNY of the bail-out will be paid by the UK taxpayer” He did not elaborate but presumably he felt confident enough to have given a wider explanation if pressed. Any ideas what his argument might be?

    • The bail out packages came in two parts – capital investment and shorter term loans. The Capital Investment into RBS came from the UK government the loads to RBS from Fed reserve amounted to £285bn V the UK £45bn. the loans have almost all been paid back the capital however is still there in the banks and the investment in RBS for example is worth lot less now than it was going in (some £15bn).

      He might be referring to the fact that every penny not paid back will be paid by the UK taxpayer? Except possibly that Barclays fatal injection came from Qatar! Ipso facto he is wrong.

      Also his statement doesn’t change the fact that the rUK tax payers would have still had to bail out RBS if Scotland had been independent and not Scotland on its own. Our share as an independent nation would be almost exactly what we paid as part of the UK so it wouldn’t have been any worse!

      • Gordon…you hit the nail on the head here…it doesn’t change the fact that rUK taxpayers would have had to bail RBS out…herein lies the Plan A currency problem. Why would rUK want a currency union when this was a possibility…turkeys and christmas?

    • The UK took an equity stake, so “paid for by the UK taxpayer” doesn’t strictly speaking actually make sense.

      I suspect it’s the old political trick of, in this instance, not referring to a period in time where this utterance may well not apply, i.e. the future. Alistair Dsrling’s phrasing only references the present. At present, the existing UK need not differentiate between constituent parts. His answer to the particular question: Had Scotland been independent at the time what would the position have been?

      It may well have been the case that the Govt of an independent Scotland would have chosen a form of loan funding rather than taking an equity stake.

      • Andy it may well have been the case that an independent Scotland would have regulated the banks differently and not had a crash!

        I met with BoE on two occasions leading up to the crash once with a member of the BoE Monitory Policy Committee and urged them to real-in the unsustainable lending to avoid a crash due to unsustainable credit levels. Who knows maybe in an independent Scotland someone would have listened!

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