Updated: Sep 28, 2020
Today's guest blog is from my friend and business partner Michelle Thomson. As an MP, Michelle was hugely impressive in tackling financial abuse. She filleted both Sir Philip Green and Mike Ashley in her select committee work. She was also active in dealing with banking abuse and in particular being a voice for Scottish small businesses. I asked her to reflect on her concerns in this blog. She has included a link to a very notable article she authored a couple of years ago. I suggest you read that too. Over to you Michelle.
They say independence is about choices – and Scotland’s financial choices are a key part of this.
This is not a blog about currency: which currency to use when initially independent, when a Scottish one is to be introduced and so on. There is already a great deal of talk about this but with limited consideration being given to important wider issues.
There have been no significant debates in the Scottish Parliament about our financial systems – such as regulation, banking issues, quantitative easing and in particular the attitude of banks to small business. There are no Cross-Party Parliamentary Groups about banking and finance. Many of Scotland’s small businesses have been ruined or damaged by the actions of banks, perhaps the most notorious being RBS and its rapacious Global Restructuring Group.
An initiative in the form of the Scottish National Investment Bank is being actively worked on and this is good - but it is only a small part of what we need to start to talk about.
We need to clarify the narrative about our financial system; what we have at present, why it is not fit for purpose , how it fails to support our small businesses, what we shall need as an independent country, and fundamentally the underlying principles of how the financial system will serve our society.
We can do that now without waiting for independence. We need to be ready to remedy the current system, making it both more ethical and more effective.
Most people will be aware of the vortex that is the City of London. Few will be aware of just how cosy the cartel is and increasingly so. In my time as an MP I used the term ‘the revolving door of corruption’ to describe the flow of personnel between parliamentarians, the regulator and the banks. Bank chiefs move to the regulator(s) and vice versa but most insidious of all is the current and former parliamentarians who join the banks and/or regulators. Recently Sajeev Javid, who is still a sitting MP, has taken a plum job advising JP Morgan -only the naive could hope for proper reform when many MPs see a lucrative future for themselves advising City firms.
Roger Mullin and I were colleagues in Westminster. Both of us in our own way tried to promote initiatives that would improve our financial environment.
Roger ran a campaign on Scottish Limited Partnerships (SLPs). SLPs are used regularly to give the illusion of legitimate trading vehicles yet are really often a front for illicit and dubious trading and tax evasion. The use of the name Scottish carries a real risk of damaging our brand: and that brand still has a reputation for fiscal probity despite the disgraceful behaviour of the City-based Royal Bank of Scotland leading up to the crisis of 2008 and beyond. The Law Society of Scotland seemed disinterested in the issue of SLPs being used for illegal means – perhaps reflecting the problem that some of their members make money from setting up these vehicles.
Banks and small businesses
I always took a very active interest in how large banks have treated small business – and the crises of 2008 showed banking behaviour to be at best disinterested and at worst rapacious. Ian Fraser’s marvellous book Shredded in its latest edition references myself, Roger and George Kerevan, in our different ways tackling corrupt banking practice.
I continue to be an Ambassador for the All-Party Parliamentary Group for Fair Business Banking and recently became an advisor to the equivalent body for the Northern Ireland Assembly. Why do we not have an equivalent body in the Scottish Parliament especially when anticipating the financial issues emerging from Covid-19? If I were an MSP I’d be ensuring we address the need for a fair financial system that serves our social and economic interests, rather than the interests of a small and often corrupt elite.
There is nothing stopping us taking ownership in many other areas. We could, for example, set up a mutual retail bank to serve small business in Scotland.
There is also much merit in looking at financial systems from a sustainable development perspective and ensuring sound principles remain at their heart. There are good progressing people in the system. We need to encourage them and have their voice heard, rather than the still dominant voice of those who think business is there to serve the banks, rather than vice versa.
Roger and I have been having discussions about what action is needed now, and what we need to do to prepare for independence. Should we be elected to the Scottish Parliament we will be ensuring we are on to financial concerns from day one. I know too there are others willing to lend a helping hand.
If we are serious about nation building activities, we must turn our attention to our financial systems. We must reform them. This link takes you to my article on “How Banks Must Change”. https://internationalbanker.com/banking/why-banks-must-change
We do not need to and should not wait for independence to act. We should start this process now. Both myself and Roger are willing to ensure serious reform is put on the agenda.