Mark Leftly: British business must make contingency plans in case the Scots decide to go their own way
Westminster Outlook: North of the border, BAE builds an array of warships for the Ministry of Defence
Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across the Independent titles. He writes a weekly column, Parliamentary Business, published on a Wednesday, that covers politics and the City. He is a multi-award winning reporter and was named Press Gazette's business magazine journalist of the year prior to joining The Independent on Sunday.
Friday 24 January 2014
Enjoy Burns Night tomorrow – particularly those of you celebrating the linguistically majestic 18th-century poet’s birthday in English, Welsh and Northern Irish pubs – as it could well be the last as a proper union.
In less than eight months, it is perfectly plausible that Scotland votes “yes” to what would then be a breathtakingly quick schism given that unification stretches back 307 years.
Alex Salmond wants independence day to take place in March 2016. He argues that such a rapid unravelling of three centuries of shared history is achievable given that the 30 states which have become UN members following a referendum post-World War II did so at an even speedier average of 15 months from polling.
The first minister and his Scottish Nationalist Party are by no means the favourites in this two-horse race. A poll conducted in the second half of last year put support for independence at 23 per cent. Experts and “no” campaigners say support has rarely, if ever, been higher than one-third of Scottish residents since devolution in 1999. But Mr Salmond loves a flutter on the nags, even appearing on television as a pundit and providing expert tips in the Racing Post. This adds to his “man you’d like to have a pint with” appeal – which Mr Salmond will surely exploit in the working-class pubs of Glasgow during this summer’s Commonwealth Games – that the head of the yes campaign, Alistair Darling, cannot hope to match.
Importantly, the formal campaign leading to the vote will take 16 weeks, a mind-numbingly long time for those who have already made their decision and pretty tiresome for those who haven’t. Yet that’s plenty of time for Mr Salmond to make up a few furlongs. Even if the core vote for yes is little more than one-fifth of the electorate, that is still a fairly strong base on which to make a late kick for home – particularly if the no campaign is tiring.
The no vote is still likely to win. But any risk manager would say the odds are such that companies with operations on both sides of the border must have contingency plans in place for the huge impact of Scottish independence. Which is why I cannot understand Ian King’s thinking. The self-proclaimed “pragmatist by nature” is chief executive at defence contractor BAE Systems, the FTSE 100 leviathan that best symbolises the corporate problems independence will cause.
North of the border, BAE builds an array of warships for the Ministry of Defence, including the two 65,000-tonne Queen Elizabeth-class aircraft carriers that are being pieced together at Rosyth.
At a press briefing on Wednesday, Mr King made clear that a plan B wasn’t necessary. Should independence happen, BAE, he said rather dismissively, “will have to have a discussion with our customer, the Westminster Government”.
Not quite believing what I’d heard, I checked afterwards that this was correct and Mr King made it even plainer that BAE’s contracts are with the British Government, not Scotland. Essentially, independence is a matter for the client, not the supplier.
This attitude spooks Scottish MPs who want to remain a part of the United Kingdom. One points out that BAE won’t be able to keep up workforce numbers under a St Andrew’s flag “unless there is some assurance of future orders and that is very doubtful if Scotland becomes a separate state as it is would not automatically become a member of Nato”.
That MP thinks current orders for a British fleet would be honoured and accommodated within Scottish facilities as those deals largely run to about 2016-17. Any new contracts would almost certainly have to be delivered in what remained of the UK, fundamentally changing the geographic profile of BAE and coming with it all the financial costs and time-absorbing problems that such an overhaul of the business would imply.
A second Parliamentarian claims to simply not believe companies like BAE have not worked-up contingency plans. Rather, those who want the Queen see out her days as sovereign of an undivided land mass are making sure there are no signals that suggest independence is even a possibility – there is no point pouring fuel on that fire.
If Mr King’s stated position is correct – and, to be fair, it does not ostensibly appear that different to many other chief executives of cross-UK corporates – then British business is making a mistake.
Separation will hit their businesses, not least because of the short-term economic instability while disputes rage over allocations of national debt, adopted currencies, revised treaties, and constitutional innovations that would surely alter the nature of contracts held in Scotland and the rump of the UK.
There is no dishonour in drafting plans for a change in circumstances; indeed, military masterminds make sure they have escape routes should the necessity of retreat emerge.
If you view Robert Burns through a nationalist paradigm, you might believe he would have felt scunner for an attitude that does not even recognise the possibility of Scottish independence.
And those ignoring that possibility probably won’t bother to look up what scunner means.
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