Banking For Scotland

“We need a banking system that is built on trust from customers which comes from banks which care about their customers.” – Common Weal Key Ideas

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Image: The National. Of course, Central Banks are a bit different from the topic of this article.

The news the closure of 1 in 4 RBS branches across Scotland is coupled with the now grimly ironic relaunch of their “Royal Bank for Scotland” advert. Once again, this bank, like others before it, is withdrawing its physical presence from many areas of the country and, as before, it cites the rise of online banking as the principal reason.

1 in 4 branches might not sound too bad to some. It might sound largely bearable. But this figure doesn’t account for regional disparities. For example, of the ten RBS branches within 25km of where I live, eight of them are now scheduled to close.

There will be places, particularly in rural Scotland, where the loss of their branch will result in the total loss of all physical banks in their community.

It is true that many people now do their day-to-day banking online but for those who don’t, this may be devastating news.

Perhaps more importantly than personal banking will be the loss of business banking services. Many small businesses require access to banks on a daily basis, particularly if they handle cash. This move, compounded with others like it past and future, may cause significant harm to the Scottish SME ecology.

Once again, the losses incurred during RBS’s casino banking glut have infected the real economy and, once again, we cannot hope to see the kind of bail-out that they were given.

Which brings up a point. RBS is more than 70% owned by the UK Government. What part have they played in these closures? Probably very little. As far as I can see, the strategy of the UK Government towards the nationalised banks has been to do absolutely nothing with them – to just let them keep doing what they would have done had they never been nationalised – and then to sell them off again.

A sensible and forward thinking government would have taken a far more proactive role in actually using its majority stake in the company. I’m not saying it would have been easy given the underlying structural issues within RBS – this is a bank which used to deliberately bankrupt small companies so that it could make a profit on seized assets – but if the UK Government had had the will to do so, it could have transformed the company into a network of local and regional banks which just solely focused on the business of providing deposits, credit and cash handling services. It could have dispensed entirely with the arcane financial shenanigans which have nearly crippled the country’s economy and could have become a very stable, very successful (if not quite so overtly profitable), “boring bank“.

Many folk will still remember how banking used to be. How you knew your bank manager and they knew better than almost anyone save yourself your business and your financial circumstances. They knew when a loan would be good for you or when it would be a burden. These things cannot be replicated via an automated helpline on a website or by an ever more complex next of “financial products” which are often more about extracting profits from you rather than supporting your business. The idea that you could become the product – to be sold and traded at the banks whim – would be utterly alien to such a system.

Of course, the UK Government isn’t going to do this. Financial gambling is just about the only thing that they have left in their economic strategy so they’re not going to say anything against it. I’m not sure if the Scottish Government has the powers to do so but it should certainly look into the possibility of setting up or encouraging the founding of a “boring bank” network – separate from but working mutually alongside the local development wings of a Scottish National Investment Bank.

Do this we’ll have a bank for Scotland. Till then, I fear that we’ll just be days or weeks or months away from another round of closures and “efficiency measures” which will be about pleasing shareholders or preparing for the next round of “investment opportunities” than it will be about actually supporting local economies and local customers.

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Senatus Populusque Caledoniae

(Apologies if my scant Latin has mangled that translation. If someone corrects it, I’ll see about writing it out 100 times on the walls of the Palace.)

It seems that all news is canceled this week. All of it. There’s nothing happening. Our state broadcaster (which is totally unlike other state broadcasters in that when it promotes its state’s national interests, this is a good thing and not the most hideous evil to ever despoil the airwaves) has told us that the only thing of note happening anywhere is that someone is marrying someone with Magic Blood.

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This is to be a ceremony that we’ll all proudly take part in, by which they mean that we are to pay for it, despite not even being invited to the party. We’re not even getting a day off work because that would apparently cost too much.

Those in power are definitely not going to use this event to sneak out the devastating news that benefits are to be frozen again this year – that’s effectively a 3% cut after adjusting for inflation. I’m certain that they’ll be bending all effects towards sorting the gaping holes in the UK VAT system which allows more than £1 billion to be evaded every year.

They absolutely wouldn’t be cutting HMRC’s budget by £400 million per year RIGHT before the UK is going to leave the largest Customs Union in the world, would they?. They certainly would be breaking ground on all the new checkpoints and infrastructure that are going to be needed. The department should be awash with capital spending in preparation, shouldn’t it?

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They certainly wouldn’t big up their having done some furiously detailed groundwork on the impact of Brexit when they hadn’t actually done any such thing and were just hoping that no-one would ask to read them…till they did.

The UK has some seriously skewed priorities and it goes from the bottom right to the top of the structure of governance. Scotland needs to have a good, hard discussion about what role it plays in all of this.

The Scottish Parliament already has a far fairer voting system than the one used for UK elections (despite the comparative complexity of the former) but should we take the step of becoming an independent country then we’ll have to have a think about some other levels of government too.

I’ve already said a fair amount about the state of Scotland’s local government so today I’d like to look at what we’d want to do ABOVE the level of the present Scottish Parliament.

For instance, we may well decide to create an Upper House to scrutinise legislation but what we absolutely shouldn’t do is copy the UK method of stuffing it full of Lords and paying them to sleep off their hard day of…doing what ever they do for £300 a day.

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Far better would be a Citizen’s Assembly. Think of it as Jury Duty writ large. We’ve already decided that the best way to determine if someone has transgressed our laws is by a jury of randomly selected citizens so we could easily set up a method by which randomly selected citizens can determine if the laws themselves are just, fair and easily understood.

And for above that? How do we represent the nation of Scotland to the world?

If you had asked me in 2014, I would have said that I didn’t really mind too much and was pretty content with the Scotland’s Future plan of keeping the monarchy in the same way that Canada and Australia have.

But I’ve shifted somewhat since then. I’m not sure I’d really welcome the appointment of a Governor General as Scotland’s nominal Head of State nor am I completely clear on what duties they would actually have in practice. The First Minister already does most of the Head-of-State meet-and-greet stuff when folk come to Scotland and it seems a little strange for that to stop.

Nor do I want a restored and separate Scottish monarchy. Again, I’ve no time for someone to tell me what to do by dint of their divine appointment or Magic Blood even if Scotland does maintain a tradition of the Scottish Monarch being subordinate to the people of Scotland. Nor should a country professing to be a democracy pride itself on  its locking citizens out from ever obtaining any governmental office even in theory.

So, if we choose to have an official Head of State separate to the First Minister then it’ll have to be an elected President and that seems straightforward enough to arrange.

Though we still need to have that discussion about what we want them to DO. As said, the First Minister already does most of the Head of State meet-and-greet stuff when folk come to Scotland so we’re faced with the choice of either actually empowering our Head of State and giving them executive controls like the power to veto laws, sign their own legislative orders or other such powers (i.e. similar to the President of the USA) or we continue to have a head of state with a ceremonial role but little actual power.

And as I think on it…whilst I think it would be an upheaval too far to actually empower a Head of State, I don’t think I feel so enthused about swapping an unelected but powerless leader with an elected but still powerless leader. It just doesn’t feel as if it’s a decision rooted in the practical. On the other hand, I’m somewhat nudged by the argument that a Head of State separate from the government may be able to say and do some things without constraint by that government (though it’s noted that our current monarch maintains a “strict” rule against saying anything at all unless they think they can get away with it).

But maybe I’m wrong.

So help me out here. What would you want from a Head of State of an independent Scotland? How would someone gain that position? And what kind of person would you expect to see in the role?

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Precautionary Principles

“Cut the EU red tape choking Britain after Brexit to set the country free” – The Telegraph

The EU (Withdrawal) Bill is currently moving through Parliament. The purpose of this bill is to transfer the laws currently governed by the EU into UK law so that there are no breaks or holes in legal competence once Brexit happens. Of course, there are also opportunities to make changes, big and small, to the laws being transfered as they come in and when something of this size comes through there is precious little time for detailed oversight of the process and the opportunity for some of these changes to fit ideological ends can become irresistible.

For example, last night Labour put up an amendment which would have ensured that the EU’s “precautionary principle” over environmental legislation would be protected and the Tories voted is down 313-297.

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This represents the clearest sign yet that the Tories are planning a post-Brexit regulatory slash-and-burn.

It’s important to consider just what the precautionary principle is and why it is important.

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Affording It

“Britain is not Great. Britain is Weird”

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The Usher Hall voting >90% in favour of Scotland adopting its own independent currency.

On the 4th of November I spoke at the Scottish Independence Convention’s Building Bridges to Independence conference. As with my SIC talk in January, it fell to me to be the one with the graphs and statistics – this time on the topic of public finances and the impact of independence on Scotland’s budget.

The livestream of my talk can be viewed thanks to Independence Live and is the first talk in this segment.

Below the fold are copies of my slides with comments drawn from my talk and references to the points made. The slides can also be downloaded here.

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SIC Build Conference Slides

Edit: This blog post has been expanded with commentary and references in addtion to the slides. You can read that version here.

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This post is for folk attending the SIC Build 2 Conference.

If you want a closer look at the slides which go with my talk, you can download them here.

I also make extensive reference to my Beyond GERS paper which can be downloaded here.

All of the slides are also reprinted in sequence below the fold

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Scotland’s National Bank

The Croatian National Bank shall be the central bank of the Republic of Croatia.
The Croatian National Bank shall be autonomous and independent, and shall report on its work to the Croatian Parliament.
The Croatian National Bank shall be managed and its operations shall be conducted by the Governor of the Croatian National Bank.
The organisation, purpose, tasks and remit of the Croatian National Bank shall be governed by law.
Article 53, The Constitution of the Republic of Croatia.

Today sees the launch of my latest contribution to the Common Weal White Paper Project on the very important topic of Central Banking in an independent Scotland.

It has received a front page splash in The National which can be read here alongside a summary by me here.

And the paper itself can be downloaded here or by clicking the image below.

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If, as I hope we should, Scotland uses the opportunity of independence to launch our own sovereign currency then one of the departments of government that we’ll need to set up is our own Central Bank. This paper outlines the principles that we’ll need to examine and follow as we design that bank.

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