House of Commons Scottish Affairs Committee Banking in Scotland Second Report of Session 2009–10 Volume II Oral and written evidence Ordered by The House of Commons to be 24 February 2010 HC 70-II Incorporating HC 38 and HC 319, Session 2008-09 Published 17 March 2010 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Scottish Affairs Committee The Scottish Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Scotland Office (including (i) relations with the Scottish Parliament and (ii) administration and expenditure of the offices of the Advocate General for Scotland (but excluding individual cases and advice given within government by the Advocate General)). Current membership Mr Mohammad Sarwar MP (Labour, Glasgow Central) (Chairman) Mr Alistair Carmichael MP (Liberal Democrat, Orkney and Shetland) Ms Katy Clark MP (Labour, North Ayrshire & Arran) Mr Ian Davidson MP (Labour, Glasgow South West) Mr Jim Devine MP (Independent, Livingston) Mr Jim McGovern MP (Labour, Dundee West) David Mundell MP (Conservative, Dumfriesshire, Clydesdale and Tweeddale) Lindsay Roy MP (Labour, Glenrothes) Mr Charles Walker MP (Conservative, Broxbourne) Mr Ben Wallace MP (Conservative, Lancaster & Wyre) Pete Wishart MP (Scottish National, Perth and North Perthshire) The following members were also members of the committee during the Parliament: Danny Alexander MP (Liberal Democrat, Inverness, Nairn, Badenoch & Strathspey) Gordon Banks MP (Labour, Ochil and South Perthshire) Mr David Hamilton MP (Labour, Midlothian) Mr John MacDougall MP (Labour, Glenrothes) Mr Angus MacNeil MP (Scottish National, Na h-Eileanan an Iar) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/scotaffcom. Committee staff The current staff of the Committee are Nerys Welfoot (Clerk), Alison Groves (Second Clerk), Ameet Chudasama (Committee Assistant), Becky Crew (Committee Assistant), Karen Watling (Committee Assistant) and Tes Stranger (Committee Support Assistant). Contacts All correspondence should be addressed to the Clerk of the Scottish Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6123; the Committee’s email address is [email protected]. Witnesses Wednesday 10 December 2008 Page Mr Ian McMillan, Director, CBI Scotland, Mr David Lonsdale, Assistant Director, CBI Scotland, Mr Garry Clark, Head of Policy and Public Affairs, Scottish Chambers of Commerce, Mr Graham Smith, General Secretary, Scottish Trades Union Congress, Mr Stephen Boyd, Assistant Secretary, Scottish Trades Union Congress and Professor David Bell, University of Stirling Ev 1 Wednesday 4 March 2009 Mr Stephen Boyd, Assistant Secretary, Scottish Trades Union Congress, Ms Wendy Dunsmore, National Secretary for Lloyds Banking Group, and Mr Rob McGregor, National Officer, Finance Sector, Unite the Union Ev 15 Mr Owen Kelly, Chief Executive, Scottish Financial Enterprise Ev 27 Wednesday 19 March 2009 Mr Gordon Pell, Deputy Group Chief Executive, Royal Bank of Scotland Group Ev 34 Mr Archie Kane, Group Executive Director, Scotland, Lloyds Banking Group Ev 53 Wednesday 25 November 2009 Mr Colin Borland, Public Affairs Manager, Federation of Small Businesses Ev 68 and Mr Norman Banski, Law Society of Scotland Mr Keith Dryburgh, Social Policy Officer, and Miss Vida Gow, Money Advice Ev 76 Coordinator, Citizens Advice Scotland Wednesday 2 December 2009 Mr Stephen Boyd, Assistant Secretary, Scottish Trades Union Congress, Mr Rob MacGregor, National Officer, Finance and Legal Sector, and Ms Ev 82 Wendy Dunsmore, National Secretary for Lloyds Banking Group, Unite the Union Mr Stephen Hester, Group Chief Executive, Royal Bank of Scotland, Mr David Thorburn, Executive Director and Chief Operating Officer, Clydesdale Ev 90 Bank, and Mr Adrian Coles, Director General, Building Societies Association Wednesday 9 December 2009 Mr Archie Kane, Group Executive Director, Insurance, Lloyds Banking Group Ev 105 Wednesday 13 January 2010 Lord Myners, a Member of the House of Lords, Financial Services Secretary, HM Treasury, and Mr Robin Haynes, Head of Financial Services, Scotland Ev 115 Office List of written evidence 1 Building Societies Association Ev 148 2 CBI Scotland Ev 132 3 Chartered Institute of Housing Scotland Ev 124 4 Citizens Advice Scotland Evs 159, 168 5 Clydesdale Bank Ev 130 6 Federation of Small Businesses, Scotland Ev 145 7 HM Treasury Ev 166 8 Archie Kane, Group Executive Director, Lloyds Banking Group Ev 121 9 Law Society of Scotland Evs 141, 162, 164 10 Lloyds Banking Group Evs 143, 174 11 Lord Myners, Financial Services Secretary to HM Treasury Ev 166 12 Gordon Pell, Deputy Group Chief Executive, Royal Bank of Scotland Ev 120 13 Royal Bank of Scotland Group Evs 122, 128, 130, 156, 164 14 Scotland Office Ev 152 15 Scottish Trades Union Congress Ev 135 16 Unite the Union Evs 139, 166 Processed: 12-03-2010 18:42:30 Page Layout: COENEW [SO] PPSysB Job: 439642 Unit: PAG1 Scottish Affairs Committee: Evidence Ev 1 Oral evidence Taken before the Scottish Affairs Committee on Wednesday 10 December 2008 Members present Mr Mohammad Sarwar, in the Chair Mr Alistair Carmichael David Mundell Mr Ian Davidson Mr Charles Walker Mr Jim Devine Pete Wishart Mr Jim McGovern Witnesses: Mr Iain McMillan, Director, CBI Scotland, Mr David Lonsdale, Assistant Director, CBI Scotland, Mr Garry Clark, Head of Policy and Public AVairs, Scottish Chambers of Commerce, Mr Graham Smith, General Secretary, Scottish Trades Union Congress, Mr Stephen Boyd, Assistant Secretary, Scottish Trades Union Congress and Professor David Bell, University of Stirling, gave evidence. Q1 Chairman: Good afternoon. I would like to Those businesses are businesses of all sizes from the welcome all the witnesses to our session. Our very smallest to some of the very largest and also original plan was to take evidence separately but covering all parts of the country. We keep a strong members of the Committee felt that it would be focus on all areas of the economy. We are delighted appropriate to take evidence from all the witnesses as well to be here today. together. Would you like to introduce yourselves please for the record? Q4 Mr Davidson: Can I just ask a point of the Professor Bell: I am Professor David Bell from the Scottish Chambers of Commerce? Why is the University of Stirling Economics Department. material you produce so consistently and Mr Clark: My name is Garry Clark and I am Head unremittingly hostile to Westminster and to the of Policy and Public AVairs with the Scottish present British Government? Chambers of Commerce. Mr Clark: I do not believe that it is. Our purpose in Mr Lonsdale: I am David Lonsdale; I am Assistant the Scottish Chambers of Commerce is to represent Director of the CBI in Scotland. views of our members. Mr McMillan: Iain McMillan, Director, CBI Scotland. Q5 Mr Davidson: Are they all nationalists then? Mr Smith: Graham Smith, General Secretary of the There is an issue for me about the extent to which we Scottish TUC. take account of your evidence here given that you so Mr Boyd: Stephen Boyd, Assistant Secretary, obviously have form. There is a contrast between the STUC. stuV that you produce and the stuV that Liz Cameron produces. It is unfortunate that Liz is not Q2 Chairman: Before we start on the detailed here today because she always produces a much questions, perhaps you would like to make an more balanced account of events than you do. Can opening statement. you just clarify for me why that is? Mr McMillan: Just to say something about our Mr Clark: I do not think that is a fair representation organisation, Chairman. The CBI—the of the views of the Scottish Chambers of Commerce. Confederation of British Industry as it has been traditionally known—is a UK organisation. CBI Q6 Mr Davidson: Neither do I actually and that is Scotland is a part of that organisation and devotes why I wonder why it is coming across from yourself, its attention to matters of public policy and business but maybe we can just move on. advocacy here in London, in other parts of the UK Mr Smith: Perhaps I could introduce the Scottish and of course in Scotland and overseas. On behalf of TUC seeing as everybody else has introduced David and I, we take the work of this Committee themselves. The Scottish TUC is Scotland’s trades very seriously.It is good to be back. It is the first time union centre. We represent 39 trades unions who in 10 years since that other place opened 400 miles represent workers in all industries and occupations north, so thank you very much for inviting us to in Scotland; we represent 644,000 members in engage with you today. Scotland. We are delighted to be here to speak to the Committee about the current situation of the Q3 Chairman: Thank you for coming. Anybody Scottish economy. else? Mr Clark: If I could say a few words to introduce the Q7 Mr Walker: We ought to make sure that Scottish Chambers of Commerce, we represent some everyone has had a turn. Professor Bell? nine and a half thousand businesses in Scotland Professor Bell: I am simply here as a person with a divided through 20 local chambers of commerce longstanding interest in the Scottish economy and its from Wick to Wigtown as we like to say in Scotland. performance. I have no particular axe to grind. Processed: 12-03-2010 18:42:30 Page Layout: COENEW [E] PPSysB Job: 439642 Unit: PAG1 Ev 2 Scottish Affairs Committee: Evidence 10 December 2008 Mr Iain McMillan, Mr David Lonsdale, Mr Garry Clark, Mr Graham Smith, Mr Stephen Boyd and Professor David Bell Q8 Chairman: I will start the questions.