Inquiry into Scots banks’ collapse moves a step closer

Published in the Sunday Herald, 10 May 2009
By Paul Hutcheon and Tom Gordon

Holyrood seeks advice on remit of investigation

A POWERFUL Holyrood committee is drawing up plans for an investigation into the collapse of the country's two largest banks.

MSPs want an inquiry into how HBOS and Royal Bank of Scotland (RBS) turned from profitable institutions into firms requiring a bail-out. The group wants to call ministers from the UK government and key figures in the Bank of England to give evidence.

The Sunday Herald last month called for a special Holyrood inquiry into the near-demise of the two financial institutions. The financial incompetence of the banks has cost the UK taxpayer billions of pounds and tarnished Scotland's international reputation for financial management.

It is understood that Holyrood's Economy, Energy and Tourism Committee is considering plans for a full-scale inquiry into the banking disaster. The committee's clerk is compiling an options paper for MSPs on the group.

One of the thorny issues is whether the remit should extend to beyond the poor-decision making of HBOS, which is now part of Lloyds Banking Group, and RBS.

Nationalist members would prefer an inquiry that also focused on the role of the UK government, the Financial Services Authority (FSA) and other players on the UK stage.

Rob Gibson, the committee's SNP deputy convener, said:

"The response I got from Iain Smith MSP, the committee's convener was that he was taking advice from the clerk, who is drawing up a paper."

"We need to have the widest ranging inquiry to make it work, which would include the political leadership in London, the FSA, and the Bank of England."

Liberal Democrat and SNP support for an inquiry would command four votes of the eight-member committee.

A tie would hand the casting vote to Smith, who is also a LibDem.

Another member of the committee, Labour MSP Lewis Macdonald, said he was keeping his options open.

He said: "I want to wait and see whether it is possible to have a meaningful and detailed inquiry. I'm open to persuasion."

Gavin Brown MSP, a Conservative, said he was sceptical of the idea but willing to discuss options.

He said: "I wouldn't dismiss it out of hand. The question is whether an inquiry would add value, or whether it would be a pale imitation of the Westminster inquiry."

The campaign has already attracted high-profile support.

Former judge Lord McCluskey; the STUC general secretary, Grahame Smith; historian Tom Devine and former Bank of Scotland chief executive Peter Burt have all endorsed an inquiry.

Other support has come from Scottish Chambers of Commerce chief executive Liz Cameron; Canon Kenyon Wright, one of the architects of devolution, and John Kay, an economic adviser to the Scottish government.

Political support has come from Scottish LibDem leader Tavish Scott, First Minister Alex Salmond. the Scottish Greens and Margo Macdonald MSP.

Scott has said: "I would be totally in favour of any mechanism which allowed the full weight of parliamentary scrutiny to come to bear on what has been an enormous event in the history of Scotland's financial industries."

Salmond said: "I would support any Scottish parliamentary inquiry into the banks and the bad decisions that were made."