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| Abbey
National - taking high quality jobs out of Scotland |
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The news that Abbey National is planning
to withdraw high quality fund management operations from Glasgow
and shut down the Scottish Provident operation in Edinburgh,
should serve as a dire warning of the consequences of de-mutualisation.
There is a progressive threat to the
mutual status of Standard Life, Europe's largest mutual assurer.
From some quarters there are mutterings there are political
imperatives driving it towards a stock market listing. Certainly
there is the ongoing greed of the carpetbaggers who sense
one-off windfall payments.
It is worth examining what mutuality
is before progressing with this article:
| Mutual Company |
Public Company |
| |
|
| Is owned by it's customers |
Is owned by it's shareholders |
| Profits benefit customers |
Profits benefit shareholders |
| Plans over the medium and long-term |
Plans over the short term |
It is also worth examining the fate
of other Scottish companies that have demutualised:
| Company |
|
Fate |
| |
|
|
| Scottish
Provident |
|
Now owned by Abbey
National. Edinburgh operation to be closed with the loss
of 700 jobs. No longer exists as a brand. |
| |
|
|
| Scottish
Mutual |
|
Now owned by Abbey
National. Highly skilled and highly paid fund management
jobs to be transferred out of Scotland. No longer exists
as a brand. |
| |
|
|
| Scottish
Amicable |
|
Now owned by Prudential.
400+ redundancies, no longer exists as a brand. |
| |
|
|
| Scottish
Life |
|
Now owned by Royal
London. Future of funds and jobs no longer in the hands
of the Scottish economy. |
| |
|
|
| Scottish
Widows |
|
Now owned by Lloyds
TSB, the lame duck banking group. Future of funds and
jobs no longer in the hands of the Scottish economy. New
hatchet man running the rule over Edinburgh operation.
Expect redundancies. |
| |
|
|
| Scottish
Equitable |
|
Now owned by Dutch
group Aegon. Future of funds and jobs no longer in the
hands of the Scottish economy. Large-scale redundancies
in 2002. |
| |
|
|
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| Standard Life - Europe's largest
mutual assurer and a flagship Scottish company |
|
Standard Life employs more than 12,000
people in Scotland. It is a flagship company for the Scottish
economy. They pay their staff well, They aren't looking to
short term outsourcing arrangements to drive a small amount
of extra profit at the expense of jobs. They plan over the
long term, are conservative, responsible and successful. They
haven't made anyone redundant, they are a model for the Social
Democratic company.
Insurance companies are bound
by promises that often stretch over decades. Their strategies
must therefore be long term, and a mutual company is much
better suited for this requirement. Stock companies must react
to market feedback on their quarterly performance. This frustration
on the part of stock companies causes decisions that are not
always appropriate for the insurance business. The mutual
companies have the advantage of being able to make decisions
that can stand the test of time are not derailed by the stock
analysts and their impatience for current earnings.
Perhaps the most obvious advantage
of the mutual company is its simplicity. Going back to their
roots, mutual companies are formed for the single purpose
of providing benefits for their members at an affordable price.
There are no shareholders to complicate the decisions about
how to allocate the funds held in trust for the members. The
governance of the mutual company is straightforward because
the trustees of the company have a clear mission - to fairly
collect and distribute funds for the benefit of the members.
If the mutual company controls its expenses, it should have
a price advantage in the marketplace because it does not have
to compensate the stockholders.
De-mutualisation has proved to be of
little benefit to the Scottish economy. Sure, it provides
jobs. But these are jobs that are not under Scottish control.
The profits are not Scottish profits.
There is bugger all wrong with being
a mutual company and an awful lot right.
If McConnell and the numpties that represent
Scotland want to pick a cause to champion, something that
is vitally important to the Scottish economy, they couldn't
pick a better one than resisting the de-mutualisation threats
to Standard Life.
And, let's be clear here. It is changes
to the rules that is forcing Standard Life to consider a stock
market listing. Rules are made by politicians.
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