Chamber
Plenary, 01 Apr 2009
01 Apr 2009 · S3 · Plenary
Item of business
Dunfermline Building Society
I thank the First Minister for allowing early sight of his statement.
This afternoon it is surely most important to welcome the fact that the assets of the customers, savers and mortgage holders of the Dunfermline Building Society have been protected. Secondly, we welcome the guarantees that have been given to branch staff, and, finally, we welcome the continuation and, we hope, development of the Dunfermline brand in the mutual sector.
We agree with the First Minister that the responsibility for the Dunfermline's position rests with the management of the institution. However, the First Minister persists in suggesting that there could have been a better outcome. Exactly what that outcome would have been remains unclear. We know that the Scottish Government was willing to make £25 million available, but the judgment of the Bank of England, the FSA, the Treasury and commentators was that even with a capital injection of £60 million the society would not have had a long-term future without the backing of a larger society and the removal of its toxic debt. As we now know, the net financing required was £1.6 billion.
The First Minister seeks further details of the value-for-money case for the FSA's solution. Will he also publish details of the range of proposals that the Scottish Government made, the mechanisms that the Government proposed and legal advice that it was given in that regard?
In recent days the First Minister suggested that financing should have been made available to enable the Dunfermline Building Society to continue. Was he arguing that £1.6 billion should have been made available to the very management that had got the society into the mess that it was in? It might be the case that most of the net financing will be recovered in the long run, as the First Minister said, but does he acknowledge that this is a rescue package that, once again, was made possible only by access to the larger resources of the UK Treasury?
This afternoon it is surely most important to welcome the fact that the assets of the customers, savers and mortgage holders of the Dunfermline Building Society have been protected. Secondly, we welcome the guarantees that have been given to branch staff, and, finally, we welcome the continuation and, we hope, development of the Dunfermline brand in the mutual sector.
We agree with the First Minister that the responsibility for the Dunfermline's position rests with the management of the institution. However, the First Minister persists in suggesting that there could have been a better outcome. Exactly what that outcome would have been remains unclear. We know that the Scottish Government was willing to make £25 million available, but the judgment of the Bank of England, the FSA, the Treasury and commentators was that even with a capital injection of £60 million the society would not have had a long-term future without the backing of a larger society and the removal of its toxic debt. As we now know, the net financing required was £1.6 billion.
The First Minister seeks further details of the value-for-money case for the FSA's solution. Will he also publish details of the range of proposals that the Scottish Government made, the mechanisms that the Government proposed and legal advice that it was given in that regard?
In recent days the First Minister suggested that financing should have been made available to enable the Dunfermline Building Society to continue. Was he arguing that £1.6 billion should have been made available to the very management that had got the society into the mess that it was in? It might be the case that most of the net financing will be recovered in the long run, as the First Minister said, but does he acknowledge that this is a rescue package that, once again, was made possible only by access to the larger resources of the UK Treasury?
In the same item of business
The Presiding Officer (Alex Fergusson):
NPA
The next item of business is a statement by the First Minister on the Dunfermline Building Society. The First Minister will take questions at the end of his ...
The First Minister (Alex Salmond):
SNP
Thank you, Presiding Officer, for the opportunity to make a statement to Parliament on the Dunfermline Building Society.Everyone in the chamber will have fol...
Iain Gray (East Lothian) (Lab):
Lab
I thank the First Minister for allowing early sight of his statement.This afternoon it is surely most important to welcome the fact that the assets of the cu...
The First Minister:
SNP
I am not sure that Iain Gray fully understands the nature of the payment to Nationwide of £1.6 billion. The payment was made because Nationwide has taken on ...
Annabel Goldie (West of Scotland) (Con):
Con
I thank the First Minister for providing an advance copy of his statement. It is extremely sad that the Dunfermline Building Society, a name that is synonymo...
The First Minister:
SNP
I welcome the fact that Annabel Goldie thinks that the demise of the Dunfermline Building Society is a matter of sadness. I think that it is, too, and most p...
Jeremy Purvis (Tweeddale, Ettrick and Lauderdale) (LD):
LD
Customers of Northern Rock could have warned the First Minister not to use Robert Peston as his adviser on the best interests of customers of the Dunfermline...
The First Minister:
SNP
I was not claiming Robert Peston as my financial adviser; I was merely saying that he is usually informed before the event of any announcements—so it appeare...
The Presiding Officer:
NPA
We come to back-bench questions. We will get everybody in as long as everybody is fairly short and sharp.
Tricia Marwick (Central Fife) (SNP):
SNP
I welcome the First Minister's very full statement. Is he aware of the fury in Fife that the Dunfermline Building Society, which had been in existence for 14...
The First Minister:
SNP
In very constructive discussions this morning, Nationwide undertook to have a continuing dialogue. Tricia Marwick's latter point is important and we will cer...
Helen Eadie (Dunfermline East) (Lab):
Lab
I declare an interest as a Labour and Co-operative Party member who always values the chance to advocate mutuals.On Monday morning, I woke up to the good new...
The First Minister:
SNP
Frankly, I simply do not understand that last point. I understand that Mr Rennie was in close contact with the management of the Dunfermline over the past tw...
Gavin Brown (Lothians) (Con):
Con
The First Minister said that the Dunfermline's social housing portfolio has been placed in a bridge bank that is wholly owned by the Bank of England to allow...
The First Minister:
SNP
Gavin Brown should read the chancellor's statement from Monday, in which he said specifically that the Scottish Government would be consulted on the future o...
Jim Tolson (Dunfermline West) (LD):
LD
As the local member for Dunfermline West and the area that contains the building society's headquarters, I think that it is at this point extremely important...
The First Minister:
SNP
Yes—that would be highly appropriate. Mr Bernau's conversation with me and Mr Swinney this morning was very positive and constructive. Indeed, perhaps becaus...
Margo MacDonald (Lothians) (Ind):
Ind
I hope that Jim Tolson will forgive me. I will be looking back because I do not have immediate responsibility for the future of the employees. The process is...
The First Minister:
SNP
As Margo MacDonald well knows, I am not a lawyer. It does seem strange that a mutual society can effectively be broken up without a vote by its members. That...
The Presiding Officer:
NPA
If I am to fit everybody in, I will need short questions and short answers from now on.
Sandra White (Glasgow) (SNP):
SNP
I declare an interest as a member of the Dunfermline Building Society. I have certainly spoken in support of Margo MacDonald's position and suggestion.Given ...
The First Minister:
SNP
Of course, it is a parliamentary matter for the Finance Committee to decide what inquiries it wants to conduct. Any minister would be best to leave it to par...
David Whitton (Strathkelvin and Bearsden) (Lab):
Lab
I welcome the First Minister's statement that responsibility for what has happened to the Dunfermline rests with its management. I am sure that that will com...
The First Minister:
SNP
I do not think that only Fifers will be furious at the loss of an independent Scottish financial institution: there will be fury across the country. Perhaps ...
John Park (Mid Scotland and Fife) (Lab):
Lab
The job situation has been the most concerning thing throughout the process. We are concerned that lots of people in the head offices do not have the job gua...
The First Minister:
SNP
We have not to date had such dialogue for the obvious reason that the situation has been developing. We asked that question of the Nationwide this morning, a...