The loss of HBoS will hit Capital's standing

A COUPLE of years ago a wise, oldish taxi driver told me it would all end in tears. He'd just handed his son thousands of pounds, of what would have been an inheritance, to secure a flat at well over the asking price. He and I shook our heads at what seemed a very risky move by a bank that was willing to give his son a mortgage of five times his salary.

His son had a good job with a promising future, but it was in one of the revolving door, creative industries with many commissions from the financial sector.

By the time he dropped me off, we had comforted each other with the thought that things had changed since our first house purchases and that bankers knew what they were doing. Both of us – him a successful small businessman, me an experienced politician – were prepared, up to a point, to trust the bankers' judgement, even though we were concerned about where it would all end.

At that time, I had never heard of the sub-prime market, but I knew the US economy was heading for trouble because of the level of debt piled up by President Bush. However, it was a big jump from American debt to stories about spend, spend, spend by people here, like the taxi driver's son.

I hoped our supposed economic stability wasn't built on sand, but frankly, felt that people who knew much more about finance than I must have known what they were doing. Naturally, I assumed the Chancellor of the Exchequer, Gordon Brown, was on top of any possible problem.

A couple of years ago, he may have been. But last week, when the scraps of information gleaned from newspapers and news programmes were pieced together, it began to look as though Prime Minister Brown and doughty Darling, his successor at the Treasury, had been bounced into clearing the way for Lloyds TSB to pull off the sweetest of takeovers.

After Northern Rock, and with Lehman Brothers going to the wall, it's not hard to imagine near-panic in the Treasury and Downing Street. Rumours about the stability of HBoS swept through the City. Even allowing for the questionable wisdom of its lending policies, that may have been a malicious conspiracy to weaken HBoS. At my request, Lothian and Borders Police are considering this possibility. Reacting to the plummeting HBoS share price, prudent Gordon and careful Alistair crossed their fingers and allowed the takeover to proceed without the usual referral to the Competition Commission.

So where does this leave all the people, particularly in Edinburgh, who work for the two banks that will become one?

Although soft words have issued forth from HBoS chief executive Andy Hornby and others whose positions and bonuses will be enhanced by the takeover, employees of both banks in branches across the street from each other would be well advised to listen instead to their trade union, and demand every option for their future employment be investigated.

At the summit of interested parties called by Alex Salmond on Monday, speakers frequently referred to Scotland's financial services being part of the global economy, and the present turbulence being felt in other parts of the globe. So why, if one of our institutions is going to be taken over from outwith Scotland, are we not considering global players in the money markets?

Maybe, having considered the possible options, HBoS shareholders would still opt for the one deal they're currently being offered – but maybe not.

After all, the certainty of retaining high-quality decision-making jobs, and the corporate functions that would flow from HBoS becoming the European HQ for a global mega-bank would enhance rather than diminish the spread of high quality jobs supporting and servicing the financial sector. Inevitably, Lloyds TSB will downgrade Edinburgh's claim to be a big player.

A sporting chance
Politicians can only please some of the people some of the time. I tried to buck the trend when, for the only debate I'll get for the four years of this parliament, I chose a motion that already had attracted support from all the parties.

My motion asks for re-instatement as soon as possible of a "substantial" amount of the £150 million skimmed from the Lottery money earmarked for the development of sport, art and other good causes in Scotland, but diverted to help pay for the London Olympics.

We should start building the legacy of the Commonwealth Games now, so more people will take up sport in the afterglow of the Olympics and young athletes can raise their standards, but some people fear sport would get all the money.

That's not the intention, and couldn't happen anyway, but the time's right to try for a down payment for sport.