SNP “secret” deal with China

Tuesday April 5th 2016

Iain Gray Labour

Article by Iain Gray, East Lothian MSP 2007-2016 and Scottish Labour candidate in forthcoming Scottish elections.

The Curious Incident of the Dog (Which Did Not Bark)

In the Sherlock Holmes story, “Silver Blaze” Arthur Conan Doyle illustrates how something not happening can tell as much as something that does. In that case it was famously the dog which “did nothing” in the night, not even bark, while a crime was taking place.

In the case of the now not-so secret deal Nicola Sturgeon signed with Chinese companies on March 21st, the “curious incident” which raises questions is the lack of a Scottish Government press release.

On that day the Scottish Government issued no fewer than 21 press releases, covering everything from beavers to dog fouling. Yet nothing was said about the fact that the First Minister was in Bute House signing a Memorandum of Understanding (MoU) with Chinese companies promising infrastructure deals worth up to £10bn, in an event complete with flags, Chinese delegation and official photographer.

Only some days later did some in the Scottish media spot the deal on the SinoFortone group website (one of the Chinese companies involved). Initially enquiries about the details of the deal were sent packing by the Scottish Government, who told journalists they should submit a freedom of Information request. That would helpfully have ensured nothing released until after the election of course.

By Sunday that position had become untenable and the Scottish Government were forced to publish the MoU.

When Nicola Sturgeon was asked why the Scottish government had been so coy, she dismissed the whole deal, saying that “there is actually no agreement on the substance of any of this at all”.

But that is always true of an MoU and it does seem rather dismissive of one which includes the huge figure of £10bn, and for which some signatories had flown across the world from China. What is more it does not ring true with previous similar deals.

In 2014 Alex Salmond signed a similar, though smaller MoU with a Chinese company, and there was certainly a press release that day. In 2011 the then First Minister signed an MoU with SSE on jobs in Dundee, with enormous fanfare. Yet neither of these were actual deals either – as Dundee has since learned to their cost with none of the promised jobs actually appearing.

No, when it comes to MoUs for billions of pounds, SNP ministers do not usually hide their light under a bushel.

Perhaps one reason for the SNP’s reluctance to shout about this deal was given away by my own local SNP MP, George Kerevan. George moonlights as a columnist for the National newspaper, and, with remarkable timing, this morning’s column is an excoriating denunciation of George Osborne for his “Faustian pact with Chinese state capitalism for the foreign capital inflows he needs”.

The piece warns that China is only interested in deals which lead to it acquiring physical assets (i.e. infrastructure) in western countries, with George saying “welcome to the new Chinese imperialism”.

The column is silent on the SNP’s deal with China, so we do not know if this SNP MP thinks that Nicola Sturgeon has signed a “Faustian pact” with the “new Chinese imperialism” too.

However, the current concerns around trade with China may well be one of the reasons Nicola Sturgeon was reluctant to be seen signing this deal, whatever its merits. A lot of those concerns centre around the impact on our steel industry of cheap Chinese steel of course, and the SNP does have a rather better story to tell there than George Osborne.

The success of the Scottish Government in finding a buyer for the remaining steel plants in Scotland is very welcome indeed, and they deserve credit for it.

Yet we should not forget that when the new Forth Crossing Contract was awarded the tender from then owner Tata to use Scottish steel was rejected in favour of the cheaper Chinese product.

A second possibility is the nature of the potential deals. We cannot know because so little detail has been provided, but some sections of the MoU do look as if the projects under discussion may be private finance models. For example, the undertaking to “Consider options for a robust model that could see opportunities structured, financed and delivered in Scotland”

Much of the SNP’s capital programme has been delivered using private finance models, through the Scottish Future’s Trust. That is not something they like to shout about though, since they often pretend they have “abolished PFI”. John Swinney likes to use phrases such as “revenue supported capital projects” to hide the facts. So perhaps the suggestion that these deals would see China building and owning infrastructure in Scotland through PFI style projects was the reason for the SNP’s unusual bashfulness. It is hard to tell with so little information.

Finally, this incident has another curious aspect. In the SinoFortone website announcement there are quotes from the Chinese companies, Nicola Sturgeon, Royal Bank of Scotland and a Scottish businessman.

This is none other than Sir Brian Souter, here of Souter investments. Of course the last time Sir Brian was in the news was last month when a court found that his Stagecoach company had used a tax avoidance scheme to dodge £11m of tax. Jim Harra of, HM Revenue & Customs said at the time “This was clear tax avoidance. It was an attempt to manufacture losses to deny the public purse the tax due.”

What Sir Brian Souter’s role in this deal was remains somewhat opaque, but perhaps his involvement, given his recent tax case and the fact that he is a major donor to the SNP was yet another reason Nicola Sturgeon had hoped this event would pass quietly by.

In “Silver Blaze” the curious incident of the dog in the night-time leads Holmes to the truth, and springs an innocent man from jail. In this case the curious incident of the press release which did not appear has rather put Nicola Sturgeon and the SNP in the dock in the court of public opinion. Now we need the truth, the whole truth about why this deal was kept quiet.

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