Dunfermline Building Society
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 statement, so there should be no interventions or interruptions during it.
Thank you, Presiding Officer, for the opportunity to make a statement to Parliament on the Dunfermline Building Society.
Everyone in the chamber will have followed closely the developments of recent days around the Dunfermline, one of Scotland's key financial institutions. The United Kingdom Government's announcement at the weekend that elements of the Dunfermline were to be transferred to the Nationwide Building Society presented questions, challenges, and—indeed—opportunities. I am pleased that we have the time to discuss them today.
Aspects of the announcement should concern everyone in the chamber. First, I will recap on some key facts. The Dunfermline has a proud history at the forefront of the financial sector in Scotland. It employs more than 500 staff in 34 branches around Scotland. In the accounts that it published in March 2008, the society confirmed assets in the region of £3 billion. The Dunfermline has provided loans of more than £675 million to the business sector and has around a 22 per cent market share in lending to the Scottish social housing sector. No-one in the chamber can therefore be in any doubt that the future of the Dunfermline is of vital importance to Scotland.
The UK Government has announced that, because of a significant deterioration in the society's financial position over the past few months, the Dunfermline's core member business has been transferred to the Nationwide Building Society. To be precise, the Dunfermline's retail and wholesale deposits, branches, head office and originated residential mortgages other than social housing loans and related deposits have been transferred to the Nationwide. The transfer follows a process that the Bank of England conducted over the weekend, under the special resolution regime provisions of the Banking Act 2009.
The Dunfermline's social housing portfolio was placed into a bridge bank that is wholly owned by the Bank of England to allow HM Treasury and the Bank of England time to secure a permanent solution, working with other stakeholders. Under the terms of the agreement, the Dunfermline's deposit business will continue to operate normally. Branches and telephone banking will continue to open and customers can access their account in the usual way. Savers can be assured that their money is safe.
A court order was made on Monday 30 March to place the remainder of the Dunfermline's business into the building society special administration procedure and to appoint KPMG as the administrator. That part of the business includes the society's commercial loans, acquired residential mortgages, subordinated debt and most Treasury assets.
I can now tell members the full extent of the Scottish Government's involvement in recent weeks. Our officials met representatives of the Dunfermline on Monday 2 March. They informed us that the society needed extra capital if it was to meet the Financial Services Authority stress test requirements and qualify for entry into the credit guarantee scheme. The society was about to declare a loss for 2008 in the region of £26 million, largely as a consequence of write-downs in its commercial loan book.
Although the Dunfermline had substantial reserves of more than £100 million, which it had accumulated over time, it was required to satisfy FSA capital adequacy ratios in order to access Treasury support schemes, if required, and to enable its directors to provide a going-concern opinion on the 2008 accounts. Last October, the capital that the society required to meet the FSA requirement was originally estimated at £20 million. However, more recently, the FSA had indicated that the figure would have to rise significantly in light of adverse market conditions.
As the chamber knows, the Scottish Government has no responsibility for financial regulation. However, we have responsibility for employment in Scotland and, indeed, for social housing provision. On Monday 16 March, we confirmed to the FSA and the Treasury that the Scottish Government was willing to provide a capital investment of £25 million to the Dunfermline, subject to guarantees on social housing loans, if that would help to find a solution. We put forward a number of proposals, the most likely being that we would use our end-year flexibility money that is held by the Treasury to provide that capital sum. For obvious reasons, we sought to keep the offer confidential.
From then on, Scottish Government officials were in constant contact with the FSA and the Treasury to seek to reach a positive conclusion. I spoke to Adair Turner of the FSA on Sunday 22 March and met the Chancellor of the Exchequer in London on Wednesday 25 March. It was extremely difficult to obtain from the FSA information on the level of capital required. However, others were willing to help. A consortium of seven building societies was prepared to inject up to £30 million in capital. On Friday 20 March, when we were told of that potential interest from Scottish mutuals, our officials immediately informed the FSA. In the event, the Treasury took the view that value-for-money considerations decided the outcome in favour of a break-up of the society. We have requested, but have yet to see, the details of that case.
It should be remembered that, although a payment of £1.6 billion has been made to the Nationwide by the Treasury in return for taking responsibility for all depositors' accounts with the Dunfermline, any losses will be met from the Dunfermline's reserves and other holdings. Any further loss would be set against the financial services compensation scheme, 90 per cent of which would be funded by the financial sector itself. As a result of that, the Treasury's potential exposure has been estimated by informed observers at £10 million.
Apparently, the FSA finally estimated a capital requirement figure of £60 million, and the Treasury doubted the Dunfermline's ability to service that amount. However, we had argued that a lower interest rate on our proportion of the capital required could be justified, because of the very low risk on social housing loans and the desirability of supporting our social housing policy objectives. The Treasury and the FSA made their decision on Friday 27 March, calling in Nationwide and, I understand, three other potential acquirers of the Dunfermline's assets.
The chancellor spoke to me on Saturday at lunch time. On Saturday afternoon, the FSA wrote to the Dunfermline effectively to instruct the directors to call a meeting and vote through a special resolution. The other building societies were told on Saturday morning that no public money was available for investment in the Dunfermline. Given that our offer of investment was still on the table, I have written to Lord Turner to question whether the FSA's letter provided a full and accurate account of the position. I will make that letter available in the Scottish Parliament information centre. That is the position in which we find ourselves as of today.
The Government is working on a number of fronts to ensure that Scotland's interests are taken properly into account. I and the Cabinet Secretary for Finance and Sustainable Growth have been in close contact with Dunfermline and Nationwide all this week. I spoke to the chief executive of the Nationwide on Monday morning. Mr Swinney and I met Stuart Bernau, executive director of Nationwide, this morning, and we have held constructive discussions about the impact of the merger on Scottish jobs and the future of Dunfermline's operations. The dialogue this morning confirmed that there will be opportunities for Dunfermline staff to apply for vacancies within the Nationwide's network. Mr Bernau confirmed the Nationwide's intention to invest in the Dunfermline brand going forward.
Nationwide is a highly reputable organisation with an impressive track record. I welcome its announcement that there will be no compulsory redundancies among Dunfermline branch staff in the next three years. However, I am clear that we must continue our dialogue in the interests of the longer-term future of those staff. There must also be abiding concern about the retention of functions, and therefore staff, at the Dunfermline's headquarters.
We are working to consider the implications for the Dunfermline's social housing portfolio. We must ensure that the upheaval of recent days does not jeopardise the successful delivery of our policy objective of increasing the availability of affordable housing in Scotland, and that the risk of an aggressive repricing of loans to the sector is minimised. The chancellor has promised dialogue with us and others on the future of the social housing portfolio, and we look forward to engaging with him.
We need to think creatively about what sort of model best serves the interests of the social housing sector in Scotland. Recent events potentially present an opportunity for solutions that could not only secure the future of lending to the sector, but offer us a framework for building on that provision. Our central objective is to secure at current rates the £500 million of existing Dunfermline lending to the social housing sector, and the £200 million of undrawn facilities on offer. We also want to secure a stream of further lending into the sector going forward. The Chancellor of the Exchequer has indicated to me that he shares those concerns and our objectives in this matter.
Responsibility for the position of the Dunfermline rests with the management of that institution—the present management and particularly the recent past management. Its exposure to the commercial property market and some aspects of its mortgage book, together with its difficulties with a major information technology project, left the society vulnerable. However, many aspects of the society—indeed, the bits that have gone to Nationwide—are highly attractive, for example the more than 300,000 depositors who have invested their money in a Scottish institution with a long and proud history going back 140 years. As was confirmed to me this morning, Nationwide has inherited a domestic mortgage book and a loyal staff of the very highest quality.
As I have said, we will work our hardest to secure the best outcome possible from the present position. However, there must be concern over whether the process has been adequate. Clearly, Dunfermline found it impossible within the tripartite arrangement to obtain constructive dialogue about how to solve the institution's problems. Those frustrations would be shared by ourselves and other participants and potential investors. Throughout the process, those at the Dunfermline Building Society seemed to be the last people to hear of their fate.
Some might argue that, regardless of the process, the present outcome was the only one possible. If the process had been more orderly, however, I believe that it could have produced a better outcome for the members of the society, for the headquarters staff of the Dunfermline and for Scotland.
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?
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 the army of depositors and the liabilities, but many of the assets have been retained in the tripartite arrangement. As I said, informed commentators—I was referring to Robert Peston, who finds things out long before anyone else does—have estimated that the final liability for the Treasury might be as low as £10 million.
The Nationwide, which is a highly reputable institution, has got the most amazing deal out of the process, as it acknowledged this morning. It is delighted with the quality of the asset base and indeed of the staff who have come into the society. There is no doubt that that is a great investment from the Nationwide's point of view.
The preferred outcome, not just for me but for many members and, I think, for the Chancellor of the Exchequer during the negotiation, was for the Dunfermline to trade on with an independent, sustainable future. The losers in the outcome are the members of the society, who did not even get a vote on its future, and the risk to headquarters staff in Dunfermline is real, despite the Nationwide's best efforts, as is the risk to Scotland of losing an independent financial institution.
Iain Gray asked what my preferred outcome would have been—it would have been to make the investment that was required to allow the institution to go forward into the future. If anything like the protection of assets that has, in effect, been available to the Nationwide had been available to the Dunfermline Building Society—perhaps even a tenth—that is exactly what could have happened.
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 synonymous with Scottish prudence and thrift, became engulfed in significant financial difficulties. The Scottish Conservatives hope that the financial security of investors and organisational stability for borrowers and employees will be safeguarded by the takeover. We wish the Nationwide Building Society well in that endeavour.
Separate from the detail of the financial issues is the negative impression that has been created about chaotic communication between the Scottish Government and the Westminster Government and between the Westminster Government and the society. The First Minister referred obliquely in his statement to a process that was less than orderly. Given that the Scottish Government became involved in the issue on 2 March, what was the agreed communications route between the Scottish Government and the Westminster Government and, if no one raised that essential issue, why not? Why did 24 hours apparently elapse between the critical decision being taken at Westminster and the First Minister getting a telephone call at lunch time on Saturday? What did the chancellor say to the First Minister during that phone call and what did the First Minister say to him?
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 people in Scotland will share that opinion.
As I said, we were informed of the Dunfermline's difficulties on 2 March, when the first meeting of officials took place. The Dunfermline had been in contact with the FSA and more widely with other parts of the tripartite arrangement for many months before that. The society came to us eventually because it found that the process was not leading to a solution of its difficulties. I do not agree that, once we were involved, the contact between us and the UK Government was not effective. We contacted the FSA and had a meeting with the chancellor. We put forward our point of view. As the chancellor said to the House of Commons on Monday, the UK Government accepted that our offer of capital was made in good faith to try to contribute to a solution. We were never under any illusion that our offer would not have to be part of a wider arrangement. My meeting with the chancellor last Wednesday was highly constructive. If I had had to guess last Wednesday, I would have said that we were working towards the recapitalisation of the society.
Eventually, the Treasury came to a different conclusion, based on a value-for-money case. I hope that we will see that case, because I would like to estimate it. There might be a difficulty for the Treasury in how it regards value for money. If Robert Peston is correct and the eventual Treasury exposure is as little as £10 million, it would be difficult for any alternative solution to look better from a Treasury point of view. However, from the point of view of the members of the society, the headquarters staff, and the Dunfermline as a financial entity in Scotland, £10 million seems a pretty small exposure, so other potential solutions could have been considered. The chancellor and I engaged constructively but, eventually, he came to a different conclusion from me. My suspicion is that he came to that conclusion with regret and on the basis of that value-for-money calculation. However, I just do not think that that value-for-money calculation gives value to Scotland or is effective in its interests.
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 Building Society. Regrettably, another formerly trusted, responsible and respected institution in the Scottish financial services sector has been laid low.
Depositors, savers and staff need assurance that, in times of turmoil, Governments north and south of the border will work fully within their respective roles and together. The First Minister said in his statement that the Scottish Government would have used end-year flexibility money to provide the capital that he said he would put into the society. In order that that commitment is not provided to a potentially large number of other institutions and bodies on a regular basis, will the First Minister publish the Scottish Government's definitive plans for the end-year flexibility money that he cited?
We recognise and respect the social housing landlords in Scotland with whom the Dunfermline Building Society has had a relationship. What is the Scottish Government's position on seeking to secure the social housing debt to which the First Minister referred, which is now the subject of a bidding process by the bridge bank? Will the Scottish Government commit to use the same funding that the First Minister said would be available to cover the Dunfermline Building Society's losses to secure the social housing portfolio debt? Will he publish details of the commitment, using EYF money, that was provided on 16 March?
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 appeared on Monday morning. I suspect that his calculation of the £10 million potential liability was made up not by him, but by whoever briefed him from his usual sources—let us put it that way.
I listened to the House of Commons debate on Monday afternoon and I thought that Willie Rennie, the local member of Parliament for Dunfermline, put forward the correct case. He acknowledged the willingness of a range of institutions to help the Dunfermline Building Society, including other building societies and the Scottish Government. He also asked whether more could not have been done to protect the society's independence. I thought that he asked the right questions and I hoped that the Liberal Democrats might ask those questions today.
As far as the social housing book is concerned, I am not certain that the member understands. I suspect that the auction on the social housing book is about how big a discount various institutions are looking for to take on the book, which is rock solid in terms of safety, but is low-margin business. The Scottish Government's interest in that aspect—which is, incidentally, shared by the Chancellor of the Exchequer, as he told me at our meeting; he has an equal concern about it—is to protect the availability of finance at the current rates that the Dunfermline Building Society was offering to RSLs across Scotland. Obviously, we hoped to make an investment contingent on the social housing book. I think that that would have been a valuable thing to do, if it could have protected the society's independence.
We continue to engage with the Treasury, at its invitation, on how we can obtain those objectives on social housing. The member has my assurance that the Government has that very much in mind.
We come to back-bench questions. We will get everybody in as long as everybody is fairly short and sharp.
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 140 years, has been asset stripped by the UK Labour Government? What further discussions will the First Minister have with the Nationwide about the future of the Dunfermline Building Society's staff? In particular, does he share my concern for the short-term future of the headquarters staff at Pitreavie and the longer-term future of the branch staff? Will he seek clarity on the position of the Dunfermline Building Society's agencies that are located throughout Fife? In all the comments that I have heard over the weekend, no one has mentioned the position of the solicitors and other firms that have acted as branches of the Dunfermline. Will he therefore seek clarity on their situation and on whether Nationwide intends to retain the agencies and the staff who work there?
In very constructive discussions this morning, Nationwide undertook to have a continuing dialogue. Tricia Marwick's latter point is important and we will certainly pursue it with Nationwide.
The Dunfermline Building Society has around 500 staff, with approximately half in the headquarters operation and half in the branch operation. As I said, the future of the branch staff has been guaranteed for the next three years. Nationwide made it clear this morning—it should be remembered that it employs 500 people in Scotland—that any available job opportunities across the Nationwide network in Scotland would be available to Dunfermline Building Society staff.
It is early days. Nationwide has been in charge of the Dunfermline now for three days—this is its third day in situ. Nationwide has made it clear that it cannot give a guarantee on compulsory redundancies. However, as the company said to Mr Swinney and me this morning, it is highly impressed by the quality of the staff and even more impressed, I think, by the quality of the asset book that it has acquired. In terms of its residential mortgages, its army of depositors and its deposit-to-loan ratio, which is crucial in the financial sector these days, it is an extremely valuable part of the organisation. That is why there will be, I think, regret: given that it was possible to offer such a deal to Nationwide—which is a highly reputable organisation—it might have been possible to find a way for the Dunfermline to continue to utilise its assets and to employ its staff independently in the future.
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 news that a deal had been done with the Nationwide. I felt a huge sense of relief that the savings of savers with the Dunfermline Building Society, including members of my family, would be safeguarded. I welcome the fact that, like the Dunfermline Building Society, the Nationwide is a mutual, and I warmly welcome the fact that the Dunfermline Building Society brand is to be built on by the Nationwide and that we may witness an expansion of the society's brand name, which could lead to the saving of some of, if not all, the head office jobs. I welcome, too, the very swift action of Alistair Darling at the Treasury and of his Westminster colleagues Jim Murphy and Gordon Brown.
In the dialogue over the past few days, the previous management of the Dunfermline Building Society sent mixed messages. What are the Government's thoughts about that? Was it, too, concerned and not confident about the society? Is it concerned that MSPs including me and Jim Tolson, who, along with Willie Rennie, wrote to the chief executive the moment the news first broke two weeks ago, did not receive answers to our letters? What is the alternative solution?
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 two weeks. That is what I heard in the media, at least, and I am sure that it must have been the case, given that he is a local member of Parliament.
A financial institution that is experiencing difficulties must be careful about how widely it canvasses such difficulties, because it could provoke the very thing that it wants to avoid, which is a lack of confidence and a run on deposits. It is absolutely correct that the Dunfermline was publicity shy over the past few months, because it was trying to work through its problems under the structures that were available to it.
The position of depositors is crucial. The deposit protection scheme, which provides the fundamental guarantee for depositors, is paid for by the financial sector. Over last year and this year, the Dunfermline will have paid £7 million or so into the scheme to protect depositors. The provision of assurance to depositors is hugely important.
Amid Helen Eadie's welcomes for everything, could she not have spared a minute to consider that if it had been possible, the outcome of sustaining the Dunfermline as an independent institution—which many people across the political spectrum would have regarded as the most desirable outcome—would indeed have been the best possible outcome for Fife and for Scotland?
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 Treasury and the Bank of England time to secure a permanent solution, working with other stakeholders.
Given that the Scottish Government has a responsibility for social housing provision, what steps has it taken to ensure that it is a stakeholder? The First Minister mentioned that the Chancellor of the Exchequer had made a promise of dialogue, but is there a clearly agreed line of communication? Is the First Minister confident that the Scottish Government will be able to offer input and to influence matters?
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 of the social housing book. There was complete agreement between me and the chancellor that the question of how to protect the interests of the social housing book was a key part of the problem with which he was wrestling.
The Dunfermline is the second-largest social housing lender in Scotland—it has some 20 per cent of the market. As I said, that 20 per cent is rock solid, but the margins are extremely fine. That is fantastic for the RSLs and social housing providers, but it is not a hugely profitable part of the society. The fact that the Bank of England kept the social housing book in the bridge bank would indicate that the bidders for the social housing book were either looking for a discount, given current market rates and availability of money, or that they were not prepared to guarantee the rates at which the current RSLs and social housing bodies are getting money. Our objective, as far as that is concerned, has been to guarantee the quantity—the £500 million, plus the £200 million facilities—and the rates at which those facilities have been offered. That remains our objective, and we will do everything possible to ensure that that is the outcome. In addition, we will perhaps be looking for an opportunity to expand social housing finance provision in Scotland and to get something really positive out of what is otherwise, in many senses, a disappointing situation.
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 to look forward rather than back. My particular concern is the protection of local jobs in the headquarters, and jobs in the branches throughout Scotland.
As the First Minister and the cabinet secretary did, I had the pleasure this morning of meeting Mr Stuart Bernau of Nationwide Building Society. He was able to assure me about several issues, including local jobs at the headquarters. Although the Nationwide cannot guarantee that all jobs will be retained—some small parts of the headquarters function may go elsewhere—it seems to me from my discussions with that gentleman this morning that the majority of jobs can be protected.
However, as the First Minister will be aware, we recently set up the financial services task force. I have asked Mr Bernau and his colleagues whether they would be willing to meet the task force soon, probably in Dunfermline, and they assured me that they will do so. Would the First Minister, or his Government officials, also be willing to meet in Dunfermline as part of the task force in the near future?
Yes—that would be highly appropriate. Mr Bernau's conversation with me and Mr Swinney this morning was very positive and constructive. Indeed, perhaps because of the timescale involved, he was able to go somewhat further than the chief executive managed to go in our conversations on Monday. I said that there are opportunities. Of course we have to look forward, take all the opportunities that we can and try to create something positive out of a disappointing situation.
As the local member, Mr Tolson will know that there is not the same guarantee for head office staff—we should not give the impression that there is—as there is for the branch staff. Nonetheless, we had positive and constructive dialogue and a commitment to continue that dialogue over the next few weeks on the questions of headquarters operations, investment in the Dunfermline brand and, indeed, on our interest—a shared interest, perhaps—in the social housing provision that is currently resting with the Bank of England.
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 important because, although we hope that they do not, other situations like this may occur in the future. I would like to know whether a saver—a member of the society—could challenge the decision in court, as the anti-merger people did with the Royal Bank of Scotland and Lloyds TSB, since no opportunity was given to depositors and members to vote on it.
Secondly, does the First Minister know when the Dunfermline Building Society was informed of other interests? What was the communications route to the Dunfermline's board? The past chairman seems to have indicated that he was not as aware of what was going on as he might have been. When did the Nationwide first indicate its interest in the Dunfermline? I appreciate that the First Minister may not have all the answers, but perhaps he will undertake to find out some of them.
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 is in the provisions of the Westminster Banking Act 2009. I think that I am right in saying that this is the first use of the emergency resolution procedure. No doubt the matter could be tested, although because the matter has been passed in an act of Parliament, the legal road would likely be difficult.
I cannot answer in respect of internal communications in the Dunfermline Building Society. However, I can—as I said in my statement—say to Margo MacDonald that as soon as we heard not of the identity of the potential other mutual society investors in Scotland but of their existence, we furnished the Financial Services Authority with the information immediately. We reinforced it the following day, just to be sure that the authority was fully aware of it.
As far as Nationwide's interest is concerned, I can give some information that I do not think is private. Nationwide had completed—last year, I think—a due diligence on Dunfermline Building Society. At that time, there was the prospect of a merger. Nationwide was therefore in a better position than most to know what the Dunfermline's assets were. Nationwide was one of four potential bidders that were contacted by the Financial Services Authority on Friday night. I do not know the identity of the other three, but I understand that there were four potential bidders. I know, for example, that the Scottish mutual organisations that Margo MacDonald mentioned were not among them.
Outcome is more important than process, but process can, of course, impact on outcome. I would ask basic questions about process. I do not understand at all why other financial institutions were contacted about the break-up of the Dunfermline before the society itself was told. I do not understand how the press were briefed that the society had "collapsed" before the society's board had met. I do not think that that was effective or proper process, either.
I do not think that the seven building societies that had offered to put up capital to support the Dunfermline should have been told by the Financial Services Authority that no public funds were available to support that recapitalisation when that was—to put it most mildly—not a full account of the facts. The Scottish Government's offer of capital support was still on the table.
If I am to fit everybody in, I will need short questions and short answers from now on.
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 large number of unanswered questions about the sell-off of the Dunfermline—including questions about use of emergency powers—does the First Minister believe that it would be appropriate for the Finance Committee to consider holding an inquiry into the facts behind the sell-off and to consider the impacts on the wider economy and on the future of Scottish financial services?
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 parliamentary committees to be in charge of their business. However, if the Finance Committee wishes to hold such an inquiry, we would co-operate fully in furnishing all the information that we have.
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 come as a blow to "Furious of Fife", most of whom seemed to be members of Tricia Marwick's family, who were stood outside Dunfermline's headquarters with placards.
On 2 March, when the First Minister's officials met representatives of the Dunfermline, how much money did those representatives say they needed in extra capital? Would the £25 million that was offered by the Government have covered it? Who were the other seven building societies, and how much could they offer?
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 it will not be shared by David Whitton, but it will be shared by many people throughout Scotland.
In his question on capital, David Whitton perhaps unwittingly got to the heart of the problem. The only figure that the Dunfermline Building Society had been given by the FSA—admittedly it was in October last year—was £20 million of new capital to conform to the stress test. I do not think that we in the Scottish Government were the only ones to feel frustrated—some UK ministers felt frustrated, too—that the society had not been able to secure from the FSA in early course another estimate of what might be required. That perhaps highlights one of the difficulties in the tripartite arrangements.
I do not know the identity of all seven building societies. I know that there were seven and that the amount that they were prepared to put forward was apparently £30 million. They were written to by the FSA on Saturday morning to say that no public money would be available, and they were asked whether they still wanted to make their contributions. I must say that that was one part of the process that I think was questionable.
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 guarantees that people in the branches have. The First Minister will know that there is an independent staff society within the Dunfermline Building Society. Has the Scottish Government had any dialogue with that staff society? If it has not, does it intend to have such dialogue in the future?
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, and it said that it was engaging in that dialogue. If it is helpful to the staff association, of course the Scottish Government is perfectly willing to meet it directly.
Unless I misread people entirely, I believe that when I met the Chancellor of the Exchequer last Wednesday, his preferred outcome would have been recapitalisation. He did not say it explicitly, but that was my impression from our conversation. It is unfortunate that that was not possible, but I look forward to seeing the value-for-money calculation to see why. Unlike some members who have spoken on the issue today, although I am perfectly willing to engage with the Nationwide and with the staff in the Dunfermline Building Society to get the best possible outcome in terms of employment investment, I regret that the organisation was unable to trade on as an independent financial institution.