CLAIM:

“The chief executive of defence giant Babcock has said the company could move its huge fabrication yard facilities from Rosyth to England within a few years if it was made to feel unwelcome in an independent Scotland.” – The Courier, February 16, 2022

DOORSTEP ANSWER:

BABCOCK makes a lot of money in Scotland decommissioning nuclear plants and managing naval facilities. Why would the shareholders want to turn up their noses at working with the Scottish Government after independence?

WHO ARE BABCOCK?

BABCOCK International is a defence, naval and nuclear services company headquartered in London but with many global subsidiaries. Originally American, Babcock expanded into Scotland in the 1890s. It acquired Rosyth dockyard from the Ministry of Defence in 1996 for a modest £21 million. Since 2019, the firm has issued multiple profit warnings and made £178m loss in 2020. Babcock is carrying significant debts of around £1.3bn.

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On February 16, the Dundee Courier reported quotes from David Lockwood (below), Babcock’s chief executive, after a visit to Rosyth from Prime Minister Boris Johnson. English-born Lockwood took over as CEO in 2020 and is a chartered accountant by trade, not an engineer.

The National:

Asked about a second independence referendum, Lockwood said: “I lived in Scotland for 10 years and it was a rumbling thing then and I think it’s just going to be a rumbling thing.”

He was then critical of the impact of the independence discussion on business, saying: “There are signs it can affect – the tone of debate – inward investment from England to Scotland and other areas.”

Lockwood was careful to preface his comments about moving company activities to England post-independence by saying this was only a possibility if “we were told we weren’t welcome here”. He added that such a move would “be a bad mistake for Scotland” but if that were the decision Babcock could relocate “in three years”.

Lockwood may have been trying to say a retreat from Scotland was contingent on a breakdown of relations with the Scottish Government – which seems unlikely in any circumstances. His reference to a three-year move might be a way of reassuring shareholders come what may. Or it may be a crude attempt to threaten Holyrood. Either way, Lockwood has managed to ignite an embarrassing media firestorm that is hardly helpful to Babcock.

BABCOCK AND INDEPENDENCE

BABCOCK has form on trying to influence the constitutional process in Scotland. In September 2014, Babcock issued a statement suggesting there would be job losses on the Clyde if Scotland voted Yes. The inference being that UK defence contracts would go south. Interestingly, the following month (after the referendum) Babcock was awarded large contracts from the UK Ministry of Defence to maintain British warships.

The National:

Babcock is heavily reliant on work from the MoD and Royal Navy. Currently, Babcock is designing and building five new Type 31 frigates for the Royal Navy. However, as Babcock is registered in London, the only possible impact on its business arising from Scottish independence would be if the Westminster government decided (after independence) to insist on banning Scotland from competing for naval contracts (a move of doubtful international legality) or ordered Babcock to relocate activities from Scotland (at great cost). Also, Babcock’s lucrative nuclear decommissioning arm is working on the Dounreay site. It is improbable that Babcock’s shareholders would welcome the company quitting Dounreay on a political whim.

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As a maritime power, an independent Scotland would likely be in the market for frigates and expertise in managing shore facilities – both Babcock specialities. Quite why Babcock shareholders would want to cut themselves off from such potential business is unclear. Especially as the company is already trying to sell its Type 31s to small nations such as Greece.

IS LOCKWOOD CORRECT ON THE CONSTITUTIONAL QUESTION?

Contrary to Lockwood’s speculation on the negative impact of the constitutional debate on inward investment, there is no evidence this is so. In fact, the opposite proved true. The year following the signing of the Edinburgh Agreement between the British and Scottish governments triggering the independence campaign, Foreign Direct Investment in Scotland reached its highest level since 1997, creating more than 4000 jobs. In 2014, which was the referendum year itself, Scotland was second only to London in attracting foreign investment projects. The overall number of FDI deals secured was the third highest on record.

The National:

As for Lockwood’s implied criticism that having a democratic debate on independence affects business confidence, the 2014 referendum was a model of democratic process. The Electoral Commission found: “The atmosphere in polling places was reported by police, staff and observers to be good natured throughout the day. There were some reports of incidents during the campaign and on polling day but the prospect of a widespread air of intimidation, which had been raised prior to polling day, did not materialise.”

FACT CHECK RATING:

The National: National Fact Check False

A BIG zero for David Lockwood’s confused comments. A course in media training might be called for.