Election '97: Lang in row over Scottish job fears

Ian Lang, President of the Board of Trade, was accused of "juvenile scaremongering" yesterday after he contradicted the boss of Scotland's second largest insurance company on the firm's attitude to devolution.

The Conservatives are rattled by an apparent change of heart by both Scottish Widows and Standard Life, from coded warnings of job losses north of the border at the time of the 1992 election to one of business as usual under home rule.

Mike Ross, the chief executive of Scottish Widows which manages funds worth pounds 24bn, has at least twice this year expressed a relaxed attitude to a Scottish parliament.

In March he said in a radio broadcast: "I don't see any particular threats in the winds, for example, from devolution." And on Wednesday the Scotsman newspaper reported Mr Ross as being "happy" with what he knew of Labour's proposals.

But Mr Lang insisted Scottish Widows were "against" devolution. A senior executive at the insurance company, who he repeatedly refused to identify, had told him the company "did not feel comfortable with the proposition".

"I have spoken to a senior executive at the Scottish Widows Fund and it is quite clear that the fund is extremely unhappy about the prospect of constitutional change and the other proposals of the Labour Party," Mr Lang said.

In a deftly-worded response, Mr Ross reiterated Scottish Widows' neutral stance. The company's overriding concern was to protect the interests of policy holders and it was "vital" that under any constitutional arrangements there should be fiscal and regulatory cohesion across the UK for insurance, he said.

In common with any other business, Scottish Widows preferred to have as few changes to contend with as possible, but, Mr Ross concluded: "On the issue of devolution, we neither back it nor oppose it."

In 1992 Standard Life, Scotland's largest insurance company managing funds of totalling some pounds 50bn, and Scottish Widows were accused of trying to influence employees' after indicating that some operations might be moved to England if there was home rule.

George Robertson, the shadow Scottish secretary, said Mr Lang should "put up or shut up. If he cannot name his sources he should not indulge in this rather juvenile scaremongering".

It was clear that the more companies learnt about Labour's devolution proposals the more comfortable they were with them, Mr Robertson said. "If one compares what Standard Life and Scottish Widows were saying at the last election on the record to what they are saying now, it is nothing less than a sea change in opinion."

Widening the charge to industry in general, Mr Lang said Labour's policies would destroy Scotland's reputation as an investment centre. In 1995-96 Scotland had attracted a record pounds 1bn worth of investment and over 1,000 jobs a month had been created or safeguarded. "Within weeks" of a Labour victory, this flow would dry up, he said. But when pressed to name a single company that had told him it would leave Scotland or not invest if Labour devolved power to Edinburgh, he was unable or unwilling to do so.