Business seeks answers on independence

Business leaders in Scotland have demanded that politicians start to address tough economic questions about what independence would mean after settling the terms of the vote.

Iain McMillan, director of CBI Scotland, said he was glad the Scottish and UK governments had agreed on a single-question referendum, though he would have preferred it to be held before autumn 2014 because of the uncertainty it was causing for companies.

“We are yet to be convinced that Scottish secession from the United Kingdom would be in the best interest of business in Scotland,” he said.

Big questions about EU membership, defence policy and energy, transport and telecoms connections need to be answered by both sides, said David Watt, executive director of the Institute of Directors Scotland. The IoD plans to remain neutral.

However, Mr Watt said: “The number one question is the cost of doing business. If it’s more expensive, companies might be tempted to leave. If it’s cheaper, others might be tempted to come. Many people remain to be convinced that it’s going to be cheaper in a smaller country.”

Much of the Scottish business community, once seen as proudly Conservative and pro-Union, has so far kept its head down in the constitutional debate.

That is a legacy of the 1980s and 1990s, when businesses got out of step with public opinion in their hostility to devolution, only to see it overwhelmingly backed at the 1997 referendum.

Pro-Union sentiment remains privately strong among many companies, particularly larger ones that operate UK-wide and beyond and have most of their customers outside Scotland. That includes many banks, life assurers and fund managers that rely on access to the UK market and its unified regulatory and taxation regimes.

Owen Kelly, chief executive of Scottish Financial Enterprise, the industry body for the financial services sector, said his organisation was also neutral on whether Scots should vote for independence.

But, he added: “We do think that there are some big questions which need to be answered before the vote takes place – particularly around the terms of EU membership, the currency, financial regulation and the single market that currrently exists within the UK for financial services.”

Scotland’s nationalist government has indicated that it wants Scotland to stick with the pound, take a seat on the Bank of England’s monetary policy committee and share a financial regulator with the rest of the UK.

But Mr Kelly said such a monetary arrangement depended on the “full-throated support of the rest of the UK”. He added that it was his understanding the EU financial framework required a regulator in each member state.

Business opinion is not all on one side, however, Jim McColl, founder and chairman of Clyde Blowers, the engineering group – previously a supporter of full fiscal autonomy short of separation – recently said the likely absence of a “more powers” option on the ballot paper had persuaded him to back full independence.

Mr McColl was one of 200 business people who endorsed the Scottish National party before last May’s Holyrood election. Many of these stopped short of supporting independence, but faced with a choice, more may follow Mr McColl.

The SNP argues that an independent Scotland would have lower business taxes such as corporation tax, which would spur economic growth and generate income tax revenue.

But Mr Watt said it would not be easy for the SNP to make that case because “if one tax goes down, another tax usually goes up”.

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