BRITISH BUSINESSES have been left with little idea of the economic and financial consequences of the Scottish referendum after the Treasury and Scottish National Party published contradictory claims about the financial cost of Scottish independence.
In analysis published in May, the Treasury claimed Scottish independence would cost financial institutions between £1.5bn and £2.7bn in restructuring. It also suggested that a 13% rise in the tax take, or an 11% cut to public services, would be needed in Scotland to maintain current tax levels in the country.
However, the SNP’s own analysis suggested independence would see tax receipts up £5bn by 2030 and drive oil and gas production up 14% between 2013 and 2018. Moreover, it said, a 3.3% rise in employment would move it up to the level of the top-five performing countries in the OECD and could increase revenues by £1.3bn a year, by 2029/30.
Depressingly for finance directors of businesses across the country that could be hit by the outcome of the Scottish vote in September, the two parties’ analysis was followed up by the usual mud-slinging. Chief secretary to the treasury Danny Alexander accused the SNP administration of making the case for leaving the UK on a “false prospectus”, while a spokeswoman for Scotland’s finance secretary has accused the Treasury of producing “bogus figures”.
Indeed, ICAS director of taxation Elspeth Orcharton accused the parties in the debate of becoming too “shouty” and criticised the lack of detail provided by both over their campaigns.
The standard of output, she said, “falls short of the informative and detailed financial memorandum that might be expected to accompany even the smallest piece of parliamentary legislation at Holyrood or Westminster at the moment”.
She added: “In the independence White Paper, costs were described as ‘a small proportion of an independent Scotland’s total budget’. How small is ‘small’? No further explanation is in the White Paper.”
Orcharton was speaking after the release of the institute’s report Scotland’s Tax Future; Taxes Explained, which outlined the need for voters to have more detail on the costs and practicalities of setting up a new tax system for an independent Scotland. It also lays out challenges over the practicalities and timescale of setting up a new tax system.
The CBI concurred, and in a speech at the body’s annual dinner, CBI president Sir Mike Rake claimed the case has not been made that an independent Scotland would be better for the British economy.
“Ultimately, because of the range of unknown and unforeseen consequences of independence, it is difficult to see how independence would be better for investment and for jobs,” he told an audience of business leaders and senior politicians.
Rake also suggested that drawing an international border between Scotland and the rest of the UK would create costs for businesses and households on both sides of the border and claimed the “majority of businesses” across the country want Scotland to stay in the UK.
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On the issue of retaining the pound, Rake said a sterling union “would lack many of the conditions that are required for a stable currency to function” and drew parallels with the collapse of Czechoslovakian monetary union following that country’s separation into the Czech Republic and Slovakia in 1993.
In February, Standard Life announced it had put contingency plans in place to relocate its operations if Scotland should vote for independence. In an extract from its latest results, it said it would consider relocating its operations if the Scottish people vote to leave the union.
Chief executive David Nish said many issues regarding independence are yet to be resolved. These issues include the currency that an independent Scotland would use; its membership of the EU; the shape and role of the monetary system; financial services regulation and consumer protection; and the approach to individual taxation, especially regarding savings and pensions.
Standard Life, headquartered in Edinburgh, has been based in Scotland for 189 years.
Chairman Gerry Grimstone said: “We are very proud of our heritage. Scotland has been a good place from which to run our business and to compete around the world. We very much hope that this can continue.
“But if anything were to threaten this, we will take whatever action we consider necessary – including transferring parts of our operations from Scotland – in order to ensure continuity and to protect the interests of our stakeholders.”