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Questions on Independence

At the end of last year, the Director of CBI Scotland, in his New Year Message, posed rather a lot of serious questions which he believes need to be address as part of the debate on the Independence Referendum. Iain McMillan says that business needs the Scottish Government to assist with “due diligence” ahead of the vote.

He explains that “The Scottish Government is committed to publishing its White Paper on independence by the autumn of 2013. As part of their due diligence ahead of the referendum, many business leaders will carry out an assessment of the possible impact of Scotland leaving the United Kingdom on Scotland’s economy and their businesses. This gives rise to many questions and, as we go through 2013, a crucial year in this debate, undoubtedly further questions will arise. We hope very much that the White Paper will address these questions in full and provide the necessary supporting evidence.

“We have provided the Scottish Government with our initial paper “The Scottish Government’s Independence White Paper – issues that business would like it to address” and trust that this will be of assistance to Ministers in addressing the business community’s questions.”

That paper is published in full below as part of our intention of promoting active and serious discussion of the issues which everyone in Scotland should consider before they enter the polling station.

The Scottish Government’s Independence White Paper – issues that business would like it to address

INTRODUCTION

1. CBI Scotland is an independent not-for-profit business advocacy organisation funded by its members and representing firms of all sizes from across the country and from all industrial, commercial and business sectors. Our mission is to help create and sustain the conditions in which businesses in Scotland can compete and prosper for the benefit of all.

2. The CBI has a rich history of engagement on constitutional public policy matters that affect business. In 2006 we published a detailed position paper on the ‘Powers of the Parliament’. Since then we have contributed to the Scottish Government’s National Conversation, the Commission on Scottish Devolution (Calman), the Scottish Government’s discussion paper on devolving corporation tax, the UK and Scottish administrations’ consultations on the referendum process, HM Treasury’s consultation on devolved government bond issuance, as well as the current Commons’ Scottish Affairs Committee and Lords’ Economic Affairs Committee inquiries into independence. We recently published a ‘Referendum Toolkit’ for our members to assist their practical consideration and assessment of what Scottish independence might mean for their organisation, their staff, their customers, supply chain and business operating environment.

3. The decision on Scotland’s future is rightly and ultimately one for the electorate. However, industry and wider civic society has a role to play too. The CBI’s Referendum Strategy, developed and approved in May 2012 by the members of our elected CBI Scotland Council, commits us to ensuring that the needs of the economy and business are properly reflected in the referendum debate. The Scottish Government’s proposed White Paper on Scottish independence provides a key opportunity to provide a thorough and detailed explanation and vision of what independence would look like, how it will be achieved, what it would mean for our economy and the management of economic policy, and what the business environment would look like and how it would work.

4. Our members are keen to understand the Scottish Government’s plans and vision for the business landscape in the event of independence. In this initial paper, developed by our Referendum Working Group and approved by the CBI Scotland Council, our members highlight issues and questions that they would like to see addressed in the White Paper. Many of the issues and questions highlighted revolve around the regulatory and taxation structure and the approach to implementation that would apply to certain areas of business life or sectors, and this paper is structured accordingly.

5. As we have said previously , there are gaps in knowledge about what Scottish independence would mean for business and our economy as well as what the business environment would look like in the event of independence. We recognise that in a few instances complete clarity would have to await the outcome of any negotiations between the Scottish and UK administrations following any referendum vote in favour of independence, or between the Scottish administration and relevant international institutions such as the EU. However for many other aspects the Scottish Government could and should provide clarity over what it would like to achieve and how it would go about it well in advance of the referendum, in order to inform a productive public debate but also to provide certainty and allow businesses and others to assess the merits of what is being proposed and plan ahead accordingly. We look forward to the White Paper and would urge the Scottish Government to consider publishing it – or at least those elements relating to macro and micro-economic policy – earlier than currently envisaged in order to provide the greater clarity and certainty that businesses seek.

KEY ISSUES TO BE ADDRESSED

6. There are a number of areas that business would like greater clarity on, and the key areas are:

Creating an independent state

 A fully independent Scotland would require its own full panoply of government departments, for example: a treasury, a central bank and revenue authority; a department of social security dealing with pensions and benefits; a foreign office with embassies and consulates; armed forces; a ministry of the interior responsible for citizenship, immigration and border control; and various commissioners and regulators, licensing and enforcement authorities (e.g. dealing with issues such as pensions, energy, telecommunications, health and safety, takeovers, advertising standards etc). We would expect the White Paper to provide the Scottish Government’s estimate of the set up and on-going costs to the public purse of this sovereign government infrastructure including its plans for disentangling Scotland from the UK institutions which presently provide these services.

 We would also expect the White Paper to set out in as much detail as possible the Scottish Government’s plans for the transition to independence following any vote in favour, including the likely length of the negotiations that will take place. This ought to include the steps being taken to assemble the necessary expertise given that, by definition, many of the areas to be negotiated are currently out-with existing devolved responsibilities. It should answer questions such as: What transitional arrangements are envisaged for the provision of (currently reserved) services in the short and medium term aftermath of a vote in favour of independence, and what services will it prioritise for early transition? For example is it expected that HM Revenue & Customs will continue to collect taxes until such time as Revenue Scotland or the appropriate tax collecting authority is able to, and if so what is the transition period likely to be?

The fiscal and economic position of an independent Scotland

 The Government Expenditure and Revenue in Scotland (GERS) 2010-2011 data shows a non-oil Scottish net fiscal Deficit of £18.6bn, 15.6% of Scottish GDP, including a population share to Scotland of the total UK expenditure on financial sector interventions. The Scottish Government adjust the data, principally by adding back 90.5% of oil and gas tax revenues to show a net fiscal deficit of £10.7bn, 7.4% of Scottish GDP. The White Paper should be able to answer questions such as: How much oil and gas would be allocated to Scotland as a result of independence negotiations? Will an independent Scotland provide tax relief for decommissioning costs of North Sea oil and gas platforms, and to what extent?

 The White Paper needs to explain fully and clearly: How the Scottish Government would fund an independent Scotland’s current levels of public spending in the current era of declining and volatile oil and gas production (down from a peak of 4.5m barrels a day in 1999 to 1.8m barrels a day in 2011 and declining further over time). What tax raising philosophy the Scottish Government would pursue in terms of business competitiveness and wealth redistribution? Presumably an independent Scotland would need to charge taxes on individuals and businesses principally on the basis of taxable incomes and profits earned in Scotland. This would mean segregating those incomes and profits earned in Scotland from the remaining parts of the United Kingdom. Therefore, what are the Scottish Government’s estimates of the initial and on-going direct and indirect costs to the public and private sectors of separate PAYE and personal and business tax assessment and collection systems in an independent Scotland?

 A critical issue for business is what the currency of an independent Scotland would be following the secession negotiations. For example, if the desire is to retain Sterling what implications if any would arise should there be a growing divergence between the economies of Scotland and the rest of the UK? What assessment if any has been made of the likely fiscal and monetary conditions that would have to be entered into if a “Sterling zone” arrangement was to be agreed with the rest of the UK? Is it the aim of the Scottish Government to eventually join the euro (or a requirement or condition of EU membership), and if so, how will it pursue the necessary currency and economic convergence if monetary policy is in the meantime determined on a pan-UK basis?

 Allied to this are issues such as: Who would be responsible for setting and meeting the inflation target? Who would be responsible for setting the level of interest rate, to control inflation and offset the risks of the international financial markets holding our currency? If an independent Scotland does not continue to use Sterling in the future, what are the Scottish Government’s estimates of the costs to businesses in Scotland of exchange rate risk and currency conversions between Scotland and England?

 Has the Scottish Government assessed and quantified the level of risk of some of Scotland’s firms not remaining headquartered in an independent Scotland, given that for example the majority of their customers, shareholders and other stakeholders may reside in a foreign country, namely the rest of the UK? Moreover, has the Scottish Government carried out a risk assessment of potential losses of business to Scottish firms operating in the remaining parts of the United Kingdom after secession?

Issues relating to foreign affairs and defence

 Many aspects relating to the foreign and defence policy of an independent Scotland would have salience for business. For example, Scotland’s membership of the EU, the international trade agreements and reach of its consular service, and the terms of those relationships, would affect trade and employment prospects. Defence related employment is important too to Scotland’s economy, and the White Paper ought to outline the approach that would be taken in order to sustain the 6,500 jobs which exist at the Faslane naval base (increasing to 7,700 as the UK submarine fleet is moved there) and the 5,000 jobs in Scotland’s naval shipbuilding and ship repair industry, which are largely dependent on UK military orders. In addition, what assessment has the Scottish Government made of the effect of independence on the prospects of and employment in the defence-related industries which supply equipment to the UK or other NATO allies?

ISSUES AND QUESTIONS

Detailed questions on these areas and others are outlined below, and which our members would like the Scottish Government’s White Paper to address.

CURRENCY AND FINANCIAL OVERSIGHT

7. Earlier in this submission we highlighted a number of questions relating to the currency of an independent Scotland: What would the currency be? How would Scotland’s inflation target be set, and how would it be met? What level of interest rates would be set to control inflation and offset the risks of the international financial markets holding any separate Scotland-only currency? What are the Scottish Government’s estimates of the benefits and costs to businesses in Scotland of exchange rate risk and currency conversions between Scotland and England?

8. In order for the public debate to be as productive and as informed as possible and to help companies and others assess the merits of what is being proposed more detail and information is required about: for example, what would be the monetary and fiscal framework and policy that would be applicable if Scotland were to become independent? If an independent Scotland was to retain Sterling and monetary policy were to continue to apply across the UK, what level of influence would the Scottish Government have over it, and would any parameters or restrictions apply e.g. would the Scottish Government be prepared to agree to constraints on its spending, taxation and borrowing, and if so to what extent? What assessment has been undertaken of the stability or otherwise of creating a monetary union without a concurrent political or fiscal union?

9. This raises the question: Would an independent Scotland have its own central bank? If yes, what would be the governance arrangements for this central bank, and would it have a degree of independence as currently enjoyed by the Bank of England (BoE)? Would this separate Scottish central bank have an explicit objective of protecting the stability of the financial system as is now the case with the Bank of England? What would be the set up and on-going running costs of establishing the central bank, and has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively?

10. If no, and the Bank of England continued to be the central bank, what governance arrangements does the Scottish Government believe would be appropriate for the BoE? For instance, would the Scottish Government seek to ensure Scottish representation on the Monetary Policy Committee or other committees? What assessment has been made of the UK authorities agreeing to such a request?

11. Who would act as ‘lender of last resort’ to Scotland’s financial sector and government, and be prepared to stand behind financial services firms with large deposit or policyholder liabilities? Who would be responsible for any significant injections of new capital should that be required? Would this ‘lender of last resort’ be willing to guarantee deposits or the policyholders of Scottish financial providers, and if so to what extent and on what terms?

12. This inevitably raises questions as to the financial services regulatory framework and supervisory regime that would be put in place in an independent Scotland. Would an independent Scotland have its own regulator(s) and licensing authorities, or would it seek to continue within the current and planned UK regulatory framework (including the Financial Conduct Authority and the Prudential Regulation Authority) and indeed would that be possible and if so on what terms? Is it the Scottish Government’s view that EU legislation does not require each Member State to have its own financial regulator? What would be the proposed legislative timetable for establishing any new regulator(s)? Would the regulator’s future approach seek to mirror that in England and the remaining part of the UK, or would it diverge over time and to what extent? What would be the governance arrangements for the financial services regulator(s), and what degree of independence from government would it have? What would be the set up and on-going running costs of establishing the regulator(s), and has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively?

THE EUROPEAN UNION AND FOREIGN AFFAIRS

13. Earlier in this submission we highlighted a number of issues related to the European Union, e.g. We asked about an independent Scotland’s expected diplomatic footprint overseas – which includes the European Union itself and the 27 individual nations of the EU. We also asked: what would be the estimated set up and on-going costs of establishing this overseas diplomatic presence?

14. In order for the public debate to be as productive and as informed as possible and to help companies and others assess the merits of what is being proposed more detail and information is required about a number of issues, such as: Would an independent Scotland automatically become a member of the EU or would it have to apply? Would the Scottish Government apply immediately for membership if that were required? What is the process for an independent Scotland becoming a member of the EU and on what terms? Whether in doing so it would be required to join the European single currency, the ERM II and new fiscal pact? Joining ERM II and the euro requires currency convergence, so how would an independent Scotland that retained Sterling seek to target and accomplish this when monetary policy would be the preserve of the Bank of England? What are the estimates of an independent Scotland’s likely annual fiscal contribution to the EU budget and receipts from it? Would an independent Scotland have automatic opt-outs from the Schengen Agreement and immigration policy that have been granted to the UK, or would it have to negotiate these and indeed would it seek to do so?

15. In addition, what would be an independent Scotland’s approach to issues like employment rules and regulations emanating from the EU, and would its influence be more or less than is currently the case?

16. Would an independent Scotland seek to join the World Trade Organisation, or does it believe that membership would be automatic? What about membership of the OECD, IMF, and World Bank?

17. What level of consular support abroad is envisaged for Scottish business and leisure travellers, and how would this be provided?

PENSIONS AND SOCIAL SECURITY

18. Earlier in this submission we highlighted a number of questions relating to pensions and social security, e.g. Will estimates be forthcoming for the set-up and on-going costs of establishing departments of state and associated regulators? This would equally apply to the creation of a pensions and social security department in an independent Scotland.

19. In order for the public debate to be as productive and as informed as possible and to help companies and others assess the merits of what is being proposed more detail and information is required about a number of areas, for example: Which authority would be responsible for regulating pension schemes offered to customers in an independent Scotland? What kind of regulatory framework and consumer protection authority and regime would be established? Would an independent Scotland seek to establish a Pension Protection Fund as is the case currently in the UK, and what framework and levies would be put in place as a result? In which currency would employer-paid pensions be paid, in Sterling or another currency if adopted? If the latter, would pensioners be protected against currency risks and costs of conversion? Would an independent Scotland have its own version of the financial services compensation scheme, what thresholds would apply, and what would be the implications if any for the public purse? Would there be a financial ombudsman service, and how would it be funded? What taxation regime would be put in place to cover pensions and other forms of personal savings? Would an independent Scotland continue to have pensions auto-enrolment, and would the same contribution rates for employers, employees and the state apply? Would an independent Scotland continue to have access to the National Employment Savings Trust (NEST) or would it seek to establish its own arrangements? If the latter would firms be compelled to join the Scottish NEST or be able to choose their own schemes? If new regulatory regimes were established, how would it be determined which regime applied to a pensions scheme operating in both Scotland and the rest of the UK?

20. What implications would there be for an independent Scotland assuming full responsibility for public sector pensions and liabilities? What is the Scottish Government’s assessment of an independent Scotland’s portion of unfunded public sector pension liabilities? Would state pension provision mirror that elsewhere in the UK, and would similar rules apply for eligibility and retirement ages? Would the pension regime for personal and employer/occupational schemes mirror that elsewhere in the UK, or would it progressively diverge over time? With the pensions of university staff and others currently organised on a UK basis, how would this be resolved in the event of Scottish independence? In the case of the former, i.e. university staff, would it have any funding implications for Scotland’s higher education sector?

ECONOMICS, TAXATION AND NON-DOMESTIC RATES

21. Earlier in this submission we highlighted a number of questions relating to economic policy making and taxation, e.g. Would an independent Scotland have its own Treasury and revenue authority and what would be the set-up and on-going costs of establishing these? Would an independent Scotland be fiscally sustainable in its own right, particularly in an era of declining and volatile oil and gas production, and what would be the implications for taxation and levels of public expenditure? What estimates have been undertaken of the initial and on-going costs to the private and public sectors of disaggregating PAYE, personal and business tax assessment and collection systems in an independent Scotland? Has any thought been given to the implications for firms from, in some instances, the bulk of their customers being resident in a foreign country post-independence?

22. In order for the public debate to be as productive and as informed as possible and to help companies and others assess the merits of what is being proposed more detail and information is required about a number of areas, for example: Will the Scottish Government’s White Paper be accompanied by an authoritative economic and regulatory assessment of the impact of independence, a pro-forma balance sheet and business plan, including the likely impact on business competitiveness and underpinned by transparency over assumptions made? What would be the implications for the single market and level playing field on taxation, laws and rules that firms currently benefit from across the UK?

23. What share of the UK’s public debt would Scotland assume were it to become independent, what would be the likely annual interest payments on this debt and what implications would this have for public spending, borrowing and taxes? Has research been undertaken to establish what the expected credit rating of Scottish sovereign debt might be, and if not what plans are there to do this? What implications if any would this have for the cost of borrowing by firms? What would be the implications for the ownership, assets and liabilities of state-owned enterprises and companies, e.g. Royal Mail, the relevant banks, as well as state-owned shareholdings in companies, e.g. NATS?

24. What would be an independent Scotland’s approach to fiscal policy, and what would be the implications for taxation of business? What would be the governance arrangements for the Treasury and the revenue collection authority, and has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff these bodies effectively?

25. How would corporate profits earned out with Scotland be treated for tax purposes? Would an independent Scotland retain the two main rates of corporation tax and the tax base, and the related Research & Development tax credits and reliefs currently available in the current UK system? A number of current UK tax incentives, including many capital allowances, only exist because they pre-date the introduction of EU State Aid rules which now proscribe which new allowances are allowed; would an independent Scotland be able – indeed would it seek – to retain such allowances? Would tax relief be available on pension contributions, long term savings products, ISAs and SIPPs, and to what extent? Would Gift Aid apply and would the regime and rates be different to those currently in place across the UK? What customs and excise duties would apply? What regimes if any would apply for capital allowances, the taxation of oil and gas production, employers and employees national insurance contributions, insurance premium tax, carbon reduction commitment, capital gains tax and entrepreneurs relief?

26. What will be the taxation position of Scots with equity investments listed on the London Stock Exchange, and for foreign investors in companies registered in Scotland? Will there be a need for double tax relief agreements between England and Scotland? With regard to double taxation relief and withholding taxes, would an independent Scotland have access to existing UK bilateral double tax treaties with other countries or will new treaties have to be negotiated? If the latter which nations would an independent Scotland seek to prioritise for negotiations?

27. What plans if any would an independent Scotland have for establishing an oil fund? What is the expected timetable for establishing this fund and what level of contributions to it are expected?

28. Would the non-domestic poundage rate, and the methods of valuing commercial and industrial properties, continue to be pegged to those in England? Would non-domestic rates be applied to offshore oil and gas and renewables installations and infrastructure, ending the current annual exemption from business rates?

DEFENCE

29. Earlier in this submission we highlighted a number of areas relating to defence, e.g. What would be the set-up and on-going costs of an independent Scotland establishing its own armed forces? How would an independent Scotland replace defence jobs at Faslane and in shipbuilding and ship repair employment in Scotland which is currently reliant on UK military orders? What assessment has been made of the effect of independence on employment in defence related industries?

30. In order for the public debate to be as productive and as informed as possible and to help companies and others assess the merits of what is being proposed more detail and information is required about: What approach to foreign policy would be adopted by an independent Scotland and what would be the implications for the profile of its defence capabilities? How would an independent Scotland protect and defend Scottish interests and trade routes overseas?

31. Additionally, how likely is it that Scottish based defence and naval contractors will be able to win defence related work from foreign governments? What would an independent Scotland’s defence industry strategy be, and how would it seek to sustain exports? What would be the approach to public procurement of an independent Scotland’s defence department? What implications if any are there for the cost of purchasing new command and control systems and military hardware as a result of the loss of economies of scale gained from UK-wide purchasing?

LABOUR MARKET, EMPLOYMENT POLICY AND HEALTH AND SAFETY

32. Would an independent Scotland have an automatic opt-out from the Schengen Agreement, and if so would it choose to adopt the opt-out? What if any implications might this have for the Common Travel Area currently in existence in Britain, Ireland, the Isle of Man and the Channel Islands? Would an independent Scotland seek to establish a body similar to the existing Migration Advisory Committee to advise it on the economic and business needs of immigration policy, and would a cap be placed on immigration numbers? What regime would be established to determine the availability of work permits for skilled and non-skilled migrants, students, and intra-company transfers, and what if any fee structure would exist in terms of charging for work permits? Will divergent welfare, social protection and pension arrangements in Scotland from elsewhere in the UK make the labour market more or less flexible?

33. What would be the approach to employment policy and practice after independence? What about maternity and paternity rights, and flexible parental leave? What about trade union rights, industrial relations and strike ballots? Would there be a distinct equal opportunities regulator to enforce equality legislation and provide advice and guidance to firms? Would an independent Scotland have its own distinct national minimum wage, and would a body similar to the Low Pay Commission be created to make recommendations on the level set? How would the regulatory and enforcement functions of the existing Health & Safety Executive be discharged in the event of independence, and what inspection fees regime would apply? What would be the approach to corporate homicide rules and sanctions? Would an independent Scotland seek to use taxpayers money to fund a service similar to ACAS?

ENERGY

34. Would the GB market for electricity remain, in terms of regulation, pricing, consumer subsidies for renewables, and transmission charging, and what would be the implications for domestic energy generation? Would the electricity transmission network (the National Grid) remain as a single entity, or would Scotland have its own distinct Grid operator? How would a separate Scottish energy regulator , one distinct from the current pan-GB Ofgem, be constituted and resourced? What would be the approach of a Scottish regulator to transmission charging, and how might that impact on consumer (business and consumer) pricing?

35. Would consumers in the rest of the UK continue to support Scottish renewables through the Renewables Obligation beyond the existing grandfathered arrangements, or alternatively buy renewable certificates from the cheapest sources? If the latter, how might this impact on ambitions for Scottish renewable energy? How would the EU’s renewable energy targets be apportioned following independence if an independent Scotland becomes a member state?

36. Would an independent Scotland seek to continue with existing initiatives such as the Renewable Heat Incentive, Feed-in Tariffs, Energy Company Obligation, and the Green Deal?

37. What would be the regulatory apparatus and approach to regulation of the oil and gas sector, and of civil nuclear power generation? What approach would be taken towards decommissioning of oil platforms and nuclear generation?

COMPETITION POLICY

38. Would a distinct Scotland-only competition or anti-trust authority be established, or would an independent Scotland seek to remain under the auspices of the proposed pan-UK Competition & Markets Authority?

39. What would be the approach to competition policy, and to consumer protection and product standards? Would it be light touch or not? What might be the implications for firms trading in Scotland and across the rest of the UK? What license fees and charges would apply?

CORPORATE GOVERNANCE AND TAKEOVERS

40. What corporate governance regulatory body(s) and regimes would be put in place, for company directors, accountants, auditors, actuaries, and investors? Would the UK Financial Reporting Council’s remit continue to extend to Scotland, and if so for how long, or would an independent Scotland have its own such body with monitoring, investigative and disciplinary functions? If Scotland is to have its own distinct regulator, has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively? Would Scotland have its own distinct approach, or would firms be expected to adhere to the existing UK Corporate Governance Code and standards? Would a distinct Scottish code of conduct be statutory? What approach would be taken to gender representation on company boards, and to executive remuneration?

41. What approach would be taken to the registration of incorporation of companies and limited liability partnerships? Would Companies House automatically fall under the remit of the independent government?

42. What supervisory, regulatory and tax regimes would be put in place governing takeovers, mergers and acquisitions, in order to protect shareholders and investors? Would the ambit of the existing UK Takeover Panel continue to apply in an independent Scotland, or would there be a new distinct Scottish version? If Scotland is to have its own distinct regulator, has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively? What level of fees, if any, would firms be liable for in order to recover the costs of regulatory consideration of mergers? Would an independent Scotland apply its own distinct Code of general principles and rules for takeovers?

BROADCASTING AND TELECOMMUNICATIONS

43. What would be the regulatory apparatus and regulatory approach to the broadcasting and telecommunications sectors following independence? Would there be a distinct Scottish regulator, or would Ofcom’s remit extend to Scotland as is the case at the moment? If Scotland is to have its own distinct regulator, has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively? Would Scotland have its own Broadcasting Code for television and radio broadcasters?

44. Would an independent Scotland seek to have a distinct public service broadcaster? If so what level of service would it be expected to deliver, and how might it be funded?

AVIATION AND RAIL

45. Would there be a distinct aviation regulatory authority and regulatory approach, or would Scotland seek to retain the pan-UK Civil Aviation Authority (CAA)? If Scotland is to have its own distinct aviation regulator, has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively? Would the running costs of a distinct regulatory authority be met from charges on those it regulates, as is the case with the UK CAA? What if any implications would there be for air traffic control, and the state owned shareholding in NATS? What if any implications would there be for ‘duty free’ at airports? What aviation taxes if any would apply?

46. Would an independent Scotland have its own distinct regulatory, enforcement and licensing regime for cross-border railway operators and health and safety in the rail industry, or would it seek to retain the pan-UK Office of the Rail Regulator?

INTELLECTUAL PROPERTY RIGHTS AND COPYRIGHT

47. What will the regulatory and enforcement regime for intellectual property rights, copyright, designs, patents and trademarks be, and who will oversee it? How would the functions of the Intellectual Property Office be discharged in an independent Scotland, if at all? What will be the duration of copyright for literary, broadcast, typographical and other creative or artistic works? What if any implications would there be for territorial publishing rights?

DATA PROTECTION

48. What sort of data protection registration and enforcement regime would apply for companies and consumers, and what fee structure would apply? Would there be a distinct Scotland-only regime to which firms must register?

ADVERTISING

49. Would Scotland have a distinct independent regulatory and enforcement body for advertising across all media, or would it seek to retain the pan-UK Advertising Standards Authority and associated codes of practice? If Scotland is to have its own distinct advertising regulator, has any attempt been made to assess the gaps in skills, expertise and knowledge that would need to be overcome in order to staff it effectively? How would a distinct Scottish regulator be funded, with a levy on the cost of buying advertising space and if so at what rate? Would the emphasis remain on self-regulation of non-broadcasting advertising, or would a different approach be taken?

RESEARCH AND INNOVATION

50. What funding streams and distribution arrangements would be put in place to replace the existing availability from the UK Research Councils and UK charitable institutions? Would alternative arrangements be put in place to spur collaboration and knowledge exchange between Scottish higher education institutions and their equivalents in the rest of the UK? How would the functions of the Technology Strategy Board as the UK’s national innovation agency be discharged in an independent Scotland, if at all? What about the functions of interest to business that fall within the ambit of the Energy Technologies Institute and the UK Space Agency? What are the implications for Research & Development tax credits, and the Patent Box relief available on profits earned on patented inventions? If Scotland became independent would higher education institutions still be able to charge students from the rest of the UK tuition fees to the same extent or at all? If not how would universities be expected to plug the financial shortfall?

EXPORT FINANCE, TRADE AND BUSINESS SUPPORT

51. Would an independent Scotland seek to retain a suite of export credit finance, guarantees, insurance and letters of credit along the lines of that which is currently available to Scottish firms through UK Export Finance? Would a distinct Scottish version of the Export Guarantees Advisory Council be established?

52. Would there be a distinct import and export licensing regime for controlled goods, and would there be a distinct Scottish version of the Export Control Organisation to provide guidance and advice to businesses? Would UK-wide anti-corruption and bribery legislation remain, or would a new Scottish regulatory and enforcement regime apply?

53. What would be the implications of independence for existing support mechanisms such as the Green Investment Bank, Enterprise Finance Guarantee and Business Growth Fund?

© CBI Scotland
Dec 2012

SIMILAR ARTICLES

  • JoeThorpe1963

    The government should buy advertising space on all the Scottish national daily newspapers & print that on pages 2 & 3 for all to read Even Alex Salmond would take a deep breath

  • Concerned

    The CBI in Scotland is neither Scottish and neither represents Scottish Business in any shape or form. They are a London lobby group with an office IN Scotland and represent about 4% of Scottish business.

    They are pro Union and should state all of the above for full public awareness of their leanings and structure.

    Did the CBI create a parallel list of Question for the impact of independence to South of the Border for the UK Government to answer? The answer is No. Why not?

    Many of the questions are legitimate though and we should expect responses. Eg Q17 and already the UK government believes that UK Embassies and services are in fact 100% English when patently they are pro rata Scottish assets and services.

  • R MacLeod

    moving on to Jan 28th I bet same Mr MacMillan has no such concerns over Cameron’s EU Referendum.
    Not a cheep has been heard form this charlatan, seems the delay is ok for business unlike Scottish Referendum.
    This man’s views are tainted and biased

  • Old Smokey

    Im sorry, but most of whats been written above is absolutely stupid
    First ,as has already been pointed out CBI Scotland does NOT speak for all business in Scotland. As for Iain McMillan he is highly bias and known Labour supporter, so I would take his word withy an extremely large pinch of salt. The questions are completly banal to say the least, such as ‘Would there be a distinct aviation regulatory authority’ I think it would be reasonable to say that Scotland would have ALL distinct regulatory authorities, including one for aviation. Scotland would, like the Isle of Man for example, have its own IATA / ICAO national prefix and have its own aircraft register, with all revenues pertaining to such.

  • Daibhidh

    At first I thought this might, at long last, be a positive and balanced contribution from the CBI, but no. Scores of these questions relate to choices of successive independent Scottish governments and simply cannot be answered at this stage. The legitimate questions are simply overwhelmed by partisan posturing….