Questions about Independence?

Should anything distract from the referendum campaign?

Last week, the Caledonian Mercury published an article in which the entrepreneur, Tony Banks, explained why he had come out in favour of a “Yes” vote next year. Today, we’re publishing a second list of questions from CBI Scotland which it believes need to be answered before other parts of the business community can even make up their minds. We’ve decided to print their document in full as part of the ongoing debate.

When we published the last set of questions, some readers criticised the decision on the grounds that the CBI was a “UK organisation”. While that it true (its name after all is the Confederation of British Industry), it has many significant Scottish members and thus has a right to be heard. And it is right that bodies like the CBI should be asking questions as, in our view, too much of the discussion has been emotional rather than intellectual

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The Scottish Government’s Independence White Paper – further 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.

CBI Scotland Logo2. This is the second paper in our series highlighting the issues and questions that businesses would like to see addressed in the Scottish Government’s forthcoming Independence White Paper. As indicated in our initial paper, the CBI has a rich history of engagement with governments, parliaments and others on constitutional public policy matters that affect business. Away from the public policy debate, we have also sought to encourage and assist our members in their practical consideration and assessment of what Scottish independence and constitutional change might mean for their organisation, their staff, their customers, supply chain and business operating environment.

3. As we have said previously, 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, and the CBI is committed to ensuring that the needs of the economy and business are properly reflected in the referendum debate. The upcoming publication of the Scottish Government’s proposed White Paper on Scottish independence is 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 second paper, developed by our member-led Referendum Working Group and subsequently considered and approved by the elected 45-strong Council of CBI Scotland, our members highlight further issues and questions that they would like to see addressed in the Independence White Paper. These issues are in addition to or expand on the ones identified in our initial paper.

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 (e.g. the EU). However for many other aspects the Scottish Government could and should provide clarity over what it would like to achieve, and a candid assessment of the benefits, risks and costs of doing so well in advance of the referendum. This would inform a productive public debate but also 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 publication of the Scottish Government’s Independence White Paper and would urge Scottish Ministers to consider publishing it earlier than currently envisaged in order to provide the greater clarity and certainty that businesses seek.

FURTHER KEY ISSUES TO BE ADDRESSED

Fiscal strategy

6. What fiscal rules if any would be applicable to an independent Scottish government, for example with regards to borrowing and national debt? Would targets be set to reduce or eliminate the public sector deficit and the national debt?

Duties, taxation and non-domestic rates

7. What income tax rates, taxable bands, allowances and reliefs would apply to those in employment and the self-employed, including reliefs for business expenses incurred whilst working? What would be the tax treatment given to encourage employee share ownership, and for loans from employers to staff for example for travel season tickets? What tax treatment would apply to non-domiciles?

8. Would an independent Scotland seek to retain or alter the 3 different rates of Value Added Tax currently applied to goods and services, including the items which are reduced-rated (e.g. heating oil) or zero-rated, as well as the range of exemptions? At what level of a company’s turnover would the ‘VAT threshold’ commence?

9. Would an independent Scotland apply a Bank Levy to commercial banks? What tax treatment would be applied to investment trust companies?

10. What taxes, rates and destination bands on air passengers or flights, if any, would apply in an independent Scotland, including for short or long haul connections, and would flights departing from airports in the Highlands and Islands continue to be exempt? What duties if any would apply to alcohol, including spirits, wine, beer and cider? What hydrocarbon oils duties would be applied to petrol, diesel, heavy oils, aviation gasoline, and biofuels? What tobacco duties would be applied to items such as cigarettes and cigars?

11. What if any rate of aggregate levy would be applied on the commercial exploitation of rock, sand and gravel? Would there be a distinct Scottish-only climate change levy and if so what rates would be applicable?

12. Would non-domestic rates reliefs that are currently uniform across the UK – e.g. for enterprise areas, properties used for the training or care of disabled persons – continue to be so?

13. What would be the implications for the ownership, assets and liabilities of state-owned shareholdings in Network Rail, Channel 4, Met Office, Ordnance Survey, Post Office Ltd, The Royal Mint, UK Hydrographic Office, Urenco, Working Links, Plasma Resources UK Ltd?

Export and business support

14. Which overseas markets and regions will be prioritised for consular support for Scottish business and leisure travellers? What transitional arrangements are envisaged for the provision of diplomatic representation at economic-facing international institutions such as the European Union, World Trade Organisation, World Bank, International Monetary Fund?

15. How will the functions of interest to business relating to the UK’s Office of Cyber Security & Information Assurance be discharged in an independent Scotland? How will the functions of relevance to business of the security service, intelligence service and GCHQ be discharged?

16. How will the functions and services of Ordnance Survey which affect and apply to business be discharged in an independent Scotland?

17. Will the Royal Mail or its Scottish successor, or indeed any liberalised system, continue to be subject to a universal service obligation which provides for mail to be delivered to business premises 6 days a week?

18. What approach would be taken to the regulation of commercial sales online, for example to do with contractual and company information?

Labour market and pensions

19. What rates if any would be set for statutory maternity pay, statutory paternity pay, and statutory sick pay?

20. How will state pensions be paid and administered? What would be the implications from the European Union’s rules on cross border pension schemes?

21. Would key markets be prioritised or have a premium service for visa services?

22. What system of employment tribunals would be put in place to determine disputes between employers and employees and consider claims to do with matters such as unfair dismissal, redundancy payments, or discrimination?

23. Would an independent Scotland seek to retain the four different rates which apply to the national minimum wage, namely the adult, apprentice and two youth rates?

Transport and energy

24. What if any implications will there be for the ownership of Network Rail and its associated rail infrastructure, operations and rail stations in Scotland? What implications if any will there be for the management and operation of – and allocation of capacity on – cross border (between Scotland and England) rail services, and will such services be subject to EU cross border rail regulation? What charging regime would apply for freight and commercial train operators using the rail network?

25. How would the functions of the Maritime & Coastguard Agency which apply to commercial shipping, ferries, and fishing be discharged in an independent Scotland? How would the sea related aspects of the Crown Estate be discharged? Maritime agreements? Would Scotland establish its own ship registry? Would a tonnage tax continue to apply or would alternative taxation arrangements for shipping be put in place?

26. What assessment has been made of the impact of Scottish independence on likely future upgrades and improvements to transport links between Scotland and the rest of the UK, for example the A1 and M74, west and east coast mainline rail enhancements, and High Speed Rail 2? What assessment has been undertaken of the impact on any potential future requests for Public Service Obligations to guarantee existing regional air services to London’s key interlining airports?

27. What tax incentives if any would be available to encourage the exploration and production of shale gas?

Intellectual property and industry standards

28. Will an independent Scotland seek to sign up to the various international patent and trademark protection systems such as the European Patent Convention, the Patent Co-operation Treaty, and Madrid Protocol, and over what period would it hope to do so?

29. How would the functions of the UK’s national standards body and the accreditation service be discharged in an independent Scotland?

Telecommunications and digital

30. What would be the approach to spectrum management of radio and broadcast frequencies, and which authority would have oversight of this and any responsibilities for licenses and auctions? What would be the approach of the Scottish telecommunications regulator to the national telephone numbering plan and the universal service obligation?

Entertainment and gambling

31. How would the functions of the Gambling Commission as Britain’s commercial gambling regulator, including licensing, codes of practice, compliance and enforcement, be discharged in an independent Scotland, if at all? What license fees and charges would be applied?

32. How would the functions of the National Lottery Commission, including licensing of any lottery operator, be discharged in an independent Scotland, if at all?

33. What taxes and duties if any would apply to gambling and betting, including rates, fees and duties on amusement machines, bingo, and machine games duty?

Pharmaceuticals

34. How would the functions of the UK regulatory and enforcement authorities which approve and license the use of medicines, drugs and medical devices be discharged in an independent Scotland? Will pharmaceutical companies need to apply to a distinct Scotland only regulatory and inspection authority for a license, and if so what fee structure would apply?

CBI Scotland
May 2013