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The Scottish Council for Development and Industry (SCDI) has published a report which summarises its discussions with leading business people across Scotland on the economic aspects of the constitutional debate. Called Future Scotland: Discussions and Priorities, the report outlines the main views and priorities of SCDI members following a series of in-depth interviews, discussion events and an online survey, all of which focussed on Scotland’s long-term economic priorities in the global economy.

Professor Lesley Sawers Chief Executive, SCDI

Professor Lesley Sawers
Chief Executive, SCDI

This latest report follows three others — on Macroeconomic and Fiscal Sustainability, Energy and Europe and International — which also look at the evidence in each of these areas and pose key questions to both sides of the debate.

In the view of Professor Lesley Sawers, Chief Executive of SCDI, the Council’s role is “to promote increasing sustainable economic development for Scotland. In fulfilling this non-political role, our members asked us to facilitate and inform the discussion on key economic aspects of the debate on Scotland’s constitutional future, particularly in the macroeconomic, energy and international policy areas. This report is the product of detailed discussions with businesses and civic organisations representing sectors and regions around Scotland – it summarises their views, priorities and questions, and raises issues for both sides of the debate to address. In an increasingly competitive global economy, the constitutional debate must focus on how we best secure SCDI’s priority of long-term economic growth for Scotland.”

As part of the debate on Scotland’s constitutional future, the Caledonian Mercury will publish the views of people of varied persuasions about why they are taking a particular stance. One of Scotland’s leading businessmen, Tony Banks, has just declared his support for Scotland becoming an independent country; he also joined the board of Business for Scotland, a pro-independence newsletter. Falklands veteran Tony is the Chairman of Balhousie Care Group, Scotland’s largest private care home provider comprising 27 care homes and employing more than 1,000 staff.

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Why I will be campaigning for a Yes Vote By Tony Banks

Tony Banks

Tony Banks

In my view, there is a vote for independence in the hearts of most Scots. But emotion apart, it’s vital we use our heads to understand the rationale for putting Scotland’s future in Scotland’s hands.

I recognise that within the UK our futures are intertwined. I am both Scottish and British. I care not only about my fellow Scots, but about everyone across these isles. So let me explain why I am convinced a Yes vote in next year’s referendum will be good for Scotland – and the rest of Britain and Northern Ireland.

First, we have to tackle the blight of inequality. The UK is currently the fourth most unequal country in the developed world. The Fiscal Commission Working Group, whose number includes Nobel Laureate economist Professor Joe Stiglitz, says that since 1975 the UK income gap has grown faster than in any other developed country. And inequality, he says, is one of the biggest inhibitors of economic growth.

Professionally, I am involved in the care home sector. Our company helps elderly people who need support get the most from their latter years. In doing so, we contribute to the economy by providing employment, paying taxes and creating wealth. I, therefore, have a particular interest in Professor Stiglitz’s central message that supporting those most in need is key to promoting broader economic health. Fairness and prosperity are two pieces of the same jigsaw.

Balhousie Care Group

Balhousie Care Group

This resonates with business people like me. For example, I want to hire the brightest possible and most committed people with a vocation in caring – their socio-economic background matters not. It is also in the interests of a stable economy to have high levels of productivity – and that means giving everyone of working age a fair opportunity to realise their potential.

Secondly, the leading international economists writing the Fiscal Commission report concluded that Scotland could not tackle inequality without a change to the economic and political model of the UK. We need to consider as voters whether the UK offers the optimal economic and political model to achieve greater equality – and sustainable economic growth.

It is clear that in this respect the UK is not OK. We have a London-centric and short-term focused system that has failed to learn the lessons of the financial crisis or address sectoral and geographic imbalances.

Population in London and the South-East is expected to rise by two million over the next seven years. But the latest economic figures suggest no improvement in the balance between manufacturing and services despite the concerns of senior figures on the left and right of the economy and politics, including Lord Heseltine. These voices are not opposed to the growth of financial services in London or elsewhere. Rather, they recognise that sector’s sustainable success is as much dependent on the development of the wider economy as any other.

A Yes vote next year can be the trigger for major reform that will be in the long-term interests of the City of London and the rest of the UK. Westminster needs to recognise that by letting go and allowing other parts of these islands to compete and create wealth it will benefit everyone.

The numbers going back decades don’t support the belief that London’s performance will trickle down to the rest of the country, be that the north-east of England or the central belt of Scotland. We have a sound financial basis on which to prosper independently but our potential is constrained by the Westminster straightjacket. Scotland needs the powers to compete and both competition and fairness are good for Britain’s economy.

Change in Scotland would mean change in London too

Change in Scotland would mean change in London too

Independence should be seen as a catalyst for structural reform across the UK. George Osborne worries about this because it involves change and he is more comfortable with the familiar. For him, that involves tailoring policy towards a City of London-led recovery pursued – not because it is necessarily sustainable – but because it retains power and improves the prospects of short-term political success in the South-East of England where elections are decided.

I was not sure about declaring my views on independence so early in the debate – that was until Mr Osborne came to Scotland last month and continued the convention favoured by successive Westminster governments of trying to pull the wool over our eyes. We have been told for generations that we were too poor and too small. Now, because those arguments have been disproven (we more than pay our way in the UK), the same people pretend that everything about independence is complicated and difficult. They reckon if they muddy the waters enough, Scotland will lose the confidence to vote yes next September.

But we mustn’t forget that the referendum is essentially about the right to choose. Will we choose to take Scotland’s future into our own hands – or leave it with politicians in a Westminster system that isn’t working for us? Even when, as an independent country, we are co-operating with other countries in these isles – whether it be on currency, pensions, defence or financial regulation, we’ll be free to make choices that are in our interests.

My third factor is something we choose already – our national identity. Let’s be clear: a Yes vote does not mean the end of Britishness. It does not mean an end to the union of monarchy, the defence union through NATO, the currency union or the family and social unions of these islands. What it means is a change to the political and economic union so we can have the economic powers to make for a more prosperous and fairer society according to our own priorities and goals. It also means maintaining Scotland in the European Union in contrast to the direction of travel at Westminster.

I will cheer on Mo Farah at the next Olympics in Brazil because I choose to feel British whether Scotland is independent or not. It doesn’t matter either if Mo Farah is wearing Team GB or England colours.

As a youngster growing up in Scotland I began to realise the extent to which we are capable of ploughing our own furrow in a way that works for all of us. When all the political posturing is done about shared currency or North Sea oil, it boils down to whether the people have the individual and collective confidence to build a better future for everyone across these isles. Then we can be truly better together. I support an independent Scotland because I am British.

(Published courtesy of Business for Scotland)

Labour Leader, Ed Miliband

It’s Spring – and the Party Spring Conference Season is almost over. In the week that saw the funeral of Margaret Thatcher, aspects of her legacy linger on. Scottish Labour for instance is determined to remind voters that there IS such a thing as society. Indeed, it will be a key theme for the Party’s UK leader, Ed Miliband, when he calls for a “new settlement” to heal economic and social divisions in Britain.

Eden Court Theatre CroppedThe Scottish Labour Conference is meeting over the weekend in Inverness. Delegates there will hear Mr Miliband say that this settlement will combine “proper rights to work with a real responsibility to do so”. He believes that the people of the UK need a new start, comparable to that offered by Margaret Thatcher in the 1980s. He will argue that she gained power because voters wanted change. He believes the same is true today, that people are tired of failed economic policies and mistaken welfare changes.

The question of independence will also figure strongly at the conference. Scottish Labour is a unionist party; but it also favours greater powers for the Scottish Parliament. So we’ll see Mr Miliband argue that independence is a divisive policy, while the party’s Devolution Commission, set up last year, believes there’s “a strong case for devolving income tax in full” to the Scottish Parliament.

The commission was made up of MPs, MEPs, union members and academic advisers. It’s been examining whether to give Holyrood responsibility for raising roughly half of the £30 billion it spends every year. Its report says that there is a case for devolving income tax but with some reservations, quite big ones. So if they led to a cut in the money coming to the Scottish Government or charges were proposed in the so-called Barnett Formula which defines Scotland’s share of UK funds, that would be a step too far.

As the report explains, “it is important to consider the stability of funding for public services. This is an issue to which the proponents of other models of fiscal devolution have given insufficient consideration. We have no wish or desire to make Scotland’s public services poorer.” It adds: “We would not want to devolve income tax in a way which would increase the administrative burden on employers, and individuals.”

However, party officials say the report is just “the start of a debate, not the end of it”. That’s because these recommendations are controversial. There have been suggestions that some Scottish Labour MPs would stay away from the conference in protest. They believe that such a full transfer of income tax would be a step too far, one on which they had not been sufficiently consulted.

Royal Observatory, Blackford Hill

Let’s get things in perspective. It may have been a week of blizzards, food scares, independence worries, council cuts, popes resigning, disappointing football results but what does it all matter in the great scheme of things? I went to a public lecture on Monday evening at the Royal Observatory, up on my local hill in Edinburgh, and I learnt that there are 100 billion stars in our galaxy alone. Yes 100 billion. And there are billions of galaxies. Makes us feel small, doesn’t it?

Even as I write, there is an asteroid hurtling past the Earth at 17,000mph. The scientists tell us it’s the size of half a football pitch and if it were to hit us, it would destroy a city bigger than Edinburgh. It’s our closest known encounter, without being hit, with one of the billion or so asteroids which are flying around our solar system all the time. We are not only small, we are precarious.

The powers of wild nature have certainly been in charge this week. We started with a blizzard and ended with spring-like blue skies. The blizzard descended on a party of six hill-walkers from Leeds University who were exploring the northern corries of the Cairngorms. It appears their leader, with the only map, fell to his death in an area known as Jacob’s Ladder, while trying to help one of the party. The rest became disorientated and headed off in the wrong direction. They were found miles away the next day and rescuers say they are lucky to be alive.

Then on Tuesday, a chairlift on the ski slopes at the Lecht in Aberdeenshire became derailed and five children and an adult were injured when they were thrown 20ft to the ground. More than 30 other skiers were trapped in their seats and had to endure freezing temperatures for over an hour before they were rescued.

On Thursday, back in the Cairngorms, three climbers were caught in an avalanche in the Chalamain Gap. The rescue teams went to their aid; but sadly all three died in hospital.

Down on lower ground, Scottish farmers were concerned they might get caught up in the latest food scare, horse-meat found in beef products. They were stressing the purity of Scottish beef, with its clear, traceable path from field to fork. The politicians meanwhile were making sure none of the fault could be traced back to them, so all sorts of meetings were held and threats of prosecution made.

Fortunately perhaps for the Scottish government, parliament was on its half-term holiday. But that didn’t stop the arguments for and against independence breaking out in other well-heated venues, from TV studios to the gilded surroundings of the Signet Library, home of the Scottish legal establishment.

Westminster government ministers Lord Wallace (left) and Michael Moore chose the Signet Library to reveal the advice they had received from two eminent constitutional law professors, James Crawford and Alan Boyle, on Scotland’s legal position if the people voted for independence in the autumn of 2014. In short, they said, we would have to start from scratch…join the United Nations as a new nation, negotiate our way into the European Union, NATO, the World Trade Organisation and sign up to the 8,500 the UK has already entered into.

Unfortunately for the No campaign, the professors also said this would not be particularly difficult. And the Yes campaign struck back with its own 221-page document, from the SNP’s Fiscal Commission, which spelt out how Scotland would join the Sterling zone but retain some “flexibility” over its tax and spending policies. But again there was a caveat, “austerity” would have to continue.

All of this happened on Monday, a good day to bury bad news. Because in far-away Rome, the Pope was announcing his resignation. Of course it dominated the following days’ newspapers but the general reaction has been one of surprise rather than shock. No one has criticised the Pope’s decision. It is not being seen as an end to papal authority – let alone papal infallibility. Nor is it being seen as an example for the Queen to follow. Nor is it seen as undermining the usefulness of older people.

And yet, you would expect the earth to shake a little with the ending of a tradition that has lasted 600 years. Perhaps we are all becoming a little blasé, accepting humanity’s place in the great scheme of things, realising that we might all be gone tomorrow if the next asteroid happens to target Planet Earth and scatter us all into “the hail clamjamfrie” of the stars.

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

by John Knox

So, we have started on the road to the referendum. It’s going to be a long and winding road to the autumn of 2014. Not everyone wants to go on this journey – in fact the opinion polls suggest that most voters would prefer to make the most of devolution rather than chose between independence and the status quo.

But the SNP won a mandate for a referendum with their overwhelming victory in the Scottish general election in 2011. And on Monday, a bright, cool autumn day, Alex Salmond welcomed the Prime Minister to St Andrew’s House in Edinburgh and both men signed an agreement which gives the referendum legal force and binds each party to accepting the result.

There’s been much mushing over the details of the agreement in this week’s news media. Mr Salmond is reckoned to have won the point that the Westminster parliament should give the referendum protection from annoying legal challenges. In exchange he’s accepted David Cameron’s insistence that there should be just one question – independence yes or no, and no third option. The Scottish Parliament will decide everything else – the exact date, the wording of the question, whether 16 and 17 year olds will be allowed to vote and how much each campaign is allowed to spend.

As to the substance of the campaigns, Mr Cameron underlined the value of the union earlier on Monday morning by climbing onto the hull of the Royal Navy’s new aircraft carrier being built at Rosyth. “We’re stronger and safer together,” he told the helmeted workforce. Mr Salmond visited a children’s nursery to suggest that independence would give Scotland a better future. Their lieutenants have been manning the TV and studios all week to begin the long argument.

The opinion pollsters are finding that around 30 per cent of Scots want independence, 30 per cent want to remain in the UK and the other 40 per cent are undecided. So the SNP’s annual conference in Perth this weekend has plenty of persuading to do.

The Liberal Democrats have been first off the mark with a substantive contribution to the “Vote No” campaign or, as they prefer to call it the “Better Together” campaign. They’ve published their latest paper on Home Rule ( the list of previous authors stretches back from David Steel to William Gladstone.) Sir Menzies Campbell’s version sees the Scottish Parliament being given responsibility for raising nearly two-thirds of its spending – from income tax, corporation tax, and eight other smaller taxes. But VAT, pensions, welfare, defence, foreign affairs and the currency would remain with the Westminster government under a new federal Act of Union. It also envisages a further devolution of powers from Holyrood to the existing local authorities and to new burgh councils.

It’s a mood point whether all this constitutional stuff will be the deciding factor in the referendum. People may chose instead to vent their anger over the economy if there is no sign of recovery by 2014. The GDP and unemployment figures released this week show Scotland lagging behind the rest of the UK. Growth was down to minus 0.4 per cent in the second quarter of the year. Unemployment has risen to 8.2 per cent in Scotland whereas in the UK as a whole, it has fallen to 7.9 per cent. And the 1700 workers at Hall’s meat processing plant in West Lothian learnt on Tuesday that they will be joining the unemployment queue over the next three months.


If there is a bright spot in the Scottish economy it’s in Aberdeen. Unemployment there is down to 2 per cent. The oil industry is entering a new phase with the larger firms passing on their fields and platforms to smaller, more specialised firms, encouraged by the Chancellor’s recent tax changes (or should that be u-turns). The city is also hoping to cash in on the off-shore wind industry.

And this week, it learned it was going to get its long-awaited by-pass. The new £400m road has been held up for three years by legal challenges but finally the UK Supreme Court has ruled that the objections are unfounded. The road won’t be completed, though, till 2018.

Overall, there hasn’t been much to be cheerful about this week. The weather has been dreich – apart from that bright Monday morning. School pupils on their half-term holiday, have been dragged through the shopping centres or have stood around on street corners, their hoods pulled over their heads. I noticed two little girls in multi-coloured raincoats carefully picking up fallen leaves on the grass outside my kitchen window and carrying them inside for an art project, no doubt being organised by a desperate parent.

Other children have been competing at the annual Gaelic music and arts festival, the National MOD, in Dunoon. The organisers say more young people are speaking fluent Gaelic than ever before, at least in recent times, and more pupils are sitting Gaelic exams.

This serious week was brought to a crushing conclusion with the realisation that Scotland is, in all probability, out of the World Cup. Our glorious team when down 2-nil to Belgium, leaving us bottom of our group. Now we have to decide whether to sack the manager, poor Craig Levein, or rebuild our football society from its foundations. Let’s have a referendum about that !

From John Knox

We are all Andy Murray fans now. Our tousled tyke has won the US Open and an Olympic gold medal at the end of a golden summer for British sport. And, by having lost out in the finals five times, the last time to Federer at Wimbeldon, he’s shown himself to be human and a tryer.

His home town of Dunblane has been whooping for joy and sending its young tennis stars out to the courts before school for the benefit of the world’s TV cameras. Dunblane was last heard of for its dreadful school shooting back in 1996 but here at last is a positive story about this pleasant dormitory town in the rolling farm lands of central Scotland.

Tennis is not a huge sport in our cold, wet, windy country. Andy had to go to Spain to perfect his game. So the fact that he is the first British player to win a grand slam tournament since the days of long-trousered Fred Perry in 1936, has surprised the Scots and puzzled the English. The First Minister Alex Salmond has called him a “sporting legend” and one enthusiastic Labour MSP has said the 25 year old should be honoured straight away with the title “Sir Andy Murray.”

Not all young Scots are so fortunate. We learnt this week that 24 per cent of them cannot find work. Overall unemployment rose for the first time for several months to 223,000, or 8.2 percent. That’s above the UK figure of 8.1 per cent – a trend that’s been going on for the past year. The trade unions have also pointed to the sharp increase in the number of people who have to settle for part time work because they cannot find full time employment – up 13,000 on a year ago.

The SNP government is blaming the Westminster government’s austerity programme. And this week the new infrastructure minister Nicola Sturgeon has been trying to do something about it. She’s announced a government guarantee scheme to persuade banks and building societies to grant mortgages of 95 per cent, rather than the usual 75 per cent. But it is only for first-time buyers and for new properties and one wonders why it has not been done before.

It is heartening to see that one of the chaps responsible for all this recession and austerity stuff has been named and shamed by the Financial Services Authority. Peter Cummings, the man who broke the Bank of Scotland, as part of HBOS, has been fined £500,000 and banned from banking for the rest of his life. He won’t be left too uncomfortable though, with a pension of £350,000 a year.

There’s been some outrage in the press too about the man who broke the other Scottish bank, RBS, Sir Fred Goodwin. He is still, apparently, a member of The Chartered Institute of Bankers and the Institute of Chartered Accountants. I wonder when the chaps sitting on the Chesterfields in these two clubs will get around to reviewing their membership lists.

As ever, there has been some murmurings about the SNP’s referendum on independence, due in the autumn of 2014. Nicola Sturgeon, as minister for independence as well as infrastructure, has been meeting Westminster’s man in Scotland Michael Moore, to discuss the final deal that will allow the referendum to go ahead. It looks like the Westminster government will make the referendum safe against any legal challenge in exchange for there being only one question – yes or no to independence.

The prominent Scottish businessman Jim McColl caused a stir when he announced he was going to vote yes to independence because his more favoured option, greater home rule, appeared to be no longer on the ballot paper.

This loss of political diversity was not however matched by the loss of bio-diversity this week with the news that a new species of plant life has been found in South Lanarkshire. The new “monkey flower” is thought to be a rare natural cross between two American invaders. Its discoverer, Dr Mario Vallejo-Marin a lecturer in evolutionary biology at Stirling University, says it could be the forerunner of many more new species as Scotland’s invading plants take hold.

A new word has also entered the official lexicon…“chuntering”. The Scottish Parliament’s presiding officer Tricia Marwick declared “there is too much chuntering going on” during First Minister’s question time. The definition: aimless background conversation or muttering, usually by young children or old men.

Shovel-ready in Lochaber? Picture: Draco2008

Alex Salmond declared this morning that the Scottish economy was “bumping along the bottom”. With the latest gross domestic product (GDP) figures showing Scotland slipping into a double-dip recession, no one would disagree with the First Minister’s assessment. But that is where agreement stops.

Mr Salmond is convinced that the way to revive the Scottish economy is to invest significant sums in infrastructure – the so-called “shovel-ready” projects he is so fond of. The bill for this was supposed to be £300 million – but, as of this morning, it has risen to £400 million. The arguments for this investment are, indeed, compelling.

As Mr Salmond pointed out, there are major areas of the Scottish economy which are growing, services and production particularly. But they are being held back by a decline in the construction sector – which shrank 6.9 per cent over the last quarter. Boost the construction sector with government cash, according to Mr Salmond, and the rest of the economy will bounce back too, taking Scotland from recession to growth.

He may well be right, but that doesn’t mean that such a £400m cash injection is going to happen – or, indeed, should happen any time soon. That is because the money just isn’t there.

When asked where the money was going to come from to fund the £400m of shovel-ready projects, the First Minister was uncharacteristically vague. Mr Salmond talked about the UK government making a sudden and unexpected £5 billion investment in infrastructure across the whole country. If that happened, Scotland would get its allocated share of £400m – without any strings attached. But where was the UK government’s £5bn to come from?

It should just be borrowed from the money markets, Mr Salmond suggested. The First Minister said that the UK could borrow money very cheaply right now and £5bn was “a fraction of the public sector borrowing requirement” at the moment. But this is where the disagreement at the heart of this issue lies.

Mr Salmond wants the UK government to borrow £5bn on the money markets and give Scotland £400m of this – increasing the UK’s public sector deficit without Scotland having to borrow anything or, indeed, pay anything back.

The UK government believes – again with good cause – that borrowing money we don’t have to fund public sector projects was what got us into this mess in the first place. Ministers in London believe they should do everything they can to boost private sector investment instead, even if that means underwriting private investment as they announced they would do today.

There is no doubt that the construction industry could do with a boost – both governments agree on that. But it is the way that is done that is causing the dispute and one that seems no nearer to resolution because the causes are ideological.

Of course, the unstated subtext to all of this is independence. Could, for example, an independent Scotland do things differently?

Undoubtedly: an independent Scotland could do exactly what Mr Salmond wants, borrow on the international markets to fund those shovel-ready projects. But the rate at which an independent Scotland would be able to borrow that money may well be higher than the rate at which the UK borrows at the moment.

And also, the government of an independent Scotland would have to pay the money back – which it would not have to do if it just gets a £400m consequential of a UK government investment.

Mr Salmond would probably be loathe to admit it, but there are advantages of being part of the United Kingdom. Only, though, if the UK government does what he wants it to do – and there is little sign of that happening at present.

Vicky Pollard from 'Little Britain'
Vicky Pollard from 'Little Britain'

Vicky Pollard from 'Little Britain'

Alistair Darling would be loath to admit it, but there is something of Little Britain’s Vicky Pollard in his pro-Union campaign which launched this week: “Yeah but no but yeah but no ….”

Is it the “Yes to the United Kingdom” campaign or is it the “No to independence” campaign?

To be fair to the former Labour Chancellor and his Lib Dem and Tory colleagues, it is not easy to be clear on this issue when nobody actually knows what we will be voting on. Is there going to be one question? And, if there is, is there actually going to be a “Yes” and a “No” choice? Isn’t it more likely that we will be offered two equal options (independence or staying in the UK)?

But there is still a strong possibility that some form of “devo max” might find its way on to the ballot paper too. What does that mean for the “Yes” and “No” sides of the independence argument?

All those options made it difficult – if not impossible – for the pro-United Kingdom campaign to define itself precisely this week, at least as far as the devolution settlement was concerned. The only thing that all the political parties involved in yesterday’s launch agreed on is that they oppose independence. Despite this, they could not coalesce around a “No” banner “because it was considered too negative”, according to a senior source in the campaign.

But the message hadn’t got through to everyone.

One shipyard worker used in the short campaign film the organisers have put together let slip that he would be “voting ‘No’ for Scotland’s future” which not only sounded a little confused but showed that, for many Scots, the Better Together campaign would have a damned sight more traction if it was simply called the “No” campaign.

The end result is that we are now in a position where we have two campaigns up and running, of which one refuses to define itself in relation to the other and neither of which knows what the Scottish people are going to be asked in two and half years time.

But while the Better Together campaign refused to hem themselves in to the boundaries set by their opponents, it was clear that the Nationalists’ launch event had influenced their own efforts this week. The SNP-led Yes Scotland campaign has been widely criticised for being too celebrity heavy, for allowing some of the participants to rant away Old Labour-style, thus alienating moderate voters and for ignoring the need to have business people somewhere near the stage.

This criticism has hurt and no more so than within the SNP itself where the inquest into what went wrong at the launch has been long and tetchy.

But having seen the mess that the pro-independence campaign made of its launch, the pro-Union side did the opposite this week. Where there were celebrities at the Yes Scotland launch, there were “ordinary people” at the Better Together event. In place of Holyrood actors, they had farmers, shipyard workers and nurses and, in place of poets and musicians, they had doctors and teachers.

Everybody in politics knows that it is always a bit dull when you involve too many “ordinary people” but this didn’t matter to Mr Darling and his team. What they wanted was to create an impression, to start the perception of a campaign which involves people not stars, individuals not politicians.

This made the event fairly boring but that probably mattered less than the overall impression which was one of earnest seriousness. The event was more than slightly long-winded but it worked in the limited sense that the organisers got their message across without making any gaffes.

But they will know that, even though the campaign is up and running, some of their initial problems remain.

One is motivation. Better Together managed to fill a hall yesterday with people who were willing to come out on a Monday morning to support the status quo. They even managed to find 40 passionate United Kingdom devotees from around the country to come to the hall and explain publicly why they felt so strongly about the Union.

But it is going to be a struggle to do this on regular basis, particularly when the Nationalists have all the passion, emotion, romance and vision they need.

Mr Darling is a good debater and he will certainly give as good as he gets in any head-to-heads with Mr Salmond. He is also measured, calm and persuasive on radio and television. But what he is not is an orator and he had trouble enthusing even his partisan crowd yesterday. He will have to get better, as will his campaign organisers, at giving the Unionists something to cheer. Otherwise, they will slip behind their opponents in a mix of apathy and complacency.

For them, and for Scotland, it is going to be a long two and a half years.

Cloud-free Britain. Picture: NEODAAS/University of Dundee
Cloud-free Britain. Picture: NEODAAS/University of Dundee

Britain. Picture: NEODAAS/University of Dundee

By Fiona MacGregor

Claims that people in an independent Scotland wouldn’t be entitled to call themselves British have been rebutted by an award winning academic.

Dr Alex Woolf, of St Andrews University, has pointed out that concepts of Britishness date back to as early as 300 years BC – two millenia between the Act of Union – and stated that: “Britishness is not predicated upon political union, it comes with the territory.”

When the respected historian, who was born and raised in East Sussex, told a BBC radio 4 programme earlier this month that he supported an independent Scotland, the presenters questioned why an Englishman living and working north of the Border would take such a view.

But as the Saltire Award-winning academic writes in an article for YesScotland.net, history has shown that when neighbouring states and countries share cultural and linguistic ties, as is the case with Scotland and England, political independence from each other actively encourages innovation and healthy competition which benefits all nations involved.

Dr Woolf points to modern connections between Westminster and Dublin and between the Scandinavian countries to predict that strong links would continue between the countries of the British Isles after Scotland became independent.

Making it clear that Westminster polticians do not have the right to decide whether the people of an independent Scotland could choose to call themselves “British” if they wished to, Dr Woolf said there is considerable historic precedence to suggest that many organisations working within the independent nations of the British Isles would also choose to operate under a British banner.

“In the context of the Independence debate one of the big questions is how Britishness will be articulated after any secession… In a post-Independence world Britishness might just become a term related to geography but it is more likely that various institutions would retain a pan-British identity simply for practicality and economy of scale.

“The dominant language in all the home nations will remain English for the foreseeable future and ease of movement in the present and the future along with shared history and family connections will constantly remind us of the link,” writes Dr Woolf.

And he adds: “In our own age we can see this happening in Scandinavia, by far the most progressive part of the West. Where countries were historically joined in various political and royal unions, but are now individual equal nations … ideas and people move freely between the countries and they give institutional priority to harmonising policies where possible.”

Making it clear that it is not political unity between neighbouring nations which determines their success, Dr Woolf concludes: “One could argue that Scandinavia is a failed state, that it has not fulfilled ethno-linguistic destiny of unification. If that is what failure looks like, bring it on.”

- Fiona MacGregor blogs for YesScotland.net