Conclusions and recommendations
Background
1. The
forthcoming referendum on Scottish Independence has an impact
not just on Scottish businesses and citizens but on all UK citizens
and businesses. We thank those organisations which gave evidence
to our Committee. It is however, regrettable that the Scottish
Government failed to accept our invitation to give evidence or
to engage fully with this inquiry. (Paragraph 3)
The impact on business
2. As
we approach the day of the referendum it is clear that there is
a deep concern about the impact of a yes vote on the future prosperity
of Scotland. In particular, there is no certainty that breaking
up the UK single market will have economic benefits. (Paragraph
8)
Scotland and the European Union
3. The
Scottish Government's view that an independent Scotland would
automatically be a member of the European Union has not been supported
by substantive evidence. While we believe that Scotland would
become a member of the European Union at some point in the future,
it is a leap of faith to believe that this would either happen
automatically or that re-admission would be a swift affair. There
would be a period of intense and complex negotiation and the terms
of those could be damaging to business and citizens. Furthermore,
a protracted period of negotiation beyond the proposed 18 months
would have a negative impact on business in Scotland as well as
the other parts of the United Kingdom. There is a substantial
risk that Scotland could be cut adrift in the short to medium
term from its largest economic market. The impact of this on Scottish
business would be significant. (Paragraph 18)
4. We recommend that
both the UK Government and the Scottish Government publish all
of their legal advice on the status of Scotland and the EU in
the event of a yes vote so that Business can have a clear understanding
of the consequences of a yes vote. Without this information it
is not possible to make an informed decision on the economic merits
of independence. (Paragraph 19)
Currency
5. All
EU member states have their own central bank and this is a key
fiscal structure which underpins the monetary relationship amongst
members. We consider the European Union would require a separate
Scotland and the Rest of the United Kingdom to have separate central
banks. Therefore it is highly unlikely that the EU would permit
a sterling zone. Furthermore, we do not believe that the use by
a separate Scotland of a "shadow pound" would be acceptable
to the EU. (Paragraph 27)
6. The Scottish Government's
economic argument for independence has been based on a belief
that Scotland would remain within a sterling zone. Given the views
of the three main parties at Westminster, this is no longer a
tenable position. A protracted negotiation over Scotland's status
within the EU also puts into doubt the possibility—in the
short term—of adopting the Euro. As a matter of urgency,
the Scottish Government must now spell out its plans for an alternative
currency for an independent Scotland. (Paragraph 28)
Scottish Government White Paper: Financial stability
and financial regulation
7. It
is not in the interests of business to impose an additional layer
of regulation, especially where there is no benefit to either
business or the consumer. This will be the inevitable outcome
of a vote for independence. The Scottish Government's ambition
to deliver a regulatory framework which is aligned to that in
the UK is an impractical approach, given the likely divergence
in the two economies over time. A significant proportion of our
businesses are highly integrated across the United Kingdom. To
disaggregate them as a result of independence would have a negative
impact on them and the services they provide. (Paragraph 42)
8. The benefits to
business of a single UK Market should not be underestimated. As
we approach the day of the referendum it is clear that increasing
numbers of businesses are deeply concerned about the impact of
a yes vote on their future prosperity. Their views should be seen
as a clear warning that significant parts of the Scottish economic
base do not consider independence to be in their best interests
or the best interests of Scotland. (Paragraph 43)
Access to Scottish higher education
9. The
current policy of charging tuition fees for non-domiciled UK students
provides a significant source of income to Scottish universities.
Despite the special circumstances highlighted by the Scottish
Government it is highly doubtful that this policy will be compatible
with EU Membership. The Scottish Government must therefore set
out how it will replace the financial shortfall of not being able
to levy tuition fees only on students from the rest of the United
Kingdom. (Paragraph 52)
Research funding
10. It
is unclear whether the common research area is either practical
or desirable in a post-independence United Kingdom. Even if it
is, such an arrangement will need detailed negotiation to ensure
that public funds from the UK are not being disproportionately
diverted to a separate country. In any case, a complicated formula
for the distribution of funds is very likely to undermine the
economies of scale currently enjoyed by universities bidding within
a single country. (Paragraph 60)
Postal Services: Scottish Government White Paper
11. The
renationalisation of the Royal Mail may well be an attractive
campaigning tool. However, the Scottish Government has to set
out in detail the costs of renationalisation and how they would
be met. Included in that assessment must be an assessment of Scotland's
proportion of the historic pension liabilities currently held
by the UK Government. Without that detail, the policy of renationalisation
is nothing more than an uncosted aspiration. (Paragraph 63)
Sustainability of the Universal Postal Obligation
12. We
do not believe that the Scottish Government has set out a coherent
body of evidence to show how it would maintain and pay for the
Universal Postal Service in an independent Scotland. The risk
to Scotland is that provision of the Universal Postal Service
will come at significant additional cost, either to the taxpayer
or to the consumer. (Paragraph 71)
Cross-border mail
13. The
Scottish Government has not set out in any detail how it will
mitigate against the financial pressures of cross border postage
in the United Kingdom. Given that this will place further financial
pressures on a Scottish Mail Service, the provision of this detail
is a pressing matter. (Paragraph 75)
Conclusion
14. The
Report highlights a number of areas of concern for a future independent
Scotland. Each area is of economic significance to the Scottish
economy. While the independence argument is an emotive one, decisions
need to be made on the basis of the long-term
prosperity of Scotland. It is clear to us that the Scottish Government
has failed to make the persuasive argument that Scotland would
be better off economically as a separate state. More worryingly,
the Scottish Government has based many of its arguments on aspirations
rather than reality. We believe that based on the strength of
the evidence put before us, remaining in the Union is in the best
economic interests of Scotland. (Paragraph 76)
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