The Implications of Scottish Independence on Business: Higher Education and Research: and Postal Services - Business, Innovation and Skills Committee Contents

Conclusions and recommendations


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)


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)


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)

previous page contents next page

© Parliamentary copyright 2014
Prepared 8 August 2014