Non Scots businesses want Barnett reformed


  A new survey which found 63% of businesses outside Scotland want alterations to current funding arrangements demonstrates the danger of remaining in the United Kingdom, the SNP has said.

The British Chambers of Commerce (BCC) survey also found considerable support for a currency union among businesses in the rest of the UK should Scotland vote Yes in September’s referendum.

In addition, the study discovered that over 90% of businesses outwith Scotland consider the debate to have had no impact on their corporate decisions to date but most (85%) wanted Scotland to remain in the Union.

However only a quarter agreed that Scotland should have any more powers with over one fifth calling for powers to be returned to Westminster.

The survey comes in the wake of calls to scrap the Barnett Formula – the method used to allocate tax revenues from Westminster to the devolved parliaments in Scotland, Wales and Northern Ireland.

First Minister of Wales, Carwyn Jones, recently said he expects the Labour Party to commit to ending the use of the Barnett Formula in its 2015 general election manifesto, while the Shadow Welsh Secretary, Owen Smith, said the mechanism had “seen its day”.

The SNP criticised the calls, suggesting such a decision would see an additional £4bn cut from Scotland’s budget if the country remained in the UK at that stage.

Stewart Hosie, Treasury spokesperson for the SNP, said the results of the latest BCC survey showed that businesses elsewhere in the UK were happy for the Westminster parties to commit to more cuts to Scotland’s public services in the event of a No vote.

“On top of unprecedented cuts we’ve already seen, senior figures at Westminster are committed to slashing another £4bn from Scotland’s public services – and this survey finds that businesses outside Scotland would pile further pressure onto the UK Government to do this,” said Mr Hosie.

The MP for Dundee East also referenced the currency debate as a whole when giving his opinion on the BCC survey and suggested that the debate on European Union membership was more worrying for businesses than the Scottish independence referendum.

“Businesses also stated that the referendum debate has had no impact on their business decisions,” continued Mr Hosie. “The biggest threat to UK business is Westminster’s obsession with a referendum on EU membership that could see us ripped out of the European Union.”

He added: “It is no surprise that the survey finds that a currency union between Scotland and the rest of the UK is the preferred option of businesses.

“The inescapable truth is that a currency union is in the interests of Scotland and the rest of the UK.”

Key findings from the BCC survey included:

The majority of businesses outside of Scotland want Scotland to remain part of the UK

·        The majority of businesses surveyed (85%) said that Scotland should remain within the UK

·        Only 11% of firms said that Scotland should become an independent country

·        If Scotland votes to remain part of the UK, almost half of businesses (49%) believe that the current division of power should remain the same

·        Exactly a quarter of businesses (25%) said that the Scottish Parliament should have more power if Scotland remains part of the UK, but a fifth (21%) also said it should have less

More than half of firms outside of Scotland do not see any opportunities with independence

·        Two thirds of businesses (63%) say no new opportunities would arise for their businesses if Scotland votes for independence

·        Only 6% of companies believe that potential tax savings (due to different tax rates between Scotland and the rest of the UK in the case of independence) would be an opportunity for their business

·        Firms identified the highest risk as trading across borders should Scotland become independent, (26%), and identified future currency arrangements as the most important issue (47%) for their business

Businesses outside of Scotland would favour a reform of the Barnett formula if Scotland voted to remain part of the UK

·        63% of businesses said it was important that the current arrangements for allocating public expenditure between the UK nations were reformed, should Scotland vote ‘no’ in September

A third of firms outside of Scotland would like a formal currency union between the UK and Scotland if Scotland votes for independence

·        Just over one third of businesses believe a formal currency union would be in the best interests of the UK if Scotland became independent (35%)

·        More than a quarter (28%) said Scotland should create its own currency if it votes for independence, 18% said it should join the Euro and 8% said it should retain Sterling but not join a formal currency union

The Scotland referendum debate hasn’t impacted the majority of firms south of the border, but more firms perceive a negative impact since the BCC’s 2013 survey

·        A clear majority (91%) of businesses outside Scotland said that the independence debate has had no impact on business decisions to date

·        However, reports of negative impacts are increasing. 11% of firms reported the debate having a negative impact on orders and sales, compared with only 5% in August last year.

·        The percentage of businesses reporting that the debate had a negative impact on their decisions to invest was up to 11% from 6% last year.

Comparisons between businesses outside of Scotland, and businesses based in Scotland:

The BCC’s sister organisation, the Scottish Chambers of Commerce (SCC), published a related survey last week made up of responses from businesses based in Scotland. This is how the results compared with the British Chambers of Commerce survey of businesses based in England, Wales and Northern Ireland:

·        In Scotland, 24% of businesses report that their decisions have already been influenced by the independence debate, whereas outside of Scotland, this number drops to 9%

·        Business in Scotland are more than twice as likely to expect to change their strategy (49%), than in the rest of the UK (20%) if Scotland becomes independent

·        In the event of a ‘no’ vote, 68% of Scottish businesses would like to see more powers given to the Scottish Parliament, compared with 25% of businesses in the rest of the UK.

·        Nearly three quarters of companies surveyed in Scotland (74%) said currency arrangements were an important issue. Whilst this was the most important single issue for businesses based outside of Scotland, it was identified by only 47% of them.

Commenting, John Longworth, Director General of the British Chambers of Commerce (BCC), said:

“Business opinion across the United Kingdom on the Scottish independence debate is far from unanimous. That’s only logical, as businesses have different interests, and different views on our complex history of economic and political union.

“Businesses in England, Wales and Northern Ireland remain less than captivated by the intense debate unfolding north of the border. Yet they do have views on the potential impacts of a change in Scotland’s relationship with the rest of the UK.

“In the event of a ‘yes’ vote, cross-border trading and currency arrangements loom large in businesses’ thinking. If Scotland votes ‘no’, constitutional questions remain around the devolution of power and the distribution of public funding between nations.

“Business communities across the UK have diverse views on the Scottish independence debate. Yet one thing is for certain. Regardless of how Scotland votes in September, things will never be quite the same again.”