Concern raised over CBI Scotland’s “political agenda”

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by a Newsnet reporter

The lobbying group the CBI, which represents a small minority of Scottish business interests, has rejected Scottish Government plans to seek control of Corporation Tax.  The organisation came out firmly against Scottish financial control over the tax in a response to the Scottish Government’s discussion paper on the proposal, published last month.

CBI Scotland claims that there is “no evidence” that there is widespread support for Scottish control over the tax, and warns that the costs and “complexities” of implementing the reform would be damaging to Scottish businesses.   It further complained that the arguments in the Scottish Government’s paper had been chosen specifically to present the proposal in a good light.

The CBI’s reponse acknowledged that the Scottish Government paper did cover both sides of the argument, but added:  “The paper does point to certain challenges associated with devolving corporation tax to Scotland but these are not developed to any real degree of sophistication.

“Any potential benefit to Scotland of a different rate and or structure of corporation tax needs to be weighed against the impact of the certain costs, complexities and risks that would arise from devolving the tax.

“However, there is little analysis of this in the paper.”

A Scottish government spokesman said: “Many of Scotland’s most successful business leaders, job and wealth creators support the devolution of corporation tax because, like the Scottish government, they realise that Scotland needs full control of the key economic levers to meet the specific challenges facing our economy.

“Full responsibility for corporation tax would give Scots a greater incentive to start their own business, provide Scottish firms with a competitive edge to help them grow, make Scotland an even more attractive location for international investment and help raise our standard of living, bringing jobs and wealth to communities across the country.”

Late last week, Linda Urquhart, chairperson of the CBI, attracted criticism for comments she made prior to Danny Alexander’s speech to the organisation.  Addressing the Scottish Government’s plan to hold an independence referendum towards the end of its period in office, Ms Urquhart demanded that the Scottish business community wanted a clear yes-no choice of referendum question in order to avoid an uncertain result and criticised the Scottish Government for not being specific about the timing of the ballot.

Ms Urquhart said: “Anything that adds uncertainty is unwelcome.  The Scottish Government is committed to holding a referendum on independence in the second half of this parliamentary term.

“That is a matter for them but concern does exist in our membership about the possible damage that could be done to Scotland by the uncertainties arising from this commitment and its timing.

“This is not helpful but with that timescale committed to, I believe that business will consider it all the more important for any referendum to deliver a clear result.  Independence: yes or no? And no second questions which might produce an inconclusive result.”

In response to Ms Urquhart remarks, Stuart Hosie MP, the SNP’s Westminster finance spokesperson, said: “This is not the first time CBI Scotland has blundered into the constitutional debate, and this latest intervention will fuel concerns that the CBI’s leadership has a political rather than a business agenda.

“Given the overwhelming mandate the SNP secured at the recent elections, with broad support from businesses big and small, there must be a question over whether CBI is even speaking for its membership let alone the wider business community.”

CBI Scotland has previously attracted criticism from leading Scottish businesspeople for claiming that the organisation speaks on behalf of the entire Scottish business community.  In an interview with the Herald in 2010, Jim McColl, Scotland’s richest man and chairman of the company Clyde Blowers, attacked CBI Scotland and accused it of being unrepresentative not only of Scottish business opinion but also of the views of its own members.  Mr McColl has never been a member of the CBI.

Speaking of CBI Scotland director Iain McMillan’s opposition to full tax raising powers for Holyrood, a position which Mr McMillan claimed was the opinion of Scottish businesspeople, Mr McColl said:  ““I am very aware that, in that organisation [CBI Scotland], people at the top speak about their views and it is not necessarily the members’ views … The CBI has fewer than 10% of business leaders in its membership.  How can you make a statement like that?  It is just ridiculously misleading … I am friendly with a number of Mr McMillan’s members and I know they share the same view as me.”