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The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services

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The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services House of Commons Business, Innovation and Skills Committee The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services Fourth Report of 2014-15 Report, together with formal minutes relating to the report, oral and written evidence Ordered by the House of Commons to be printed 5 August 2014, pursuant to Standing Order No. 137 HC 504 [INCORPORATING HC 378-I, II AND III, SESSION 2013-14] Published on 8 August 2014 by authority of the House of Commons London: The Stationery Office Limited £0.00 Business, Innovation and Skills Committee The Business, Innovation and Skills Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Business, Innovation and Skills. Current membership Mr Adrian Bailey MP (Labour, West Bromwich West) (Chair) Mr William Bain MP (Labour, Glasgow North East) Mr Brian Binley MP (Conservative, Northampton South) Paul Blomfield MP (Labour, Sheffield Central) Katy Clark MP (Labour, North Ayrshire and Arran) Mike Crockart MP (Liberal Democrat, Edinburgh West) Caroline Dinenage MP (Conservative, Gosport) Rebecca Harris MP (Conservative, Castle Point) Ann McKechin MP (Labour, Glasgow North) Mr Robin Walker MP (Conservative, Worcester) Nadhim Zahawi MP (Conservative, Stratford-upon-Avon) The following members were also members of the Committee during the Parliament. Luciana Berger MP (Labour, Liverpool, Wavertree) Jack Dromey MP (Labour, Birmingham, Erdington) Julie Elliott MP (Labour, Sunderland Central) Margot James MP (Conservative, Stourbridge) Dan Jarvis MP (Labour, Barnsley Central) Simon Kirby MP (Conservative, Brighton Kemptown) Gregg McClymont MP (Labour, Cumbernauld, Kilsyth and Kirkintilloch East) Ian Murray MP (Labour, Edinburgh South) Nicky Morgan MP (Conservative, Loughborough) Chi Onwurah MP (Labour, Newcastle upon Tyne Central) Rachel Reeves MP (Labour, Leeds West) Mr David Ward MP (Liberal Democrat, Bradford East) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications Committee reports are published on the Committee’s website at www.parliament.uk/bis and by The Stationary Office by Order of the House. Committee staff The current staff of the Committee are James Davies (Clerk), Amelia Aspden (Second Clerk), Peter Stam (Committee Specialist), Josephine Willows (Committee Specialist), Frances Allingham (Senior Committee Assistant), and Pam Morris (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the Business, Innovation and Skills Committee, House of Commons, 7th Floor, 14 Tothill Street, London SW1H 9NB. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected] The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services 1 Contents Report Page 1 Background 3 2 The impact on business 4 Background 4 Scotland and the European Union 5 Currency 7 3 Regulation 10 Scottish Government White Paper: Financial stability and financial regulation 10 4 The impact on Higher Education 14 Access to Scottish higher education 14 Research funding 15 5 Postal Services 18 Scottish Government White Paper 18 Sustainability of the Universal Postal Obligation 18 Cross‐border mail 20 6 Conclusion 22 Conclusions and recommendations 23 Annex 26 Formal Minutes 27 Witnesses 28 Published written evidence 29 List of Reports from the Committee during the current Parliament 30 The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services 3 1 Background 1. In preparation for the referendum on Scottish independence, we decided to consider the impact of a “yes” vote on those areas which are covered by the Department of Business, Innovation and Skills. Our evidence concentrated on three main areas: business, higher education and postal services. 2. We took evidence from business, higher education and postal service organisations in Scotland. This was followed by evidence from the Secretary of State for Business, Innovation and Skills and Rt Hon David Willetts MP, the Minister with responsibility for Higher Education. On a number of occasions we invited Mr John Swinney MSP to give the view of the Scottish Executive. It is a matter of regret that despite being offered a range of dates, Mr Swinney declared himself unable to attend our meetings. In his absence, we have drawn on the Scottish Government’s White Paper to gain an understanding how a “yes” vote would impact on these areas. 3. 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. 4 The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services 2 The impact on business Background 4. In its White Paper, the Scottish Government set out the economic vision on an independent Scotland. It begins by asserting that independence for Scotland would: … allow us to use our own resources and shape our own fiscal and economic policies for Scottish needs and circumstances. This will ensure greater economic security and opportunity in the future.1 5. When we were in Scotland however, the view of business organisations was less confident. Uncertainty and lack of information were key areas of concern for them, alongside the position of an independent Scotland in the European Union, the future currency and the regulatory regime. When he gave evidence to the Economic Affairs Committee in the House of Lords, John Cridland, Director General of the CBI, said that uncertainty was “the biggest killer for investment”2 and that this characterised the debate on the referendum. This was echoed by the business representatives who gave evidence to us. David Watt, Director at the Institute of Directors, Scotland, said that the uncertainty and lack of clarity was “something that business does not find welcome”.3 6. The Scottish Government published its White Paper on Scottish Independence on Tuesday, November 26, 2013. In his first response, John Cridland stated clearly his belief that business would be better off in the existing United Kingdom: The CBI believes that the nations of the UK are stronger together and that Scotland’s business and economic interests will be best served by remaining as part of the UK. Our members have been pressing for responses to many key questions on independence that we have put to the Scottish Government and we will study this White Paper closely to decide how far it answers businesses’ questions.4 7. In its analysis, the UK Government set out the economic relationship between Scotland and the rest of the United Kingdom, and the dominance of the UK market for Scottish exports: The rest of the UK is, by far, Scotland’s biggest economic partner. In 2011, Scotland sold goods and services worth £45.5 billion to the UK, double the levels exported to the rest of the world. It is also four times greater than Scottish sales to the rest of the European Union. Overall, exports to the UK represent 29 per cent of Scottish Gross Domestic Product but the importance of the UK market is even higher in some sectors. For example, financial and 1 http://www.scotland.gov.uk/Publications/2013/11/9348/7 2 http://www.publications.parliament.uk/pa/ld201213/ldselect/ldeconaf/152/15207.htm 3 Q 100 4 http://www.cbi.org.uk/media-centre/tags/?tag=independence+referendum The Implications of Scottish Independence on Business; Higher Education and Research; and Postal Services 5 insurance services in Scotland sold nearly half their output in the rest of the UK in 2009.5 8. 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. Scotland and the European Union 9. The matter of a separate Scotland’s membership of the European Union was a central issue raised by our witnesses from business. While it was clear that the business groups believed it was in the interests of both Scotland and the rest of the UK for Scotland to be in the EU, they all raised concerns as to how this would be brought about. 10. Iain McMillan from CBI Scotland noted that Scotland’s continued membership of the European Union was a “controversial question” and that opinions differed on the both the timing and route to membership. He said that while the preference of the CBI was for Scotland to be in the European Union there were “issues around whether that would be so, on what terms and when”.6 David Watt, Executive Director at the Institute of Directors, Scotland, was also concerned that Scotland’s re-admittance into the EU would not be automatic, not least because there was “a queue of countries waiting to get it in as it is”.7 He went on to argue that while he hoped that Scotland would receive “sympathetic transition arrangements”, there was “no guarantee of that”.8 11. The route to EU Membership is set out in detail in the Scottish Affairs Committee Report on Scotland’s Membership of the EU.9 That Committee highlighted the difference of opinion between the Scottish Government and others over the route to EU Membership. The Scottish Government believes that Scotland would not have to apply, as it is currently a Member through being a part of the United Kingdom. Therefore, it is seeking a “seamless transition” to membership. This it believes will be done by amending Article 48 of the Treaty of the European Union to include reference to an independent Scotland.
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