House of Commons Scottish Affairs Committee The Referendum on Separation for Scotland, Session 2013–14 Oral and written evidence Volume IV Oral evidence ordered by the House of Commons to be printed 4 September, 23, and 29 October, 12 November and 10 December 2013, 8 15 and 29 January, 4, 5 and 26 February and 5 March 2014 Written evidence ordered by the House of Commons to be printed on 04 September 2013 HC 140-II Published on 24 March 2014 by authority of the House of Commons London: The Stationery Office Limited £23.00 The Scottish Affairs Committee The Scottish Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Scotland Office (including (i) relations with the Scottish Parliament and (ii) administration and expenditure of the offices of the Advocate General for Scotland (but excluding individual cases and advice given within government by the Advocate General)). Current membership Mr Ian Davidson MP (Labour/Co-op, Glasgow South West) (Chair) Mike Crockart MP (Liberal Democrat, Edinburgh West) Jim McGovern MP (Labour, Dundee West) Graeme Morrice MP (Labour, Livingston) Pamela Nash MP (Labour, Airdrie and Shotts) Sir Jim Paice MP (Conservative, South East Cambridgeshire) Simon Reevell MP (Conservative, Dewsbury) Mr Alan Reid MP (Liberal Democrat, Argyll and Bute) Lindsay Roy MP (Labour, Glenrothes) Dr Eilidh Whiteford MP (Scottish National Party, Banff and Buchan) The following members were also members of the committee during the Parliament: Fiona Bruce MP (Conservative, Congleton) Mike Freer MP (Conservative, Finchley and Golders Green) Cathy Jamieson MP (Labour/Co-op, Kilmarnock and Loudoun) Mrs Eleanor Laing MP (Conservative, Epping Forest) Mark Menzies MP (Conservative, Fylde) Iain McKenzie MP (Labour, Inverclyde) David Mowat MP (Conservative, Warrington South) Fiona O’Donnell MP (Labour, East Lothian) Julian Smith MP (Conservative, Skipton and Ripon) 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. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/scotaffcom. A list of Reports of the Committee in the present parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Rebecca Davies (Clerk), Rhiannon Hollis (Clerk), Phil Jones (Committee Specialist), Elizabeth McEnhill (Assistant Policy Analyst), Gabrielle Hill (Senior Committee Assistant) and Rosie Tate (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the Scottish Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6123; the Committee’s email address is [email protected] List of witnesses Wednesday 4 September 2013 Page Rt Hon Dr Vince Cable MP, Secretary of State, Department for Business, Innovation and Skills, and Rt Hon David Mundell MP, Parliamentary Under- Secretary of State for Scotland Ev 1 Wednesday 23 October 2013 Rt Hon Danny Alexander MP, Chief Secretary to the Treasury, Stephen Farrington, Deputy Director, Economics Group, HM Treasury, Rt Hon Alistair Carmichael MP, Secretary of State for Scotland, and Chris Flatt, Deputy Director, Constitution, Scotland Office Ev 12 Tuesday 29 October 2013 Dr Patrick Mileham, former British Army officer, Royal Tank Regiment, and writer on military history Ev25 Tuesday 12 November 2013 Rt Hon Alistair Carmichael MP, Secretary of State for Scotland, Dr Andrew Murrison MP, Parliamentary Under-Secretary of State for International Security Strategy, Ministry of Defence, and Margaret Porteous, Deputy Director (Policy) in the Scotland Office Ev 37 Tuesday 10 December 2013 Paul Johnson, Director, David Phillips, Senior Research Economist, and Gemma Tetlow, Programme Director, Institute for Fiscal Studies Ev 55 Wednesday 8 January 2014 James Brokenshire MP, Minister for Security, Home Office, and Rt Hon David Mundell MP, Parliamentary Under-Secretary of State for Scotland Ev 68 Wednesday 15 January 2014 Professor Iain McLean, Professor of Politics, Official Fellow, NuffieldCollege, University of Oxford, Professor Adam Tomkins, John Millar Chair of Public Law, University of Glasgow, and Professor Kenneth Armstrong, Professor of European Law, University of Cambridge Ev 80 Wednesday 29 January 2014 Professor Hugh Pennington CBE, Emeritus Professor of Bacteriology, University of Aberdeen, Alastair Sim, Director, Universities Scotland, and Professor David Raffe, Professor of Sociology and Education and Member of the Centre for Educational Sociology, University of Edinburgh Ev 105 Tuesday 4 February 2014 Rt Hon David Willetts MP, Minister for Universities and Science, Department for Business, Innovation and Skills, and Rt Hon David Mundell MP, Under-Secretary of State for Scotland Ev 124 Wednesday 5 February 2014 Dr Angus Armstrong, Head of Macroeconomics and Finance Group, National Institute of Economic and Social Research, Professor David Bell, Professor of Economics, University of Stirling, and Professor Ronald MacDonald, University of Glasgow Ev 136 Wednesday 26 February 2014 Owen Kelly, Chief Executive, Scottish Financial Enterprise, and Iain MacNeil, Alexander Stone Chair of Commercial Law, University of Glasgow Ev 159 Mark Neale, Chief Executive, Financial Services Compensation Scheme, and Sean Martin, General Counsel, Financial Conduct Authority Ev 173 Andrew Bailey, Chief Executive Officer, Prudential Regulation Authority Ev 181 Wednesday 5 March 2014 Professor Robert Wright, Professor of Economics, Strathclyde University, and Dr David Comerford, Professor of Economics, Stirling University Ev192 Martin Potter, Leader of the Scottish Board, Institute and Faculty of Actuaries; and David Wood, Christine Scott and David Davison, Institute of Chartered Accountants Scotland Ev 205 List of written evidence 1 Rt Hon Dr Vince Cable MP, Secretary of State for BIS Ev 222 2 Dr Patrick Mileham Ev 223 3 Ministry of Defence Ev 228 4 Rt Hon Alistair Carmichael MP, Secretary of State for Scotland Ev 232 5 Dr Andrew Murrison, Minister for International Security Strategy, MoD Ev 232 6 Professor Adam Tomkins, University of Glasgow Ev 234 7 Ian King, Chief Executive Officer, BAE Systems Ev 236 8 Alastair Sim Director Universities Scotland Ev 236 9 James Brokenshire MP, Security Minister Ev 237 10 Financial Conduct Authority Ev 239 cobber Pack: U PL: COE1 [SO] Processed: [21-03-2014 15:57] Job: 038186 Unit: PG01 Source: /MILES/PKU/INPUT/038186/038186_o001_odeth_SAC 130904.xml Scottish Affairs Committee: Evidence Ev 1 Oral evidence Taken before the Scottish Affairs Committee on Wednesday 4 September 2013 Members present: Mr Ian Davidson (Chair) Graeme Morrice Mr Alan Reid Pamela Nash Lindsay Roy ________________ Examination of Witnesses Witnesses: Rt Hon Dr Vince Cable MP, Secretary of State, Department for Business, Innovation and Skills, and Rt Hon David Mundell MP, Parliamentary Under-Secretary of State for Scotland, gave evidence. Q3581 Chair: Gentlemen, I welcome you to this the single market within the UK. We have also meeting of the Scottish Affairs Select Committee. As described a lot of our common infrastructure, some of you know, in the run-up to the referendum we are very which I have ministerial responsibility for—the Post keen to try and make sure that we help to provide as Office, Royal Mail and so on. much clarity as possible to people in Scotland about In addition, there are a lot of common UK regulations, the decision that is going to face them in the everything from the minimum wage to insolvency law referendum choice. Therefore, we very much and the whole corporate governance framework, welcome the papers that this Government and the which is the wiring behind business. We all tend to Scottish Government are producing, and we will take it for granted. If Scotland were independent, there review all of those as they appear. is an issue about how much of this system would have David, you are a regular offender here. I see that you to be duplicated under a separate system of regulation. have brought a new assistant with you today. Maybe My basic argument is that, if Scotland were to opt I could ask you to indicate who you are for the record for independence, there would be economic costs to and speak to the paper and then give an indication of business but, in a way, probably more importantly, a its main findings. We are particularly keen in this lot of uncertainty. We simply do not know how an session to have not simply a regurgitation of the paper independent Scotland would treat the regulatory but an indication from you of how you respond to the framework that we currently have. Would they want responses that have been made by others. We want to to create something totally different? We do not know. try and move the debate forward rather than simply Equally, we do not know how the rest of the UK covering what is in the paper. We are conscious that would react to it. If you are in business, particularly any questions you raise will have been described as in the aftermath of this big crisis, uncertainty and its an element of Project Fear, talking Scotland down and effect on investment and jobs is a big weight hanging all the rest of it, but we want to move beyond that over us. so that we can get some clarification on the genuine When I have been to Scotland and presented this responses that there have been to the issues. paper, I have tried to do it in a dispassionate, rational Vince Cable: Thank you for giving us an opportunity way.