The business community has been relatively quiet during the independence debate. Just like the public, businesses have differing views about the case for Scottish independence. Some argue that independence will be transformational, leading to a revival of entrepreneurship and the business sector. Others believe independence may cause their business to decline. Conscious of the diversity of opinion, business organisations, in the main, have avoided taking a position that suggests support for one side or the other in the independence debate.
Since most of the key questions on independence concern its economic implications, businesses might reasonably expect to have access to good information on these questions. They want to know how independence will affect the economic environment in Scotland. Some of the answers cannot be known before the referendum is held. But with some facts and well-articulated arguments, it should at least be possible to narrow the range of uncertainty.
To identify the areas where their members were most concerned about lack of information, the Scottish Chambers of Commerce commissioned a survey to identify their main concerns. David Eiser, David Comerford and myself, with the help of Liam Delaney, set up a web-based survey that was distributed to all of the Scottish chambers. We received more than 800 responses: there is no doubt that independence is viewed as an important issue by the business community. The responding businesses varied in size from sole traders, of which there were 75, to companies with more than 500 employees, of which there were 65. Large and small companies felt sufficiently motivated to answer the survey. The businesses were located across Scotland with particularly strong responses in the Aberdeen area and the Highlands. More than 60 per cent of the respondents traded mainly in Scotland, while 19 per cent were focussed on the rest of the UK. The main trading activity of the rest was equally split between the EU and the rest of the world.
Yet even though the majority of businesses had a Scottish focus, only 10 per cent felt that their business activity would not be affected by independence, were it to happen. About 71 per cent felt that it would be affected, with the remainder unsure. Yet 61 per cent felt that they did not have enough information on which to base a decision about the business impact of independence. A large proportion of the Scottish business community feel that their business will be affected by independence, but are not sure what its effects might be.
The survey also asked where businesses would like to get more information. Interestingly, the Scottish Government was a preferred source in 46 per cent of the replies while the UK government trailed behind at 36 per cent. At the end of the queue were the Yes Campaign and Better Together on 17 per cent each. The campaigns for and against independence do not have much credibility with the business community.
Businesses were also asked to assess which issues were most important to them in relation to the independence debate. Bottom of the list came immigration, the economic development environment and the availability of credit. Presumably businesses think that concern over credit constraints is short-term and that they are not much affected by immigration and economic development issues. Corporate taxation was somewhere mid-table, while at the top of the list, five issues dominated: financial regulation, currency, Scotland’s place in the EU, business taxes, business regulation and income taxes.
Whereas Scotland is in the process of acquiring more powers over income tax as a result of the Scotland Act 2012, the effects of independence on personal taxation is the most important issue for the business community. In turn this may reflect uncertainty as to whether an independent Scotland would follow a high-tax high-spend or low-tax low-spend fiscal path.
Analysis by sector and trading pattern provides further detail. Understandably, companies in the financial sector are most concerned about financial regulation: for businesses in manufacturing and construction, this is much less important, though the oil and gas sector, which perhaps needs more access to capital markets, is an exception. Concern about currency was widespread across industry with the exception of businesses in education and health. Income tax was also an almost universal concern though public admin, education and the arts were exceptions.
The breakdown of important issues by where companies trade also shows a logical pattern. Companies that mainly trade in Scotland were less concerned about currency and Scotland’s status in the EU than those who trade outside Scotland. Clearly these issues might pose more of a challenge to existing business relationships that involved trading outside Scotland.
Concerns about business regulation were independent of trade location. The same was not true of income tax rates. Companies trading with the rest of the UK seemed more concerned about income tax than either those who traded mainly in Scotland or mainly outside the UK.
The analysis of this survey of businesses opinion shows that the business community is thinking carefully about what independence might mean for them. But they still believe that they are being short-changed in relation to the information they would like to be made available prior to the referendum.