Scottish independence: The business and political climate in Scotland is calling for more control and more independence

Michelle Thomson
The political world in Scotland changed and no-one wants to go back to the old style (Source: Getty)

Here we are a year on, looking into several crystal balls in terms of how Tory austerity will impact Scotland ever more and how businesses can survive.

The environment we now face leads on from the referendum campaign that set a fire under Scotland’s traditional tribal politics. Everywhere you went, there was a conversation going on about the pros and cons, the advantages and the challenges.

But mostly, we saw that we could in fact have a voice – that’s why 56 of my party, the Scottish National Party, were elected, virtually wiping Labour off the map.

Was it all ‘the summer of love’ that some have suggested? A national fantasy drama where we’d temporarily taken leave of our senses? No. The political world in Scotland changed and no-one wants to go back to the old style.

And why would we? The situation is far from ideal for Scotland, particularly for business in light of the secretary for business, Savid Javid, having commissioned a report from McKinsey about how he can cut up to 40 per cent from his £18bn departmental budget.

Read more: Alistair Darling tells David Cameron to agree to second referendum

I am profoundly concerned about what this could mean but Mr Javid has not so far shared the contents of the report with either the House of Commons or the BIS committee of which I am a member. The idea of cutting research and development funding and shifting investment purely to the private sector is a dangerous one. Business growth needs R&D funding or we will lose our global credibility in areas like life sciences and technology.

Public spending on R&D is looking ever more shaky and recent one-off boosts haven’t prevented the public spend from falling below 0.5 per cent of GDP – much less than any other developed economy. An independent Scotland would not have taken this route.

These cuts, however they fall, are going to damage investment in business, including business support and innovation. To me, this is akin to looking up at space from the wrong end of the telescope. We need to invest if we are to grow the economy.

On top of this, Javid goes even further. The cost of increasing the number of apprenticeships and restricting working tax credits has made him decide to introduce an apprenticeship levy on employers. We don’t yet know how this will work but I do know that employers are worried about it. In Scotland, we now have 30,000 apprenticeships a year - with guaranteed employment on completion – ranged across every sector and size of business. A levy could seriously limit the opportunities available to young people.

Read more: Is an independent Scotland becoming inevitable?

Yes – oil prices have tumbled, and yes this would have made the fiscal situation in Scotland difficult. But the oil and gas revenue question brings Scotland no benefit at all at the moment - it all goes to the Treasury - so whatever we might (or might not) have received directly under independence would have been icing on the cake.

And just last week, George Osborne welcomed news that £3bn is to be invested in the North Sea and its supply chain, supporting up to 6,000 jobs and creating another 400. The development of the Culzean gas field by Maersk Oil is expected to produce enough gas to meet five per cent of total UK demand at peak production in 2020.

Great news. Pity it won’t benefit the Scottish economy directly as all the taxes go to London.

But it is not just about tax revenue. The business and political climate in Scotland is calling for more control and more independence. Of course there will be another referendum and my guess is that when there is, there will be a comprehensive vote in favour of independence.

What we don't know is when we will be given that referendum - for that will require negotiations between Scotland and the corridors of power of Westminster.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles