As Scotland’s decisive vote over independence draws closer, James Pozzi examines the pros and cons for manufacturing in the event of an independent Scotland.
The date of September 18, 2014 could prove to be one of the most significant in the 300-year plus history of the Union. For there is a genuine possibility that when Autumn comes around, the United Kingdom created by King James I as part of the Union Act of 1706 could be no more. The campaign for Scottish independence has been a fixture of the political agenda for the past 18 months, being discussed everywhere from Westminster to the Vatican and beyond.
One of the key battle grounds fought by both sides of the vote has been about Scotland’s economy. As a contributor, the spotlight has also shone on manufacturing. With more than 8,000 manufacturing companies employing 184,000 people, Scottish industry generated £12.7bn for the economy in 2013, accounting for around 12% of Scotland’s onshore GDP.
But should the Scottish electorate return a ‘yes’ majority come September, the proposition of an independent Scotland brings with it a litany of intriguing scenarios. First Minister Alex Salmond, the architect of the independence movement, solidified his government’s intent for life without the UK by announcing his government’s plans for Scottish industry.
Scotland going it alone
The objective of the plan for the “reindustrialisation of an independent Scotland” is to increase its manufacturing by almost a third by 2030. The government says this strategy could see a 50% rise in exports and boost employment by more than 100,000 jobs.
This would be underpinned by the creation of a Scottish Innovation Agency and a national Business Development Bank complimented by industry-friendly tax measures. The Scottish export market, which was last worth an estimated £26bn, would be aided by a new network of 70-90 overseas exports to boost trade as part of the proposals.
“Scotland’s wealth, talent and resources mean we have the potential to become a global hub for the industries of the future,” said the First Minister. “To achieve this requires a national mission where we come together as a country to reindustrialise Scotland for the 21st Century.” Salmond has also spoken of re-addressing the balance away from an unequal growth with other regions of the UK, furthering the decision making powers
afforded to Scotland in the 1997 devolution.
But Salmond’s talk of manufacturing fulfilling its potential independently has been countered by the ‘no’ camp. Former chancellor Alistair Darling believes a split in the Union would create a barrier between Scottish manufacturers and their English-heavy customer base in sectors such as whisky production, while losing easy access to a single market of 63 million people.
The sound of silence?
But away from what has at times turned into political point scoring, it is the noises emanating from businesses with a presence in Scotland which shows an altogether more fascinating picture. A host of retailers such as Sainsbury’s and banks including Lloyd’s and RBS have spoken out of against independence, yet manufacturers have been less forthcoming in expressing their public views.
A high profile occasion of a view being expressed was defence giant BAE Systems siding towards the Union in its annual report. “BAE Systems has significant interests and employees in Scotland, and it is clear that continued union offers greater certainty and stability for our business,” said chief executive Ian King.
Employing more than 3,000 people across two Glasgow shipyards, BAE most recently signed a deal with the Ministry of Defence to commence work on three new Royal Navy offshore patrol vessels in Scotland, which raised questions over future projects.
In the event of independence, it said it would work with governments to find the best solution, while the Scottish government says an independent country would still be able to bid for MoD defence contracts. Could it be the case that the majority of companies – even ones which have spoken out on the issue – have contingencies for either outcome?
Despite the aforementioned exceptions, there appears a widespread reluctance from the majority of Scottish businesses to discuss where their support lies publically. The Scottish
Manufacturing Advisory Service conference, which took place in June, provided an illustration of the issue’s delicacy. While the event placed impetus on the growth of Scottish manufacturing rather than divert attention to the question of independence, one unnamed delegate described the issue as the “the elephant in the room.”
Bill Jamieson, executive editor of The Scotsman who has written extensively about Scottish independence, says business reluctance to discuss the issue derives from numerous factors. “It may be because they are genuinely unsure. Or because they don’t like the online and social media vilification and abuse dished out to those who have argued for staying with the Union, which has been quite intimidating,” he said. “I’ve noticed this
reluctance across business conferences I’ve attended in recent months – most business people just do not want to show their hand on this issue.”
But there is a private feeling of business opposition towards independence, a notion given credence in surveys. An anonymous poll by the Scottish Mail on Sunday showed 36% of firms questioned would consider moving following a ‘yes’ vote, with 40% electing to stay. Interestingly, just 15% felt an independent Scotland would be “beneficial” to their business, while 45% said leaving the Union would prove “harmful”.
A breach into the unknown
Whatever the stance, breaking with more than 300 years of stability will naturally bring a level of anxiety. Underlying concerns persist over Scotland being able to enter into a currency union with the UK, a notion already ruled out by Chancellor George Osborne with the backing of both the Labour Party and the Liberal Democrats. The issue of Scotland having to wait until 2019 at the earliest to re-enter the European Union as an independent country also refuses to go away.
But backed by solid industries, a thriving Oil & Gas sector and the emergence of Scotland as a centre for advanced manufacturing innovation, the Scottish government has created an equally compelling argument. With the decision pivotal to the future of Scotland’s awakening industry, the stakes are as high as it gets.