Ian Swanson: Local impact of Scottish independence

First Minister Alex Salmond. Picture: Jane Barlow
First Minister Alex Salmond. Picture: Jane Barlow
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Should Scotland be an independent country? It’s the question we must answer 12 months from now, but its simplicity belies a minefield for the Yes and No campaigns. Ian Swanson looks at the argument.

THE final countdown to Scotland’s independence referendum begins in earnest tomorrow with exactly a year to go until the big day.

Campaigners from both sides will be out and about in the Capital and across Scotland, handing out leaflets and putting their case to voters. Polls suggest many people have yet to make up their minds, which means there is everything to play for.

So what would a Yes vote mean for Edinburgh?

Veteran independence campaigner Margo MacDonald believes if Scotland votes for independence the Capital would benefit from a new dynamism, energy and enthusiasm.

The independent Lothian MSP said: “There would be an explosion of energy, creativity and entrepreneurialism. That’s what has happened in the capitals of any of the other countries which have become independent over the last couple of decades.”

She argues the issues cited as problems by the anti-independence camp would be amicably resolved between an independent Scotland and the rest of the UK. “It’s in both our interests that we get on – together or apart.”

However, former chancellor Alistair Darling, Labour MSP for Edinburgh South West and leader of the cross-party Better Together campaign, does foresee problems. He says: “The big employer in Edinburgh is the financial services sector and the lawyers and accountants whose livelihoods depend on how well it’s doing.

“Nobody is saying that the day after independence all the lights would go out, but firms would find 80 per cent of what they were selling, pensions for instance, were being sold to what was now a foreign country.

“And what currency would we be using? There is no guarantee of a currency union with the rest of the UK and if we had our own currency that would mean massive disruption.”

BANK ON FIRMS STAYING

AS home to Royal Bank of Scotland and HBOS, Edinburgh took a big hit in the 2008 banking crisis, with major job losses and a serious dent in its reputation.

But the Capital remains the UK’s second biggest financial services centre after London, with almost 35,000 people employed in the sector. So what would independence mean for the banks, other financial companies and their workers?

Asked last year if RBS would look to move after a Yes vote, bank chairman Sir Philip Hampton said: “If we found extra difficulties or cost pressures arising from that then we would have to think about alternatives. But at the moment, we don’t identify any clear rationale for making major domicile changes.”

Some argue real power has already moved away from RBS’s Gogarburn HQ, but other firms, such as Virgin Money and Tesco Bank have chosen to base themselves here.

Anti-independence campaigners argue a separate Scotland would present the financial services sector with two sets of regulations, employment laws, insurance requirements and tax authorities to deal with.

One independent expert says: “There is a lot of potential ambiguity about taxation, corporation tax, how taxes are paid and the transition from Westminster to a new Scottish government. But there are no large organisations saying they are going to up sticks and move.”

Posts move in new game

INDEPENDENCE could mean a jobs boom for civil servants as the government workforce expands to cope with all the extra responsibilities … but there will also be job losses. It all adds up to a complicated situation.

New ministries and agencies would have to be created to take care of foreign affairs, defence, welfare, the economy and other remits currently reserved to the UK Government.

There might be a move to spread the employment opportunities around the country, but the majority of the new posts would almost certainly be based in the Capital.

There are currently around 4000 people in Edinburgh working for the Scottish Government. But there are also lots of civil servants based in the city working for UK Government departments or agencies, like HM Revenue and Customs, the Forestry Commission and the Department of Work and Pensions. Pro-independence campaigners say these jobs should be safe since these functions would still be needed in an independent Scotland, but the transition would inevitably involve some uncertainty and upheaval.

Some of the work carried out here by these departments relates to other parts of the UK, while work affecting Scotland is done elsewhere.

Unions are currently assessing the likely overall effect.

One insider says: “It’s a very muddled situation. We’re still trying to map it all out.”

Tourism spin-off

MORE than 3.5 million tourists visit Edinburgh each year, but independence could boost the Capital’s pulling power even more … at least in the short term.

Professor Joe Goldblatt of Edinburgh’s Queen Margaret University says if there is a Yes vote next year, the international publicity could lead to an increase in visits by curious tourists.

He says: “Think of independence as a mega-event, similar to the Olympics … the world’s eye is cast on Scotland. There is often a halo effect, for a short time after the event there is an upturn in tourism.

“And if the infrastructure is in place – enough accommodation and good transport links – you can capitalise on that.”

The Capital’s new status could also mean an increase in business and conference tourism.

RENEWED INTEREST

THE economy would obviously be crucial to the success of an independent Scotland … but there are sharply different views of what would happen.

Independence supporters predict a major boost, with companies eager to set up in the new country and Scots finding success through a new confidence.

Sceptics say complex changes are more likely to make companies move away. One city business analyst says new industries, such as renewable energy in Leith, could hold the key. He says: “There’s already a lot of interest in Scottish renewable energy policy because of its ambition. If there were to be independence, that would accelerate.”

BOOMTOWN

THE Capital could see a property boom if there is a Yes vote next year.

Experts say more government and commercial activity would mean more demand for both office space and housing.

Greater interest in homes at the upper end of the market could mean increased pressure all the way down the price chain, with the risk that lower-income families could be pushed out of the city and into areas like Midlothian, West Lothian and Fife in the search for an affordable place to live.

Similarly, demand would be likely to increase for commercial and office premises.

One insider says: “We know there is a shortage of grade A office facilities in the city. The problem will be finding the right sites in the right places. But we could expect a significant demand for property, not just for consulates and embassies, but for business facilities as companies look to set up in Edinburgh.”

The argument for

IN 14 years of devolution, governments of different hues in Edinburgh have taken decisions different to those remote governments in Westminster. Scotland now boasts the free bus pass and personal care, no tuition fees, and a still avowedly public NHS. And we are better for it.

After three decades of the UK’s national accounts showing us paying in more than our fair share, we know we have firm foundations on which to build decision making over welfare and the economy, just as we do on health and education. Edinburgh’s status as a world-class city is a living refutation of anyone who would say we are anything but wealthy enough to provide for ourselves.

Edinburgh as the capital stands to gain. Global companies looking to find an anglophone base in the EU would no longer have to choose between London and Dublin. Accountancy firm Ernst & Young lists Scotland as the best part of the UK to invest in outside London. If the Scottish Government can achieve that with limited economic powers then with independence why should we aim for less than the top spot?

Edinburgh is also a government hub, but with 4000 posts has only one per cent of all the UK civil service employment, despite Scotland containing over eight per cent of population. Scotland already pays for treasury, welfare and foreign office posts located far away. With a yes vote these functions would come north and the employment created would help Scotland rather than the already booming London employment market.

We would become the truly global hub we deserve to be; a bustling centre of government and commerce, bringing jobs and prosperity.

• Marco Biagi, SNP MSP for Edinburgh Central

The argument against

EDINBURGH has a strong identity as Scotland’s capital but it also has a strong reputation as a cultural hub, a centre of knowledge and as a place to do business with the UK’s largest financial sector outside of London. For the last 13 years, Edinburgh has been voted the best place to live in the UK, and visitors to this year’s record-breaking festival would surely agree.

Despite our city’s strengths I strongly believe that it’s in Edinburgh’s – and Scotland’s – interests to remain part of the UK.

Our financial services sector brings £8.8 billion into our economy and accounts for around seven per cent of our jobs. That’s big business, but it’s largely based on our place within the UK, so there’s no guarantee that it will remain if our ties with the UK are severed and we lose control of the pound. Staying in the UK means we will have stability.

Our universities are renowned as leaders in scientific research. They get 15 per cent of the UK’s research funding – almost double our share of the population. The SNP hasn’t been able to tell us if this would be matched under independence.

As part of the UK we know that the pensions of one million Scots are guaranteed. The Scottish Government’s pledges have been light on detail, but in private they have concerns about affordability.

There’s now a year to go before we cast our votes. My mind is clear that in Edinburgh we have the best of both worlds with the security of the UK behind us and a successful, devolved Scottish Parliament that has improved the lives of Scots. We should build on this not just by strengthening our Parliament, but by devolving to councils and communities.

• Sarah Boyack, Labour MSP for Lothian