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CBI questions independence plans

The Scottish Government blueprint for independence "does not add up", with Nationalists ignoring the need for deficit reduction while promising at least £670 million of "unfunded" spending commitments, a business leader claimed.

John Cridland, director-general of the CBI, said the "lack of clarity" in the White Paper could put an independent Scotland's future success in jeopardy.

He hit out as the business organisation - which represents 240,000 firms across the UK - published its response to the independence White Paper launched by First Minister Alex Salmond last November.

The CBI said: " Our conclusion is that the White Paper does not offer a coherent vision for how or why an independent Scotland would be better off from erecting barriers between itself and its biggest export market."

It added : "The loss of many of the strengths of the union would open the nation to a higher risk from economic shocks. Independence would be a major economic upheaval with uncertain consequences.

"For this reason, we believe that the best way to deliver jobs and prosperity for the people of Scotland is for Scotland to remain a part of the UK. In short, Scotland and the UK are stronger together."

The CBI, whose members employ some 500,000 people north of the border, said that "S cotland's success is underpinned by being a vital part of a dynamic and outward-looking UK economy".

It added: " The White Paper's vision for an independent Scotland lacks clarity and coherence on issues that are vital for future economic success."

While it said the Scottish Government's immediate policy plans were "fiscally neutral", it added that in the longer term the "plans appear less fiscally prudent, with apparently unfunded commitments to the tune of £670 million".

The CBI went on to state that "the actual size of unfunded long-term commitments could be closer to the £920 million figure".

The business organisation also argued a Yes vote in September's referendum would " open key sectors of the Scottish economy to increased risk".

It dismissed Scottish Government plans to keep the pound in a currency union with the rest of the UK as "not viable", with this having been rejected by Chancellor George Osborne and his Labour and Liberal Democrat counterparts.

Despite that, the CBI said " we have not seen a plan B" on currency from Holyrood ministers.

It claimed that "b reaking up" the UK internal market would increase costs for businesses and consumers on both sides of the border, and said an independent Scotland was unlikely to enjoy a "smooth process" to membership of the European Union, and its " terms of membership could leave it worse off".

Mr Cridland said: "The minute you draw a line between Gretna and Berwick, Scotland starts to drift apart from its biggest market and loses a significant amount of economic clout.

"The economic plan outlined in the White Paper does not add up. It ignores the need for deficit reduction, instead promising more unfunded spending.

"On the key issues that are critical to jobs and growth, the White Paper's lack of clarity runs the risk of jeopardising an independent Scotland's future success."

He added: "Keeping the pound is the best option for Scotland but that is only on offer through maintaining the union. The main UK political parties have ruled out currency union as an option, so we're calling on the Scottish Government to set out a credible plan B."

Mr Cridland also said: " An independent Scotland would also have to negotiate hard to get back into the EU, temporarily losing access to the world's biggest trade area with huge economic consequences."

The CBI said Scotland was home to a number of "world-beating industries", including in defence, financial services, energy, higher education and food and drinks, adding that if the country was independent it " would be one of the wealthiest nations within the OECD".

But it pointed to spending in Scotland on areas such as free university education and free personal care, and said: " The question is whether Scotland can afford this higher per capita spending."

It also claimed the gap between revenues and spending per head was larger than for the UK - although it said the exact level of this depended on cash raised from the North Sea oil and gas sector.

" Currently, the rest of the UK can act as a buffer if these oil revenues disappoint, mitigating the impact on Scottish finances," the CBI said.

"However, should revenues in an independent Scotland come in lower than expected, an independent Scotland would be forced to re-evaluate its spending choices in order to arrest the development of a significant fiscal gap."

On Europe, the CBI said independence would leave Scotland " out in the cold, at least temporarily, with other EU member states in control of its future".

The business organisation said the White Paper failed to set out the Government's negotiating strategy with the EU, and added the timescale for talks to be concluded before March 2016 is "highly ambitious".

"Businesses should therefore prepare for the consequences of a possible interruption to Scotland's EU membership," the CBI said.

"Any time outside the EU single market would have significant impacts on Scottish businesses' ability to trade."

Former chancellor Alistair Darling, the leader of the pro-UK Better Together campaign, said: " This important report from the body representing our largest employers makes clear that we face an important choice in September between the strength, stability and security of being part of the bigger UK or taking a leap in the dark with independence.

"Being part of the UK is good for Scotland's economy. It secures thousands of jobs across the country and keeps down costs for families on mortgages, credit card bills, car loans and at the supermarket checkout. Leaving the UK means more costs, fewer jobs and cuts to public services.

" The CBI is right to call for Alex Salmond to set out a plan B on currency. A currency union isn't going to happen, as it would be bad for Scotland and for the continuing UK. We need to know what would replace the pound - would we rush to adopt the euro or set up a separate unproven Scottish currency? The idea that Scots can go to the polls blind on this most fundamental issue simply isn't credible."

A spokesman for Scotland's Deputy First Minister Nicola Sturgeon said: " Unfortunately, this paper misrepresents the realities of independence in several key respects - an independent Scotland will still enjoy barrier-free trade with the rest of the UK, which is in everyone's interest - and the only serious threat to our membership of the EU is Westminster's proposed in-out referendum.

"The CBI recognises the Scottish economy has key strengths - and that we are one of the wealthiest countries per head in the world - but for some reason this one-sided report ignores the positive impact of growth policies in Scotland's Future, such as giving Scottish business a competitive tax advantage, cutting air passenger duty, a sensible immigration policy, plans to transform childcare and grow the working population, increase the number of women on company boards and a range of levers necessary to counter the massively unbalanced nature of Westminster economic policy-making which favours London and the south-east of England.

"On currency, the CBI make the point that businesses want to retain a single currency, while only this week the UK Government's arguments on a Sterling area were taken apart by an independent expert who described them as 'weasel words' which are 'entirely a false argument'.

"The reality is that Business for Scotland - the pro-independence business group - has attracted more than 1,500 members since its launch just nine months ago. That is the measure of success the positive vision for the economic opportunities of independence is having in attracting business people into the Yes campaign."

Tony Banks, chairman of Balhousie Care and board member of Business for Scotland, said he was a member of the CBI but the organisation " never consulted me on my views on independence and I don't know of any members they have asked".

He said the report "represents the personal views of certain office holders in the CBI", and added: " CBI office bearers are of course entirely entitled to their point of view - just as they were entitled to oppose the creation of the Scottish Parliament in the 1997 referendum.

"But they were wrong then - using the powers of devolution Scotland has the most competitive business environment in the UK thanks to measures like the small business bonus scheme, and we are next only to London in terms of securing overseas investment and jobs, thanks to the fantastic efforts of Scottish Development International. Business for Scotland believe that the CBI are wrong once again, this time about independence."

Mr Banks said: " I believe businesses in Scotland will benefit from control over decisions made in Scotland rather than Westminster.

"Scotland is a wealthy country - as even this report is obliged to concede - which has provided a net contribution to UK finances of £8.3 billion over the past five years. The plan for deficit reduction is to grow the Scottish economy more quickly when we have the powers of independence.

"Business for Scotland has over 1,600 members and we see tremendous opportunities with independence. Scotland can grow its economy and create more jobs for people in Scotland.

"Business for Scotland has set out 10 key economic opportunities to improve Scotland's economy with independence. Improving Scotland's economy and proving opportunities for business requires Scotland to take decision making into its own hands."

Scottish Secretary Alistair Carmichael said the report from the CBI was the " latest addition to a long line of concerns and questions that the Scottish Government simply cannot afford to ignore".

The UK Government minister said: "We know Scotland's economy is doing well as part of the UK and it is reckless to put that at risk with the uncertainties of independence. The CBI joins a growing list of organisations and companies raising real concerns about the fact the Scottish Government has no plan B on currency and no plan A on dealing with the structural deficit and black hole in the public finances shown in their own figures."


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