JIM McColl, one of the country’s leading business figures, has warned that a No vote in next year’s independence referendum would deal Scotland’s prospects a major blow, making it less likely that he and fellow entrepreneurs would want to locate north of the Border.
In an interview with The Scotsman, the Clyde Blowers Capital chief executive said that if Scotland opted to stay part of the United Kingdom next year, it would be “looking into a very sad future”.
Asked whether his own business would remain based in Scotland, he said he “could be based anywhere”, and warned that the country needed incentives to keep firms out of the gravitational pull of London.
Mr McColl, who has built Clyde Blowers into a global engineering empire over the past two decades, is a member of the Scottish Government’s Council of Economic Advisers. Last year he said that, in the absence of a “second question” on more devolution in next year’s referendum, he believed independence was the only way to gain the economic levers he believes are necessary to boost the economy.
He said that after a Yes vote, those economic levers could include a reversal of former prime minister Gordon Brown’s “pensions raid”, which removed tax credits on fund earnings, a 3 per cent cut to corporation tax, plus the complete abolition of capital gains tax.
He warned that in the event of a No vote, and without any incentives in place, business figures such as him would question why they should remain in Scotland.
Mr McColl said: “If it is a No vote and the status quo, I think we are looking into a very sad future.”
On the need for incentives, he added: “Why would I come to Scotland if I can go to London, with its ease of travel and the critical mass there?”
And on the location of his business after a No vote, he said: “I think my business could be based anywhere.
“I do have it here [in Scotland]. I recruit the people at the top, I try to have this as their main area. But the guys in here travel a lot and spend most of their time out of the country.”
He added: “This isn’t a Scotland-England issue. This is a London vs rest of the UK issue.
“There is a diverging economy between London and the rest of the UK, and at least it would redress it a bit if we had more levers to give advantages for people to come to Scotland.
“I travel a lot. I am getting taxed more for travelling than my counterpart in London. If you had control over that, then you could do something.”
Born in Glasgow, Mr McColl is now resident in Monaco, but has kept his head office for the huge Clyde Blowers Capital firm in East Kilbride. However, he also has offices in Zurich and Beijing.
His comments come ahead of a Scotsman debate next month on the economics of independence, when Mr McColl will present the business case for a Yes vote. The No case will be presented by Rupert Soames, chief executive of power equipment company Aggreko.
Mr McColl is now one of Scotland’s wealthiest men and has faced criticism for intervening in Scottish political life despite basing himself in Monaco.
His call for tax cuts will also anger left-wing figures, who have claimed it could lead to Scotland becoming a “tax haven”.
But Mr McColl said critics of his lifestlyle choice were “unenlightened”.
A No vote next year would leave Scottish public services exposed to further cutbacks, he said.
“If the interest rates go up, and when they go up, the UK will be facing such a bill on interest that it is going to really cut back heavily on all the money they have for other areas in the public sector.
“That means there will be pressure on the Barnett Formula. So there is more austerity to come and there are more cutbacks to come. And we have got no leverage.”
He claimed that having more powers in Scotland would allow ministers to “fine tune” the country’s economy. He said: “The alternative is that you are going to end up getting cut back anyway.
“And recently, the UK governments have different political persuasions from Scotland, so it is just going to end up in this bunfight of everyone blaming each other, when what you should be doing is saying, ‘What should we be doing to make this better for everybody?’”
On tax cuts, he said: “London is fantastic for the UK, but it is starving all the regions of investment because it is all attracted to London.
“You need to have some reason for people to move out and that might be corporation tax.”
He also dismissed claims by leading economists that an independent Scotland in a currency union with the UK would face constraints on his tax and spending levels, insisting that – after a Yes vote – both sides would reach agreement quickly.
Jim McColl on banks, taxes, and life after 2014
Jim McColl described as a “red herring” warnings earlier this week that Scottish based banks would leave the country after a Yes vote, saying they were in effect no longer based north of the Border anyway.
“Scotland doesn’t have any banks any more,” he said. On the Royal Bank of Scotland, headquartered in Edinburgh, he added: “Even RBS, which has a lovely office in Edinburgh – you find out how often [chief executive] Stephen Hester and the chairman have been up in Edinburgh? It’s not often and if you were to speak to anyone senior in RBS, you now have to go to London.” He said RBS should now be broken up. “Those banks are too big to fail and you shouldn’t have that. If it’s too big to fail, it’s too big.”He said such a new arrangement would “introduce more competition” into the market place.
On tax powers
Mr McColl gave three examples of tax cuts that he said an independent Scotland could consider. He said it could reverse Gordon Brown’s “pensions raid”, which cut the tax credits available to pension funds. “I’m not saying they would do it, but it [independence] would give the Scottish Parliament the opportunity to do something”.
He said corporation tax should be reduced to 3 per cent below the UK level. “If you lower taxes, there is a point at which you get more tax take. It is getting that balance right.”
He also said an independent Scotland could abolish capital gains tax. “It would attract start-up companies.”
However, he denied he was backing independence purely to secure lower taxes for business. “They [a future Scottish government] would need to work out how to plug that – if we are losing that money, how do we get some more in, but it [independence]gives them the tools to emphasise where they want to put the effort.”
Mr McColl, who is the chairman of the Glasgow Works Partnership, said welfare policy should be given to Holyrood. On the UK government’s welfare reform plans, he said: “I think the principle is right, but the broad-brush approach can end up with some people who really need the help being penalised and we don’t have the ability to vary that,” he said.
He said the Department for Work and Pensions offered contracts to firms on a UK- wide basis. They then sub-contracted the delivery to other local enterprises. “I did a calculation and something like 40 per cent of the amount was ending up in administration. Why wouldn’t you have a simpler way? You have got the Scottish Parliament trying to do something to help. But it’s difficult to get them all joined up, so you end up getting all this political bickering instead of solving the problem and joining it up.”
Mr McColl said voters in Scotland would get a “second bite at the cherry” to decide on the country’s path in 2016, when the first independent Scottish parliamentary elections are due to be held.
That government could “decide anything”, he said, including to re-form a close alliance with the rest of the UK, if that was what people wanted.
“It could be a coalition with whoever gets voted in at Westminster,” he added. A Yes vote, he said, “doesn’t mean everything is going to change… like defence, and Trident – it may be that people want to keep it.
“So if there’s a political party that says vote for us and we’ll keep Trident, then there – that’s democracy.”
“But we don’t have a real democracy just now because we have a government we didn’t elect.”
On tax status
Mr McColl has been resident in Monaco for the last 12 years and said he is now settled in the French Riviera. But he rejects claims he is a “tax exile”, saying he continued to pay tax in to the Exchequer, and that his decision to move to Monaco was because of the quality of life there.
Clyde Blowers injected tens of millions of pounds into the Scottish economy in both tax, and in fees paid to legal and accountancy firms, he added.
Mr McColl, who has a house in Glasgow, added: “I think I have got an affiliation to Scotland because I was born and brought up here.
“I moved out of Scotland 12 years ago to seek my fortune and I have done reasonably well, but I have always kept a focus here and invested here, and despite being accused of not doing that, I have a passion for it which isn’t logical,” he said.
Biography: Engineering apprentice who mastered the art of business
Jim McColl, 61, bought a 30 per cent stake in Clyde Blowers worth £1 million in 1992. From its beginnings as a small engineering company, Clyde Blowers Capital now comprises a portfolio of global engineering companies, including a division of the US firm Textron, bought in 2008 in a deal worth $1 billion (£660m).
Born in Glasgow, he left school at 16 to take up work as an apprentice at Weir Pumps. He left to take a degree at Strathclyde University in technology and business studies, before going on to attain a Masters in Business Administration.
From overseeing engineering, he moved into management consultancy, as a “company doctor”, before buying Clyde Blowers. In 2007, the company bought Weir Pumps, the firm he had begun with. It is now an investor in power, oil and gas and energy firms across the world.
A motor sports fan, Mr McColl moved to Monaco 12 years ago, but has kept the Clyde Blowers headquarters in East Kilbride, while opening new offices in Beijing and Zurich. The decision has prompted claims he is avoiding tax, but friends say he gives away money to back charities and education schemes in Scotland.
He is a long-standing supporter of handing more tax powers to the Scottish Government. In the absence of a “devo-more” question in the independence referendum, he said that “it appears that only independence as defined by the Scottish Government, an independent nation within this social union and common market of the UK, will allow England and Scotland to pursue distinctive economic policies in the face of different demands and competitive pressures.”