Why border issue could be barrier to split

Published on 15/12/2006 00:49

THE idea of Border check points on every road from the Solway Firth to Berwick-on-Tweed will appal many Scots, but that is the picture which unionists paint of life in an independent Scotland.

Gordon Brown, the Chancellor, has claimed two million Scots families would be split down the middle, with their English relatives being turned into foreigners on independence day.

So what is the truth? Would we all have to produce our new, Scottish passports at the English Border? Would GNER and Virgin trains stop taking pounds and switch to euros when they crossed the Border?

Much will depend on the way Scotland sues for independence. Murray Ritchie, the convener of the Independence Convention, has argued in The Scotsman for a dissolution of the Act of Union but a retention of the Union of the Crowns. He, and other nationalists, want to see as little change as possible along the Border, with trains, cars and lorries passing uninterrupted from one country to the other.

They want to persuade Scots that they have nothing to fear and much to gain from independence. Their aim is to see the management of Scotland transferred from London to Edinburgh with as little disruption as possible to those whose lives straddle the Border.

Even in such a "management" change, there are potentially difficult issues.

Scotland's financial services industry is extremely profitable, primarily because it looks after the interests of millions of customers in England. If that industry was to lose confidence or be damaged in any way, the knock-on effect on the Scottish economy would be potentially disastrous.

Scotland would have to regulate the industry, mirroring the regulations already in force in London. It would then have to collect the taxes from this industry, and all others, and use them to pay benefits and pensions to Scots - which it does not do at present.

All these are difficult and contentious issues, with almost every detail disputed by nationalists and unionists. Today, in the last of The Scotsman's series on independence, experts and politicians try to provide the answers.

Infrastructure is in place to handle tax and pensions, but will there be guards along the boundaries?

BORDERS

THE ISSUE:

Would there be border guards at Hadrian's Wall?

It would certainly not be in Scotland's interests to put up any barriers along the Border with England.

But it may not be in Scotland's hands if border posts are erected. This is because of immigration. An independent Scotland is almost certain to want a more open immigration policy than England.

If Scotland was to open its borders to, say, any Bulgarian and Romanian who wanted to work, and England did not, there would be nothing to stop the new migrants from coming to Scotland to work and then nipping over the Border to England. The English authorities might take the step of putting up check points at the Border to prevent such an influx.

THE EXPERT SAYS:

James Mitchell, Professor of Politics at Strathclyde University, said: "The claims of border guards at Hadrian's Wall are just scaremongering. In reality, a lot of the decisions on immigration will be taken in Brussels.

"It is inconceivable that there would be any real change in the Border between England and Scotland after independence."

THE NATIONALISTS SAY

Alex Salmond, the SNP leader, said: "No, there would not be border guards on the Border. We would be in exactly the same position as Ireland and the UK today. We can visit our cousins in Cork without passports and so would be able to visit a granny in Grimsby just as easily."

THE UNIONISTS SAY

Bristow Muldoon, head of Labour's policy forum, said: "It would seem certain that passport checks at the Border with England would apply just as there are passport checks currently if you travel from France to England."

PENSIONS AND BENEFITS

THE ISSUE:

What would happen to the pensions and benefits paid by London in an independent Scotland?

At the moment, the large number of Scots who receive benefits and government pensions get them direct from the UK Treasury. If Scotland was to become independent, the new Scottish Treasury would have to take over the payments from day one of independence.

But there are 13,681 people employed in Scotland by the Department of Work and Pensions. They could be transferred over to an independent Scotland pensions and benefits department.

THE EXPERT SAYS:

Peter Lynch, Politics Lecturer, Stirling University, said: "It's really all about the negotiations and how the transition from one government to the other is phased in. The real issue is how things are going to be costed and what is in the budget for pensions and benefits.

"People will get a guarantee they will get their pensions and benefits in an independent Scotland but the level at which they are set depends what is in the budget and whether there is enough to keep the current levels."

THE NATIONALISTS SAY

Mr Salmond said: "There is already an independent social security system in Northern Ireland under devolution. It is actually more cost effective in terms of overhead costs per payment than the system in Great Britain. We would look to move to a similar model using the extensive network of offices already in place in Scotland. Payments would continue as present."

THE UNIONISTS SAY

Mr Muldoon said: "There is a 1 billion black hole in the SNP pension plans. They are typical fantasy-land stuff. The reality of the SNP plans is longer working, higher amounts to be paid in and the prospect of a poorer return."

FINANCIAL SERVICES

THE ISSUE:

Scotland's biggest industry has most of its customers in England, what would happen to the financial services industry after independence?

There have been fears that Scotland's financial services industry might suffer if the majority of its customers from the rest of the UK found they were suddenly dealing with a business in a foreign country.

THE EXPERT SAYS

Professor Alistair Dow, from the Caledonia Business School: "I do not think independence would have an effect on Scotland's financial services.

"However, some people in England might think - 'I'm not keeping my money in a Scottish firm' - but I do not think that would happen.

"I think the reputation of these Scottish institutions would be strong enough to keep their customers."

THE NATIONALISTS SAY

Mr Salmond said: "Like Ireland, our financial services industry would flourish with a low corporate tax regime.

"As Ben Thomson, chief executive of the Edinburgh-based investment bank Noble Group, said, independence could create 'a more attractive environment for business'."

THE UNIONISTS SAY

Murdo Fraser, the deputy leader of the Scottish Conservatives, said: "With Scotland in the euro and England - 90 per cent of the market for our financial services - retaining the pound, this would cripple this key industry."

TAX

THE ISSUE:

If Scotland had full tax-raising powers, where would the infrastructure come from and what would happen to tax rates? There are 11,816 people employed in Scotland by Her Majesty's Revenue and Customs, most of them working on the taxes of Scots and Scottish businesses.

It would be relatively easy to simply transfer the staff to a new Scottish tax department. It would be more complicated transferring the rest of the tax payment system from London but it is seen as feasible.

What is less clear is what would happen to tax rates.

The SNP has made it clear that it intends to reduce corporation tax to an Irish level (about 12.5 per cent).

THE EXPERT SAYS

Prof Mitchell said: "Scotland has the infrastructure to run its own tax system, so there is no problem there. The infrastructure is in place."

"Any move to reduce business taxes will lead to differences with England but I suspect these will be shadings, not dramatic differences. A Scottish government would be able to fashion things for Scotland's needs, to a limited extent."

THE NATIONALISTS SAY:

Mr Salmond said: "Initially we would have the same taxes and taxpayers. Changes could be made by a future Scottish government in the same way as the UK changes its taxes. We do not envisage tax rises, there is no need for them."

THE UNIONISTS SAY:

Mr Fraser said: "The SNP MP Angus Robertson has let the cat out of the bag. We would pay more tax in an independent Scotland. The only questions are which taxes, and by how much?"

KEY QUESTIONS

POST SERVICES: Would Scotland have its own Scottish post office network and mail service?

The expert says:

Royal Mail spokesperson: "It would be a matter for the Scottish government, but it would be a complicated split. Any post office network would have to be heavily subsidised in future. A Scottish mail service would have to work with Royal Mail in England and would also have to be subsidised by the government as Scotland has more rural addresses but cannot make so much money from the business service."

The nationalists say:

Alex Neil, SNP MSP: "The SNP would look at a Scottish network and Scottish regulator. Scottish stamps celebrating Burns Night, St Andrew's Day and Independence Day would be introduced."

The unionists say:

Bristow Muldoon, of Scottish Labour policy forum: "If Scotland was to set up its own service then economies of scale would be drastically reduced. Therefore they would find it very difficult to sustain a universal service or the cost of sending letters or packages would have to rise dramatically."

SPORT: Would Scotland compete alone?

The expert says:

Jon Doig, chief executive of the Commonwealth Games Council: "Separate Scottish teams would cause a lot of upheaval in the run-up to the 2012 Olympics and the 2014 Commonwealth games that would ultimately be detrimental. It all depends on resources and availability of athletes in Scotland."

The nationalists say:

Alex Neil, SNP spokesman: "In the Olympics we would have our own Scottish team which would hopefully do well because we would invest in sports equipment to help our young people do better."

The unionists say:

Bristow Muldoon: "Scottish athletes benefit from being part of the UK, with shared investment in centres of excellence for training across the UK. Scotland has a proud sporting tradition; the SNP would leave us isolated."