FOR business leaders worried about the independence referendum, this has been a bad week. First, the CBI pulled the pin on a grenade that has now blown up in its hands.
Then Rupert Soames, ex-head of Aggreko, now taking over at Serco, and a formidable critic of independence, declared on Friday he is withdrawing from the debate.
The CBI’s decision to de-register from Better Together after a stream of resignations and distancing by various members within a week is a colossal climb-down for Britain’s biggest business lobby group. It reflects poorly on its judgment and exposes a failure to carry out proper soundings among members in Scotland before taking sides as it did. Several business contacts I spoke to in the past week who have deep concerns about independence also expressed the view that the CBI should not have registered.
Now the fear is that the row will discourage Scottish businesses from expressing any view on the issue and will take business concerns out of the debate altogether.
The CBI would have been better to have followed the example of the Scottish Chambers of Commerce: its central council has refrained from making any declaration but instead committed itself to inform members of the issues through public debates and question-and-answer sessions across Scotland. Most members may be opposed to independence. Some are not. Their views should be respected.
The exit of Soames from this arena raises rather more difficult issues. He used the public occasion of the CFA Society Scottish Analysts’ dinner in Edinburgh on Friday to tell the 260 guests that he will be making no further pronouncements on the independence issue.
Some will recall his speech to a Scotsman Conference at the National Gallery in Edinburgh last year when he itemised all the additional obligations and costs that would face an independent Scotland. All went quiet for a while until last autumn when the text of this speech went viral, flying round the business community like some secretive, seditious samizdat.
His reasons for withdrawal will resonate with many Scottish business leaders. Serco, where he takes charge from this week, is a major outsourcing company, managing, in addition to office maintenance and servicing, public and private transport control, aviation, military and nuclear weapons contracts, detention centres, four prisons (including Kilmarnock) and schools. It operates, among other responsibilities, the National Border Targeting Centre for the UK Border Agency, the Docklands Light Railway and the North Link Ferries service in Scotland.
Soames now argues that as a major supplier of services to government and public bodies, it would be wrong for him to make pronouncements on political issues.
Given all the existing possibilities for trouble for Serco – and the scrapes it has already got into on this highly public interface – its new chief executive will have enough on his hands without further engagement on Scottish independence.
Many will support the position he has taken. But government in all its guises is a major player in Scotland’s economy. It is difficult to avoid. And there are many businesses, large and small in Scotland, that engage with public authorities and central and local government in one form or another. Should they now all follow his example and withdraw from the debate?
There is a problem with this. As a questioner put it at the dinner, how could Scottish voters arrive at an understanding of the implications for business if others followed Soames’ example? Or if only Yes supporters were able to be heard?
As it is, many businesses are already reluctant to make their apprehensions known on independence, fearing the negative reaction this might create, and the possibility – wholly imaginary I am sure – that it might affect their working relations with the SNP administration. So are we getting a full and fair picture of the concerns that businesses have with just five months to go and with the polls pointing to a close result?
Given the substantial increase in government functions in Scotland that would follow independence and which Soames painstakingly itemised last year – a Scottish Food Standards Agency, a Scottish Civil Aviation Authority, a Scottish Telecommunications Agency, an Advertising Standards Authority, a Broadcasting Standards Authority, Competition Commission, Financial Services Authority, Gambling Commission, Pensions Regulator, all the new embassies and international legations (Ireland has 72 in all) and all the extra civil servants that we would need to hire and house – it could be boom time for service companies in Scotland, with lots of new work on offer.
The problem, as Soames pointed out, is who ends up paying. His fear was that the burden would fall, in one form or another, on Scottish business.
For the moment firms in Scotland are having to wrestle with a lengthening list of uncertainties – the “known unknowns” of independence – ranging across which currency we will be using, what the tax rates and levels will be, what our share of debt will be, what employment regulation would apply, whether we will be in the EU or out, or half in or half out, who the financial regulator will be and who will be the lender of last resort. From a business perspective all this looks like a colossal blank cheque we’re being asked to sign.
Also in uneasy limbo are inward investors. In Scotland there are some 2,270 large companies employing more than 250 people. Of these, 82 per cent are owned outside of Scotland. They employ almost two-thirds of the large enterprise workforce (30 per cent of total Scottish private sector employment). Their investment here contributes to our well-being and prosperity. If these and other businesses are now discouraged from speaking and not to be heard, it may be chancing it to assume that such silence is universally golden.