Brian Monteith: Cross-border business can show benefits of the Union

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Kilgour’s group ensures we can continue to fight for the economic benefits of the Union, says Brian Monteith.

Scotland’s win-win with the UK goes beyond just economics Thank goodness for Robert Kilgour. By establishing Scottish Business UK, the serial entrepreneur has ensured that business leaders no longer feel intimidated by independence campaigners into keeping their counsel when the country’s economic future is at stake.

Robert Kilgour.

Robert Kilgour.

In the 2014 referendum, instances of Scottish-based businesses speaking out about what was in their interests to ensure success – and thus create jobs and spread prosperity – were noticeably few. Kilgour often found himself a lonely figure as the only businessman willing to openly challenge the economics of the Scottish Government’s White Paper, or debate on television and radio when he knew many that privately agreed with him.

The reasons for this were many; some business organisations, be they national or representing individual sectors, felt unable to take a position for or against breaking up the UK, so chose to say nothing. Some individual businesses felt they might become targeted for boycotts or subject to negative publicity that would lose them customers and that, commercially, saying nothing made more sense. Some businesses relied on government contracts and had no wish to put themselves at risk.

After the referendum delivered its resounding defeat of independence, Robert Kilgour resolved that never again should the country’s businesses be put in such a marginal position. He decided there had to be a vehicle for business leaders with something to say, that had some useful insight to share with their employees, their customers and the wider society that benefits from the tax revenues their enterprises generate. Scottish Business UK was soon established and a board of Scots successful in their respective fields pulled together.

Now Scottish Business UK is to publish tomorrow, on the fourth anniversary of the referendum that rejected independence, its first paper on why Scotland remaining in the UK is good for business. Entitled Win-Win, it argues Scotland profits in two ways, firstly through gaining significant economic benefits that could not be improved upon but would be hugely diminished were Scotland to be outside the UK; and secondly our locally-tailored public services can be more responsive to our particular needs while being underwritten through the “union dividend”.

The economic pluses might be obvious to many but still benefit from being repeated so they are never taken for granted. There is the tariff and regulatory free access to the UK single market for our goods, services and people, worth four times as much as the EU to our exporters. We are able to use the pound sterling at no cost to our businesses or citizens. And there is the “union dividend” where beneficial fiscal transfers can ensure vital public services are maintained even when Scotland’s own tax revenues are lower than the costs of running them. Rather than deliver Westminster austerity, the union dividend from the UK has helped us to avoid it. That dividend was worth £11.1 billion last year – but the fact it exists rather than its amount is the most important benefit.

We also know that £45.8bn or 65 per cent of all Scottish exports go to the rest of the UK, compared to £12.7bn or 17 per cent to the rest of the EU and a larger £17.1 or 20 per cent to the rest of the world. The Fraser of Allander Institute estimates that while 125,000 Scottish jobs are supported by trade with the EU, there are 529,000 Scottish jobs supported by trade with the rest of the UK.

What this tells us is that if, as the Scottish Government says, we are to be concerned about the loss of frictionless trade with the EU single market following Brexit, then the risk to Scottish trade, jobs and prosperity is proportionately four times greater.

Furthermore, once the UK leaves the EU on 29 March next year, any deal that is agreed between the EU and UK would not automatically transfer to Scotland were it to subsequently become independent. Scotland would need to negotiate its own deal or obtain full or associate membership – paying its own membership fee, agreeing to adopt the Schengen border scheme and eventual membership of the Euro.

All of these issues could impact upon the friction-free trading arrangements with the UK. Nor would negotiations be easy, Scotland’s hand would be weaker than the UK’s has been and we would need to repair relationships with countries such as Spain – or see any agreement being vetoed.

Economically the optimal arrangement is to remain in the UK and benefit from all of its strengths.

Scotland remaining in the UK is not just about economics, however, it is about the close personal ties that have built up over the last 300-plus years, our shared culture and history – and how the soft power and opportunities that come from being inside the UK, and often from leading it at the political or business level, are of great value too.

A timely reminder of how economic benefits come from more than just trade came with the opening of the V&A Dundee at the weekend. Much economic as well as cultural profit is expected in Dundee from the new gallery – and yet little acknowledgement has been given to the fact that V&A Dundee is a member of the British institution and that its beneficial arrival could not have been realised in the same manner were Scotland outside the UK. Of course Dundee’s V&A pays testimony to the cultural legacy of Scots such as Charles Rennie Mackintosh and Scotland’s contribution to design more generally, but as a member of the V&A family the recognition of that contribution is elevated – while the sharing of the V&A’s rich British archives is also made possible.

Likewise, the various city deals that are being signed off between the Scottish and UK governments – bringing over £1bn of UK funding that is outside the Scottish block grant or the Barnett Formula shows that there can be further benefits to what was being anticipated even a decade ago. The UK continues to evolve and change and Scotland can both shape that change and gain from it.

Scottish business in the UK is indeed a win-win opportunity. If Robert Kilgour and his team can publish more reports that bring to our attention the quiet or untold advantages of Scotland remaining a full and active member of the UK, then his challenging experiences in the referendum will have been worthwhile.