Businesses urge end to Scots constitution battle

John Swinney will say the Smith Commission proposals for more devolution are the beginning not the end of enhanced powers. Picture: PA

The CBI and the Federation of Small Businesses (FSB) said stability is crucial to unlocking investment that was effectively frozen by uncertainty in the run-up to last year’s vote on independence.

Deputy First Minister John Swinney will today say the Smith Commission proposals for more devolution are “the beginning not the end” of enhanced Scottish Parliament powers.

Two-thirds of Scots now believe independence will happen eventually, according to a weekend poll, with only one in five believing the country will always remain part of the UK.

Representatives from CBI Scotland and the FSB are set to appear before MSPs on Holyrood’s finance committee this week to appeal for a long-term period of constitutional stability.

In a submission to MSPs, CBI Scotland says the Scottish and UK economies have been hit by “political and economic uncertainty” created by the referendum as firms “paused their investment plans across the UK”.

It adds: “Ultimately, businesses need a coherent and long-term solution.”

The organisation backs the rapid time frame for the implementation of the Smith Commission proposals on greater devolution over taxation and some welfare, which all the political parties have signed up to, and wants the issue put to rest.

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“Businesses want to see the commission reach a long-term resolution which gains cross-party support,” it adds.

“This will help provide much needed political and economic security and certainty which are key considerations for businesses looking to invest.

“Reaching a coherent settlement will also be a measure of success for the commission. Discussions on further devolution are fast-moving in Scotland, but there is also a developing and changing debate in the rest of the UK.

“The commission must proactively consider the emerging debate across the UK and where possible ensure that its recommendations reflect a coherent narrative.”

CBI Scotland became embroiled in a row during the referendum when it registered as an official No campaign backer. The body climbed down after a backlash from some members.

Lord Smith of Kelvin headed the commission set up after the referendum to reach a deal on more powers for Holyrood.

It followed the “vow” by David Cameron, Ed Miliband and Nick Clegg to deliver greater devolution if Scotland voted to stay in the UK. It called for control over income tax bands and for some welfare to be handed to MSPs.

CBI Scotland rejects key Scottish Government demands for the devolution of corporation tax, which is not among the Smith Commission proposals, warning this would send “unhelpful signals abroad” and lead to increased costs for firms.

The commission’s proposal to devolve air passenger duty is also rejected amid concerns it would create a “bidding war” with UK airports offering cheap rates to attract new routes.

The FSB is also backing calls for constitutional stability.

“We now know that the referendum campaign itself had an impact on decisions,” it states in a submission. “Eighteen per cent of respondents to our survey said that the referendum had influenced a business decision in the previous 12 months.”

When asked for examples, firms highlighted “postponing investment or taking on new long-term commitments”. “Thus, we see it as being in the interests of our members and the overall business environment that the proposals put forward by your commission represent a long-term constitutional settlement which gives businesses an agreed framework to plan and work within.”

Most firms in the FSB back the Scottish Parliament being given more powers and “raising more of the money it spends”.

The organisation warns that the prospect of powers over income tax being devolved must be balanced against the “need to avoid placing extra administrative burdens” on business.

The UK government is expected to publish draft clauses to implement the Smith Commission proposals.

Mr Swinney said all parties must have an “open mind” on improving the proposals and called for the greater transfer of powers over equality, welfare and the means to tackle poverty.

He added: “Any proposals put forward this week must be the start of a process of devolving power and not the end.

“This week Westminster must demonstrate clearly that it will translate the proposals from Smith into legislation and ensure that the powers are transferred to Scotland fully in keeping with both the letter and the spirit of the Smith Commission and in a way which has the support of the people of Scotland.

“The publication of these proposals creates the opportunity for people and organisations across Scotland to have the opportunity to shine a light on what is being offered.

“It is now time to ensure that the people have their say and that all parties listen to their voices.

“Whilst Smith did not recommend all the powers I would want the parliament to have, we will use what powers are made available, as far as possible, to increase equality, to tackle poverty and to grow the economy.”

A poll at the weekend conducted for think-tank British Future found 48 per cent of Scots believe independence will happen within ten years.

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