Scottish independence: Confusion over SNP proposal

Finance secretary John Swinney unveiled his vision for the future of regulation under an independent Scotland. Picture: PA
Finance secretary John Swinney unveiled his vision for the future of regulation under an independent Scotland. Picture: PA
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SNP government plans to create a single, powerful competition watchdog after independence could drive up “costs and complexity” for businesses, according to industry leaders.

Finance secretary John Swinney set out proposals yesterday aimed at slashing red tape by merging seven existing regulatory roles covering utilities such as energy, water and communications, down to just one or two.

But there was confusion over what the new Scottish watchdog would police, with Mr Swinney suggesting that it would “work closely” with UK watchdogs. Areas of rail and civil aviation regulation, as well as communications and energy, may remain within the UK, according to a paper launched by Mr Swinney in Stirling.

But CBI assistant director David Lonsdale said: “Scottish firms operating across the UK currently benefit from a single regulatory approach. Any fragmentation could add further costs and complexity as firms try to navigate differing regulators north and south of the Border and different regulatory, licensing and enforcement regimes.”

The new Scottish set-up would regulate the energy, telecommunications, postal services, water and rail sectors, as well as issues around competition in commercial markets. The current seven watchdogs in these areas would be cut to one or two, according to the paper entitled Economic and Competition Regulation in an Independent Scotland.

“We must have regulators with the teeth to serve consumers and businesses properly,” Mr Swinney said.

“There is growing evidence that the current UK regulatory framework does not adequately reflect Scottish priorities. With independence we can take the opportunity to deliver a better service making it simpler for business and offering proper protection to consumers.”

The plans will see the existing Ofgem, Water Industry Commissioner for Scotland (WICS), Ofcom, Office of the Rail Regulator (ORR), Civil Aviation Authority (CAA), Competition Commission and Office of Fair Trading (OFT) merged into a single Combined Economic and Competition Regulator.

But Scottish Secretary Michael Moore said that many firms in Scotland who do business across the UK and follow one set of rules would have their regulatory burden doubled under independence.

About two-thirds of Scottish trade – amounting to £450 billion a year – is done with firms south of the Border.

Mr Moore said: “We need to help our companies not double the red-tape burden.

“No company wants to have twice as many rules to deal with but it will be the small and medium-size companies who will be hit the hardest if this ever came to pass. Scottish business knows that separating ourselves from the larger, single UK market and increasing regulation would hamper trade and jeopardise Scottish jobs.”

The UK’s approach to regulation has come under fire for failing to address concerns over soaring energy prices and broadband availability.

Mr Swinney highlighted Scotland’s devolved water industry as an example of what can be achieved if Scotland had full powers over regulation, with prices north of the Border £50 cheaper.

The plans do not include the regulation of financial services which will be set out in the coming weeks.