What Scottish independence would mean for business leaders and SMEs

As the battle lines are draw between the Yes camp of Alex Salmond and the No camp of Alistair Darling, GrowthBusiness asks the question of what a lone Scotland would do for business.

As the battle lines are draw between the Yes camp of Alex Salmond and the No camp of Alistair Darling, GrowthBusiness asks the question of what a lone Scotland would do for business.

It’s been an incredibly divisive subject over the last year, one of those topics that can crop up at a dinner party and result with someone making a hasty and angry departure half an hour later.

Most of us have an opinion on what an Independent Scotland would look like, whether it is strong enough to support itself and if the rest of the world would engage with it. But what about those that founded and set up a company based on a ‘United’ Kingdom?

For Leah Hutcheon, founder of Edinburgh-based software start-up Appointedd, her worries centre on the pressure the divide might put on small businesses like hers if the pound is not kept. As a native of England, but having lived in Scotland for 13 years, the entrepreneur says the decision of how to vote isn’t an easy one.

‘I know lots of people are adamant that we will keep Sterling, but even the tinniest risk has got to be considered by a small business owner,’ she adds.

‘That said, if we do keep Sterling or go into Sterlingisation, then independence seems to be somewhat watered down. I don’t know if it’s worth all the upheaval if Scotland won’t control its own currency.’

The issue of currency is one which has cropped up time and time again, with many believing that Scotland would struggle without it and Darling stating that Scotland can’t have its cake and eat it too.

Opinion polls, having swung strongly towards a No vote, are now swinging back towards a positive outcome for those in favour of independence, making a number of Scottish businesses worried about long-term stability.

Common voice

An open letter penned by a number of Scottish multinationals and SMEs stated that the business case for independence has not yet been made. The letter declared, ‘Our economic ties inside the United Kingdom are very close and support almost one million Scottish jobs. The rest of the UK is Scotland’s biggest market by far.

‘As job creators, we have looked carefully at the arguments made by both sides of the debate. Our conclusion is that the business case for independence has not been made.’

Uncertainty about currency, regulation, tax, pennons, EU membership and support of Scotland’s exports around the world are all listed. The group of businesses also cites the fact that the nation is right now attracting record investment and registering employment rate highs.

Mark Coulters, managing director of Coulters Property, is one such business leader who believes that Scottish independence would have a big, and adverse, impact on his company.

While not one of the signatories on the letter, Coulters admits that in the short term the change would be ‘fairly catastrophic’. ‘The uncertainty in the property market caused by both interest rates rises, currency and pension discussions, as well as the potential flight of financial services jobs and personnel which could last until at least the general election of 2015, would not help a very fragile market recovery,’ he adds.

‘The Scottish economy is strong enough to support itself but benefits massively from being part of the union. Devolution is the answer, not separation.’

However, the No argument is not being levied by all Scottish businesses – with many such as Reserve Apartments seeing a considerable upside to independence.

Craig Douglas, founder of the business, believes his company would benefit ‘hugely’ from a Yes vote decision. The tourism industry in Scotland, he says, would trivia with the promotion of a nationalistic image.

‘Tourism here is already hugely successful, but given this chance we’d really come into our own,’ he adds. ‘Salmond is incredibly supportive of young businesses in terms of entrepreneurial thinking and the creation of new jobs, which is fantastic. As a small company I feel our voice would more than easily be heard if we had a smaller, more localised government – we would have access higher up the chain of command.’

Tourism in Scotland was worth a combined £9 billion last year, with events including the Commonwealth Games in Glasgow and upcoming Ryder Cup at Gleneagles sure to boost 2014 figures. The industry, alongside natural resources, financial services and the increasingly impressive set up of software and digital media companies, contributes greatly to the economy.

If independence were not awarded, entrepreneurs like Douglas would like to see more genuine funding for businesses throughout Scotland. ‘There are some fantastic schemes such as the Commonwealth Fund in Glasgow that have made a huge difference to businesses by subsidising salaries – it’s the way forward,’ he says.

SME aid

Appointedd’s Hutcheon too believes that a great deal has been done for the start-ups of Scotland. Programmes such as Entrepreneurial Spark and Business Gateway means that people are given a ‘great grounding’ in business principles, she explains.

‘I also benefited from winning £30,000 at the inaugural Scottish EDGE Awards and our investment was matched by Scottish Investment Bank, so I am a big fan of the way Scotland supports start-ups and small businesses.’

Alongside currency, another sticking point for the argument has been tax, and just what would be done to regulate it once a division was made. Ed Molyneux, founder of small business tax software business FreeAgent, which just so happens to be a Scottish company as well, says that a new infrastructure would have to be set up to eventually replace HMRC.

‘But there has been little detail about how this could affect self assessment, VAT or other important issues that small businesses currently have to deal with,’ he adds.

‘On the one hand, if Scotland’s tax system ended up getting simplified it could make running or starting a business much easier. But if it resulted in more complicated rules and regulations being created, then small business owners could actually find it increasingly difficult to manage finances without the help of a dedicated tax expert.’

Vested interest

The other side of the border has also seen some businesses speak out against independence, believing that the move would impact on their bottom lines. At Crunch Accounting, a software business that couldn’t be further from Scotland at its Brighton headquarters, founder and managing director Darren Fell says that the company would stand to lose if the Yes campaign is successful.

‘In raw revenue terms we’d be losing around £175,000 a year. Although we’re just about as far-removed geographically from Scotland as a UK business can be, we speak to our Scottish clients on a daily basis and they have passionate beliefs both for and against independence.

‘It’s important the Scottish people get their say on the issue, but as a business we want to maintain the great relationships we have with our Scottish clients – and that means they have to stay part of the UK.’

Sykes Cottages is another business which has a vested interest in Scotland, and another that can only see a negative impact from independence. 

Tom Lowes, online marketing executive at the company, says, ‘It came as no surprise when the results of a recent survey we conducted revealed that 25 per cent of respondents from England and Wales would be concerned about potential price inflation should Scotland become independent.

‘Some 31 per cent of respondents from the survey would also be hesitant to head to the country on holiday should there be a change in currency. We have over 600 properties available to rent in Scotland and as the country is a popular destination for domestic tourism there are concerns that holiday makers may choose to go elsewhere for their getaways.’

When Scots go to the polls on Thursday 18 September they will collectively be making a decision which could impact generations to come. In what promises to be a closer vote than most would have imagine, let’s hope neither decision impacts on the ability to start and then grow a business.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

Related Topics