12/12/2013 Newsnight Scotland


12/12/2013

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Who would win? My money is on the All Blacks? The All Blacks would

:00:00.3:59:59

win! They are petty unbeatable. Tonight on Newsnight Scotland: Would

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independence really mean your grocery bills would go up? The big

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supermarkets have hinted they might, then that they might not. Are they

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just after a tax break? And how do they cope in Ireland,

:00:22.:00:25.

living on a land border between the UK and another EU state?

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Good evening. Earlier this week, the ASDA and Morrisons supermarkets told

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the Financial Times newspaper that independence might mean higher food

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prices in Scotland. Today, the idea of a dearer Scottish loaf was

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roundly dismissed by the First Minister, and some of those same

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supermarket bosses have hastily insisted a change in the business

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regime here could result in prices falling. So, would a border between

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England and Scotland really have any effect on your bill at the checkout?

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It was either a blatant scare story, or a realistic assessment of the

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costs of change. We are used to the supermarkets promising us the lowest

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possible prices so to hear them threatening that goods could cost

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more struck a rather discordant note. Not least because it sounded

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like an intervention in a decision that is for Scots' voters alone to

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make. The argument went that the market would be smaller and

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overheads would be higher in an independent Scotland. Would it be

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fair to pass those charges on to consumers in the rest of the UK? Of

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course, that is what happens at the moment. Writing today in the Herald,

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Andy Clarke stresses the economies... And he is careful to

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stress that he is not arguing on either side of the independence

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debate. And that price rises are not inevitable in an independent

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Scotland. Today, Morrisons, one of the major chains reported to have

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been behind the original story, were keen to distance themselves from

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accusations of meddling in Scottish politics. If the costs in Scotland

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were to increase, say if taxes were increased, or if there was lots of

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different and extra legislation which added cost to stores, we would

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have to look at that in the context of an independent Scotland.

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Likewise, the Scottish Government in an independent Scotland might choose

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to make the costs of doing business much lower and, of course,

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therefore, we would expect pressures on us to lower prices to reflect

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that fact. Can I ask the First Minister what the Scottish position

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is... At First Minister's Questions today, Alex Salmond was able to

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dismiss the whole thing as a scare story. Far from food prices rising,

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because of independence, the truth of the matter is they are rising

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within the UK at the present moment. The latest stats on food price rises

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for the year to October showed the prices in the UK are the fourth

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highest in the OECD. One of the problems of any legislation, or any

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difference... The reality is that already today under devolution and

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regardless of the outcome of next September's referendum, the rules

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and regulations in force here are becoming more and more different

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from those that apply elsewhere in the United Kingdom. If you look at

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devolution and look at the devolved country, there's been a series of

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differences across the countries. So, we have had differential pricing

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in terms of plastic bags. The Scottish Government has put a levy,

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a health levy on large retailers who sell tobacco and alcohol, on the

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rateable value, so that's increased the cost of doing business up here.

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We have different regulations with alcohol in Scotland, tobacco in

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terms of how you can present tobacco and alcohol. Therefore, what

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marketing you can do in terms of those products within Scotland. So

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there's been a divorce in many ways of some of the activities that

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retailers used to be having across the UK. Now there are separate

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things going on. Like the value of stocks and shares, the costs of

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doing business in Scotland may go down as well as up. But you can be

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certain there will be more stories like this in the months to come. The

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unexpected items in the bagging area of Scottish politics.

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Now, shortly, we'll look at how business copes with the border

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between Northern Ireland and the Republic. But first, I'm joined by

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Gordon MacIntyre-Kemp of the organisation Business for Scotland,

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campaigning for a "yes" vote. And in Edinburgh, a businessman who runs a

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group of shops, and supports Better Together, Daniel Johnson. Daniel

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Johnson, this has non-issue written all over it, doesn't it? I don't

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think so. I think the person in your clip there summed it up quite

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neatly. We already know we have had complexity from devolution. I think

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if Scotland were to become independent, we would have to be

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looking at what might happen in terms of different regulations,

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different taxes, different regimes. Maybe different currencies. That

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complexity adds cost to business and in retail, those costs will end up

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being passed on to consumers as the supermarkets have been saying. Yes,

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but it depends what these changes are. It is as easy to envisage

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changes that could mean that prices would go down, so the only argument

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is to say there's something intrinsically about Scotland being

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independent and being a smaller country that would mean prices would

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go up? No, I think - if you listen to what I was just saying - the

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moment you have two systems, you are going to introduce complexity. For a

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retailer like me, who is small, if you are having to deal with two sets

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of regulations, maybe two sets of currencies, that is quite a

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complicated thing to have to deal with. It's that complexity, the

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administration required to administer different regimes, which

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is going to add cost to customers. Right. Gordon MacIntyre-Kemp, the

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problem for you, while the people who support the "no" campaign seize

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on this stuff and say, "Your grocery bills are going to go up" the "yes"

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campaign say, "No, they won't." To get to the core truth of this

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matter, no supermarkets have said they have any plans to raise prices

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in an independent Scotland. Morrisons have said that prices

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could go down with the right regime. What nay have said is that transport

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costs for fresh food are more expensive in Scotland and after

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independence, should it happen, they would run their business in Scotland

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differently from the business in the whole of the UK, so that UK

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consumers would no longer subsidise the extra costs involved in

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Scotland. I spent about seven years of my career dealing at head office

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level with ASDA and Morrisons and it is true that it does cost more to

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deliver food to Orkney or to Aberdeen from Leeds, but it also

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costs more to deliver it to Cornwall or to the Lake District than to

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Leeds. Their point is if Scotland was independent, they would run

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their business in Scotland separately and would not have

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cross-border subsidies in the way they do at the moment? For a start,

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it's been said in an interview with the Huffington Post, Morrisons said

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that it would depend on the direction of travel and Scotland

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would have the ability to make it a more fairer environment for

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retailers to operate in. If you look at the direction of travel, the

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White Paper that's come out from the Scottish Government states that

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there will be a 3% corporation tax cut. There have been freight

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services grants from the Scottish Government already which amounted to

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?4 million that Tesco and ASDA have used to start distributing by rail

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rather than road and cutting costs. So, basically, the powers are there

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in an independent Scotland to create a situation where the cost of living

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could go down and Andy Clarke, the Chief Executive of ASDA, has said he

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is open to have meetings with Scottish politicians. Right. Daniel

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Johnson? By the same token, Morrisons are saying - and you are

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saying that Morrisons say that prices could go down. They are also

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saying that if the cost of doing business in Scotland goes up, they

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will pass those costs on. I think you can't... They won't go up. There

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is no real reason for them to go up. Well, I think the distribution

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costs... They will stay exactly the same. Why would they pass them on to

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a different jurisdiction? It is like saying customers in France will

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subsidise the transportation costs in Finland. That doesn't happen. I

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don't see why businesses would be doing that under independence in

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Scotland. It doesn't make sense. You can't say the prices might go down

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and that they might go up as well. I can guarantee they have been going

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up in Scotland and across the UK. Anyone who goes to Morrisons or ASDA

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and buys the family shopping will see we have had a 4% increase in

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food inflation in the UK over the last year. That's double that of

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Norway, three times that of Sweden and in Denmark, small, independent

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country that doesn't speak the same language or use the same currency,

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food price inflation has decreased. So being a small independent nation,

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how come they are doing better than Great Britain? It doesn't make sense

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to say that just because you are smaller. If you are smaller and you

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have the economic levers, you can create a better environment for

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business and that has been said over and over again by the Scottish

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Government. Alright. Let Daniel Johnson get a word in. I think it

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comes back to the same point. It's got nothing to do with being

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smaller. It's got to do with Scotland being a lot furtherer away

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in the markets. There have been allegations that some businesses,

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not just in Scotland, but big companies are afraid to speak out on

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this issue because they might get lambasted by the Scottish

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Government, or by people at the shops. Can you both agree that it

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would be a good thing if the Max maximum number of businesses... That

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is why I'm very pleased to be talking on the programme tonight. I

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thought you would be. Are you? Business for Scotland has over 1,000

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members. Businesses are coming forward. They are willing to speak

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out in favour of independence. You would like those who are not in

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favour to speak out as well? They are not willing to go on television

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and try and back up ridiculous scare stories like this. Alright. Don't go

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away. We will bring you back in a moment if we have time.

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Now, our reporter, Ian Hamilton, has been to Ireland, home to a land

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border between a constituent part of the UK, and a separate state which

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is part of the EU, and indeed the eurozone. There's a free travel area

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between them, but the Republic of Ireland is not part of the European

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Schengen free travel area. As I leave Scotland, and -- I am on

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the road in the search for the UK's only international land border.

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Sounds easy? You would think so. According to some in the better

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together campaign, if Scotland votes yes next year, we could have

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security guards and custom posts along the border between Scotland

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and England. But according to the yes campaign, it does not have to be

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that way. I am in Newry, a business -- a busy

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border town in Northern Ireland. It is suggested that if Scotland votes

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yes next year, this is a good example of the sort of border

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Scotland could have with England. This border was once much tougher

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due to the troubles. But today, the border is quite different.

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Since 1923, there had been a Common travel area between the United

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Kingdom and the Republic of Island. There was only one break in this

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agreement, during the Second World War. Anyone holding a United Kingdom

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passport or someone from the Isle of Man, the Channel Islands or the

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Republic of Arles and can travel freely within this area without

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showing that passport. -- Republic of Ireland. The yes campaign say

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there is no reason why it is an independent Scotland should not be

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part of this same Common travel area.

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This is a good model, which has allowed a lot of labour mobility

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across the border. The borders and smacked the barriers and challenges

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arrived on things like taxation and regulatory issues. These are

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barriers that in a sense could or should be sorted out.

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Joseph is in the rubbish business, bringing in waste from all over

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these islands. The likes of our business, because it is waste, the

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border is very much there, everything that comes across much be

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recorded, and it has to be shown exactly on time so that the people,

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the regulators can know exactly what happens. I can take waste from

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London and are not have to notify the authorities, but if I take it

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from the South of Ireland, I have to.

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This causes Joseph a headache and a lot of money. The lack of

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harmonisation in the regulation of the movement of waste also causes

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problems, and this is between two EU members.

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We have been travelling around here trying to find the border between

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the Republic of Island and the North of Ireland, and so far, no luck. --

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Republic of Ireland. I am desperate to show my passport, but there is no

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one around. We gave up the idea of looking for

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the border, and moved six miles south.

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This is a massive frozen food distribution area, with enough space

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for 40,000 pallets. The food here will end up on dining tables across

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Britain and beyond. The owner of this business says the border six

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miles to the north of them does not cause him any difficulties. It is

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not a real problem. There are a few minor issues like this certification

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for veterinary purposes for products produced in Northern Ireland or the

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UK that are being exported to China or Russia, are countries like that,

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but generally there is free trade. There are no customs barriers as

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such. Everything flows on documentation.

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Another contentious area if Scotland votes yes, is policing. There are

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plenty of corporation between the police in the north and the Garda in

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the South. They cooperate. I am sure there is a little bit of unofficial

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or whatever, but generally they cooperate. What they did not have a

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common travel zone for themselves. If I was to rob a bank this

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afternoon, I could not get a clean getaway? ! That is a shame.

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Neither I -- I would not attempt to rob any bank on either side of the

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border. Like many things in this debate, the border between Scotland

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and the rest of the UK will come down to negotiation. The Scottish

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Government might be keen for it to become a member of the Scott --

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Common travel area, but will the rest of the UK? This might come down

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to what kind of deal Scotland can negotiate to be part of the European

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Union, and whether the rest of the UK vote to remain part of Europe.

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Gordon, you have had experience in this. Either price differentials, I

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think there were -- I thought there were. Milk and eggs seemed to be

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cheaper in southern and fun Northern Ireland but potatoes are cheaper the

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other way around, so it is pretty much the other -- the same. I have

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done business in Ireland, and across -- I crossed the border several

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times without noticing it. I asked my accountant before going to

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Ireland last year what would be the differences. He said, it is pretty

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seamless, there is a slight difference on tax. I will just put

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the VAT inbox eight rather than box for. I think if we get the

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regulations right, there is no reason for additional complexity,

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but without additional complexes team we will have the opportunity to

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create a business environment which could lower the cost of shopping in

:18:51.:18:56.

Scotland. What do you make of that, Daniel? There are a lot of ifs and

:18:57.:19:01.

buts. I have no doubt Scottish retailers will continue regardless

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what has happened, but we do not know what will happen. There will be

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additional regulations, and the people... The people dealing with

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rubbish were saying there were a lot of differences. You have got a chain

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of shops, are there any differences that would make a change to you? I

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have about 300 suppliers, most based on the rest of the UK. -- in the

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rest of the UK. The rest in continental Europe. When I am paying

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invoices for suppliers in Europe, I have to pay ?15 for every

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transaction. I do not have to do that for the rest of England. If

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that did happen, that would be pretty worrying. I pay hundreds of

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invoices every month, that would add thousands of pounds... But there is

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no reason why that would happen. We would look to maintain seamless

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control across the Borders. We would not have a separate currency. You

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must have a different version of the white paper to me, because mine did

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not have the chapter written by Nostradamus which said how the

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negotiations were going to go. On the balance of problem -- prog -- on

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the balance of probability, there should not be any more problems with

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an independent Scotland dealing with other countries in the world.

:20:28.:20:33.

You will have to continue this in your own time.

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Tomorrow's front pages. The Daily Mail, was fuelled Fox to

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blame in helicopter tragedy? -- fuel forked.

:20:46.:20:56.

-- fault. The Times, cheat speed crackdown on

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benefit -- claim fraud. That is all for tonight. Good night.

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Good evening. We are in for a mild night across the British Isles

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tonight. A thickening blanket of cloud will bring rain into most

:21:17.:21:20.

areas by Dawn on Friday, but overnight lows will be something

:21:21.:21:25.

like ten to 12 Celsius. The cloud and rain will work its way eastwards

:21:26.:21:30.

through Friday, allowing trier, brighter weather to come in. --

:21:31.:21:40.

drier. Generally much drier and brighter for Scotland. The same can

:21:41.:21:46.

be said for Wales and the south-west of England. The central and --

:21:47.:21:54.

central and eastern England, the rain on and off throughout the day

:21:55.:21:57.

and into Friday evening it could be wet as well. Ended and Wales, the

:21:58.:22:03.

weekend should be fine by day, Scotland and northern Ireland, in

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for a stormy spell. One area of low pressure arriving on Saturday, so

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you can see a much quieter story for England and Wales. Rain sweeps

:22:21.:22:24.

across England and Wales on Saturday night, out of the way on Sunday. But

:22:25.:22:30.

then our next front approaches on Sunday, bringing stronger winds.

:22:31.:22:34.

Potentially

:22:35.:22:35.

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