Questions of Business

Just Months Before The Election For The Scottish Parliament, A MORI Scotland Poll Of Opinion Formers Finds That Anticipated Disadvantages For Business Are Still Uppermost In The Players' Minds

Recent research by MORI Scotland reveals that many of the opinion formers interviewed do not hold the kind of positive expectations for the outcome of devolution that the architects of change might hope for.

Just months before the election for the Scottish Parliament, the majority feeling of those polled across Britain, including business leaders in Scotland, was that devolution will bring little or no benefit to the business community north of the border. Indeed, remarkable numbers still have little to say about what such radical change to the way Scotland is governed might mean to Scottish business.

MORI interviewed 101 city investors (directors and managers of investment firms throughout Britain), 41 business and financial journalists (from the national and specialist media) and 30 Scottish captains of industry (managing directors, chairmen, chief executives and financial directors from companies drawn from the insider 500), the latter carried out for the Scottish Council Foundation. Interviewing took place between June and September 1998.

These are the key findings:

On Devolution

Most City investors say that they feel devolution will bring no benefits to Scottish business. Although pushed to say what the disadvantages might be, a third say that they feel there will be no disadvantages either. Implicit is a degree of scepticism that the Parliament will make any difference, and this is reflected to some extent in other groups of opinion formers. What marks out City investors, however, are worries over the impact of tax increases that the Parliament might impose in Scotland.

Business and financial journalists tend to have more uniform expectations, with pessimism prevailing over optimism. Three in ten say they think devolution will bring little or no benefit to Scottish business, while just 2 per cent expect there to be no disadvantages. The principle advantages that they foresee revolve around the benefits from increased national identity, but the most prominent anxiety is, again, doubt over higher taxation.

Captains of industry in Scotland itself are generally more optimistic. But even so, around 1 in 10 say that they can think of no advantages for Scottish business, all of them can think of at least some disadvantages.

Positive views are frequently qualified by significant anxieties. Expectations of increased business prospects are "balanced out" by fears that businesses will not invest if there are rising taxes. Expectations of stronger national identity are mixed with fears of marginalisation.

Common to many themes that emerge is a sense that many people - and people with significant roles in business and finance - are unsure what devolution will mean for Scotland.

National Identity

The research uncovers some intriguing questions. To what extent will national identity develop into nationalism, and what will that mean for Scotland? What impact will it have on businesses and, perhaps more importantly, on Scotland's position in Europe? Patriotism and a sense of nationalism is generally expected to rise with devolution. The Scottish brand could clearly become stronger, re-enforcing marketing strategies overseas, but some we spoke to sensed a danger that the process could create an impression of a nation rejecting the outside world.

Some emphasise that an increased sense of nationat identity in Scotland will raise consumer confidence levels and in turn increase spending and new business development. On the other hand, some we spoke to feared increased marginalisation. Exclusive branding as Scottish companies might enhance concerns about Scotland's rote within the UK and its links with England. As far as many in business are concerned, it is still considered important not to isolate themselves and keep the vital links with England and Europe. Some perceive that businesses will be "forced" to make more of their "Scottishness" and this might disrupt their trading links with England.

Taxes

With the new Parliament having tax-raising powers, many opinion formers we spoke to expect taxes to rise. This is believed to have serious implications for Scottish businesses and investment. If levels of taxation in Scotland are higher than in England, opinion formers think Scotland will lose both established companies and new developing companies to south of the Border.

Global Scotland

The move to devolved government in Scotland is not considered by some as supporting global thinking. Many argue that inward investment is good for the local economy and that too much attention on developing a separate Scotland will have a damaging effect on future and international development. The main concern is that Scotland may be regarded as a smaller country on the verge of a larger one. Businesses will therefore invest in what they see as a more stable, larger country - England.

The Parliament

The introduction of the Parliament in Edinburgh is generally thought of as a "good" idea, but the actual powers it will have are widely criticised. The positive effects include the practical aspects of having the Parliament close by, the possible speed of response to tenders and enquiries, awareness of the local environment and more effective means of lobbying for companies. Businesses that are expected to benefit from devolution and the new Parliament are those with a particular 'Scottish' product to sell, and those benefiting in Edinburgh from a burgeoning office supply sector, such as print shops and office equipment. Some also anticipate increased government subsidy from the Scottish parliament.

One common anxiety is a perception that the Scottish parliament will introduce a layer of bureaucracy and red tape. This is generally expected to hinder companies and, combined with the prospect of increased taxes, drive investors and companies out of Scotland.

Positive Quotes

"I would have thought increased government spending would lead to a local boom in property prices etc."

" … good for certain industries like media, publishing, secretverdana, anything related to bureaucracy but not of great value to business generally"

" … the fact that there is a place where only Scottish concerns are debated may result in a better understanding of what businesses in Scotland need"

" … decisions will made closer to where the action is"

"The distinctive Scottish identity will allow companies to sell Scotland abroad"

Negative Quotes

" … it may well result in increased interference because you have got another layer of idle hands"

"Chances are there might be higher taxes so companies might move away from Scotland"

"I just think psychologically it makes people feel more insular … you've got to think globally almost, not just Europe-wide"

"I think it may detach them from the U K. There has always been a flow of people out of Scotland and I think that might increase"

"If a company is inclined to, or forced to, make more of its Scottishness it might lose on some trade-unions links with England"

" … could lead to the belief that these companies are somehow on the fringe because of the size of the country"

Published in the Scottish Business Insider - January 1999

Simon Braunholtz is director of MORI Scotland

Technical details

This document contains the overall percentage results from a survey of Captains of Industry in Scotland. A total of 100 interviews were conducted by telephone by MORI Scotland on behalf of the Scottish Industry forum. The sample was drawn from the top 400 companies listed in the Business Insider 500, and at each company we interviewed a Main Board Director or, in some cases, a Senior Manger where the Main Board Directors are all located overseas.