No vote by Scots could still be a ‘no-but’ decision for business
The hope for a rapid return to business as usual in Scotland following the 55% - 44% vote in favour of the nation remaining within the UK has already been thrown into doubt.
Scotland’s First Minister, Alex Salmond, in accepting the voting result commented: “I don’t think that we will ever be allowed to go back to business as usual in politics again.”
Better Together campaign leader Alistair Darling also reflected the divisive tone of some parts of the yes-no debate in recent weeks when he said that many people had ‘felt unable to speak out except through the ballot box’.
By the same token, energy sector leaders continued to keep their heads down this morning, preferring to retain the ‘no comment’ status which they’re adopted during the campaign itself. While being impartial ahead of the vote was understandable for many organisations, the unwillingness to now comment on the way forward is more difficult to understand. The only conclusion to be drawn is that such business leaders recognise that almost 1.6m Scots are now disappointed to still be part of the UK and their support going forward will require careful management.
Another key issue for Scottish business is the prospect of Scotland acquiring tax-raising powers in the months and years ahead, by anything between 15% and 40% of total taxation requirements, subject to the differing views expressed to date by the UK political parties.
This calls into question how the funding of energy incentives, such as Feed-in-Tarrifs (FITs), might be affected in the future, a question which edie put to Scott Walker, chief executive of the National Farmers Union of Scotland (NFUS) many of whose farming and land-owning members already hold substantial wind, solar, hydro and anaerobic digestion investments.
“Until we see more details on this, a lot of current comments on this amount to pure speculation,” he said. “When you look at FITs, however, because these are financed through electricity prices, to which all consumers contribute, we wouldn’t expect these to be one of the factors which would be related back to Scottish funding.
“Where we could see something, however, if the potential for various tax raising powers are given to Scotland, is that the Scottish Government may be able to use additional funds to incentivise technologies in different areas. There are clearly a lot of ifs and buts involved in the debate this morning, but this is certainly a possibility.”
Business as usual
Such views echoed First Minister’s Salmond’s call for a rapid delivery of the extra devolution promises made by the UK political parties during the final days of the independence campaign. Business leaders will no doubt also be looking to cash in on such UK promises to the potential commercial advantage of Scottish developments.
“We would hope now for business as usual, of course, with the degree of uncertainty which we’ve all faced having been removed,” said Mr Walker. “Immediate concerns over FiTs, for example, disappears with no indication that the overall energy market will now change in any way. That delivers a renewed degree of certainty for businesses concerning ongoing investments.
“Looking to the longer term, however, we will be examining what Scotland’s additional powers might mean for businesses. On energy we are looking at two points. The first would be an improvement in transitional charging methodology which is currently seen as holding back renewable developments in certain areas. The second requirement concerns the need for improved grid structure and improved access to that structure, especially for independent generators.”
The message emerging from the industry this morning therefore is that Scottish businesses are well placed to extract a bit more from the UK exchequer in the weeks and months ahead and that this could just deliver a production and trading advantage for businesses located north of the border. The one downside to such views, however, is that 1.6 million ‘yes’ voters mean that staying away from another referendum for as long as a generation, as the First Minister previously promised, may prove hard to achieve.
“We’re hoping things will return to business as normal,” said John Maslen, director of RM Energy, which supplies, installs, maintains and lease wind turbines, solar PV systems and biomass heating systems from bases in Perth and Edinburgh.
“In the case of FIT-scale renewables, we are not likely to see any more favourable terms being offered in our view. What we need as a business is stability and as much certainty over future incentives as possible.”
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