The day Westminster asked my opinion (and didn’t like my answers)

I will let those of you with enough time to read the minutes decide how well I handled the Committee’s plan of attack. I hope it will become clear to you how much information is actually available from the Yes camp and how the No camp have almost nothing by way of a collective or even individual party visions for improving Scotland if we vote No.

I was the only supporter of independence giving evidence of course, somewhat of a token gesture by them perhaps, no doubt at least trying to give the impression of impartiality.The MP’s interrupted regularly, made loud scoffing noises, one even shouted Alex Salmond at an inappropriate moment and multiple probing questions came my way time and time again which led some in the audience to ask me later why they invited anyone else.In the end, it felt like a public debate involving seven unionist MPs versus one Yes supporter (a bit like BBC Question Time but without the cameras).

Now we can all guess what the Committee’s findings will be, seven unionist MP’s are hardly likely to recommend independence. Indeed, I wondered if they were really interested in my opinion but it seems they were at least hoping to catch me out. In actual fact, they got quite excited, even animated about credible answers BfS is able to provide to most reasonable questions on a future Yes vote.

One Monday in June the Westminster Parliament’s Business, Innovation and Skills Committee came to Glasgow specifically to look into “the Implications of Scottish Independence on Business”. I was delighted (if a little surprised) to be invited along to give evidence on behalf of Business for Scotland’s membership but in the end I thoroughly enjoyed the experience.

Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

Oral Evidence, Taken before the Business, Innovation and Skills Committee on Monday 17 June 2013

Members present:

Mr Adrian Bailey (Chair)

Paul Blomfield

Katy Clark

Mike Crockart

Caroline Dinenage

Ann McKechin

Mr Robin Walker

________________

Examination of Witnesses

Witnesses: Iain McMillan, Director, CBI Scotland, Gordon MacIntyre-Kemp, Founder and Facilitator, Business for Scotland, and Jo Armstrong, Independent Economic Researcher, Centre for Public Policy for Regions (CPPR), University of Glasgow, gave evidence.

Chair: Good morning and thank you for agreeing to give evidence to the Committee. As you can see, we are one witness short at the moment, but I understand she is coming and I do not intend to delay proceedings. Just to repeat, thank you for agreeing to speak to us. Could I just mention that obviously there may be one panellist better qualified to speak in answer to one question rather than the other. Do not feel that everyone has to answer every question if you really have nothing much to add. We shall not be concerned if you feel there is nothing more to add. Equally, if you do feel there is something to add or subtract to what any other member of the panel has said, please feel free to do so. Before we open the questions, could I just ask you to introduce yourselves? Obviously, we know from your labels who you are, but for voice transcription purposes it would be helpful if you could do so. I will start with you, Gordon.

Gordon MacIntyre-Kemp: Gordon MacIntyre-Kemp. I am the Managing Director of the new business network Business for Scotland. It is a business network for pro-independence business people. We launched on the 14th of last month and we already have over 500 members. To join Business for Scotland, you have to sign a declaration that says that you wholeheartedly agree that independence will be a good thing for Scottish business and the economy overall. We are a non-party political organisation and our board has members who represent all political parties and views but mostly none. The only thing that brings us all together is the fact that we want to make sure people get the facts about the opportunities for business that independence or a No vote brings.

Jo Armstrong: Good morning, I am Jo Armstrong. I use the word independent economist. I am the economist unaligned to any political party or to any of the possible options facing the electorate at the moment. I write under the banner of the Centre for Public Policy for the Regions and I have a bias towards financial services regulation and economic regulation.

Iain McMillan: Good morning to you. I am Iain McMillan. I am the Director of CBI Scotland. Now, I think most of you will have heard of the CBI. We are one organisation. We are headquartered in London with offices throughout the UK, the principal larger ones being in Scotland, Wales and Northern Ireland because of the devolved jurisdictions. I am part of the CBI line management structure and I am the professional head of the organisation for Scotland. Our role is business advocacy to make sure that the Governments, legislators and others understand the business position and the reasons for the business positions, principally in the development of public policy.

Chair: Thanks very much. Indeed, my opening question is actually a quote from your boss, John Cridland, giving evidence to the House of Lords. John Cridland, who, of course, is Director General of the CBI, said, “Uncertainty is the biggest killer for investment”. In your opinion, what are the key areas of uncertainty that need to be clarified in advance of the referendum? I will start with Iain, although I am sure the other speakers will have a view on this as well.

Iain McMillan: Sure, yes. I would like to do that. I am going to mention seven principal ones, not necessarily in any particular order of importance because they are all important and this is not exhaustive because some questions lead to other questions. Indeed, we have put over 200 questions to the Scottish Government asking them to clarify matters around the independence proposition.

The first one I would mention is membership of the European Union. That is quite a controversial question at the moment where opinions differed. Our view in the CBI is that if Scotland were to be independent then we would like to see the newly independent country be in the European Union, but there are issues around whether that would be so, on what terms and when. For example, the UK Government produced a paper some months ago that called into question the seamless way into Europe that the Scottish Government at that time appeared to believe was possible, that Scotland would be a new state, would need to apply to the European Union for membership, would need to in all probability accept all the full conditions of membership without exceptions, and that position seems to be supported by the President of the European Commission and several of the Foreign Ministers of member states. The President of the European Commission is also on the public record as saying that were Scotland, or an independent Scotland, to apply for membership of the European Union, which it would need to do, it could only do that after statehood. In other words, it could not negotiate its entry to the European Union concurrently with secession negotiations with the UK Government and so it would have to be consecutive rather than in parallel. So, a great deal of uncertainty around EU membership.

There is then the currency that an independent Scotland would adopt. Our view is that were Scotland to be independent we would want to keep the pound sterling. That is the view of the Scottish Government, but the Chancellor of the Exchequer and the Treasury has placed a question mark over that to say that it would require the remainder of the UK to agree to, for example, a sterling area and even if there was agreement then such an arrangement might not endure if the economy of the separate Scotland were to divert significantly from the rest of the UK. Were that to happen, then Scotland would have several choices there. It could unilaterally decide to use the pound sterling but not any sterling area. It could apply to join the euro or it could adopt its own currency. None of the three offer particularly attractive choices and two of them would introduce exchange rate costs and exchange rate risks into doing business with the rest of the UK and other parts of Europe were it not to be the euro.

Next up is the cost of credit. An independent Scotland-based Government would not have a track record of borrowing on the bond markets. It would not have a track record of fulfilling its obligations and, therefore, it could well be that the bond markets would attach a premium to the interest rate payable by an independent Scotland to offset that risk. Of course, that could have an impact on a currency if Scotland was to use a different currency than the pound sterling. Indeed, there is quite a lot of cascading knock-on effects there, which I would be happy to explore with you as we go forward.

Then there are the public finances. The only claim that they have to this really are the Government expenditure and revenue accounts, which show that at the last numbers that were struck, without oil and gas revenues included Scotland would have a deficit of some £18 billion, which is over 14% of gross domestic product, compared to the UK’s deficit, which is just under 8% of gross domestic product. Include 90% of oil and gas revenues, which is a figure roughly that the Scottish Government believe that they could negotiate, and that deficit falls to 5% of gross domestic product.

Now, there are some issues around that because oil revenues are volatile. For example, in 2011/2012 they delivered £10.6 billion of revenue to the UK Government. Two years earlier, they delivered only £5.9 billion in revenue. That is also the long-term trend. In the short term, I think that the Scottish Government are probably right that the oil and gas output could well rise from 1.5 million barrels equivalent a day back up to 2 million, but that is a long way down from the peak of 4.5 million barrels of oil and gas in 1999. Therefore, given we are, as the economists said in 2006, “into the long goodbye”, it certainly appears to us that the macroeconomic case for independence is highly dependent on oil and gas revenues, which are volatile and in the long term reducing.

Then there are the full costs of statehood. What would these be to the Scottish Government? What would they be to business? Because we would see the great departments of state having to be duplicated north of the border; the regulators that report and are responsible to the departments of state and through them to Parliament. There would be much duplication there.

Then on to my penultimate uncertainty, which is the impact on key industries; for example, financial services. Although it varies from sector to sector a bit, by and large our financial services sector has 90% of its clients outside Scotland, mostly in England. Therefore, what would happen in terms of regulation, what would happen in terms of currency and so on and so forth following independence?

Then, lastly, over time there would inevitably be a divergence of all the laws and the rules and the regulations between the two jurisdictions. Although, because of our civil and criminal justice system and devolution and some of the things that carried on after the Act of Union there is already some divergence there. Business by and large lives with that and it is not a problem, but there would be a great deal more divergence, in our view, following independence as Parliament quite rightly reacted to different pressures north of the border to those south of the border.

That is seven, as I said. It is not exhaustive and I would be very happy to expand on some of that during your questions.

Chair: Thanks very much. I think that was a fairly comprehensive introduction to the issues. Now, I am sure that both the other panellists could probably participate and we could take all morning on the issues that you have raised. I would just caution panellists. I think we have an hour for this session and we have at least a dozen questions altogether, so if you could keep your points in response as brief as possible I would be grateful. I would emphasise that if you feel that you have not had the opportunity to say everything that you would want to at this session, feel free to submit further written evidence or if you wish to contradict a point that was made but you did not get a chance to during the session, equally feel free to write in with supplementary written evidence. We will be very happy to receive it and it has equal weight to any verbal contributions that are made at this session. First of all, would anybody like to pick up in response to those opening remarks?

Jo Armstrong: Yes, I do not have seven, I have three, and they are definitely shorter than Iain’s seven points there. One is businesses have to deal with and do deal with uncertainty, so I think it is an important issue that says uncertainty is part of business.

The second one is around we are talking about in the main short term versus long-term issues. I think the short-term transition, short-term uncertainties, are significant purely dependent on, in effect, the negotiations in large part, but there is clearly a belief that the longer term outcome would be better as a consequence of that very painful potential short-term transition phase. What is not clear to me is how long that is likely to be. What are the costs and what is the net present value of the overall outlook that you might be expecting to achieve as a consequence of going down that route?

The third one is the status quo is not lacking uncertainty either. Clearly, the issue around EU membership is one that is quite significant. As Iain pointed out, we are part of the European Union but we may or may not be as a consequence of what is currently happening in Westminster. I think the status quo uncertainty is maybe not as large but it is definitely significant and cannot be ignored.

Chair: Gordon, I suspect you may want to add to all this.

Gordon MacIntyre-Kemp: Yes, I will try not to take as long as Iain did but I want to counter quite a few of those.

First of all, we have just had a survey done by Ernst & Young, which says that Scotland has just had a record year of inward investment. It is a significant increase year on year—76 inward investment projects. I think that the idea of uncertainty existing because of the independence referendum has been turned on its head completely by that. What actually has happened—and this is what the report itself said—is that independence is having quite the opposite effect. Business people that I speak to tell me that the uncertainty they are worried about is whether or not—and this goes to Jo’s point— that after the next UK-wide general election the in/out referendum on Europe will actually take Scottish businesses out of Europe regardless of how Scotland votes because of the number of people in London and the South East that will vote and possibly sway that referendum. If businesses are afraid of anything, it is the fact that there could be an exit from Europe as a result of policies that we in Scotland would very probably not agree with in the referendum. There have been polls that have said that Scottish people, as a whole, are pro remaining in Europe, whereas there have been polls that have said that from London and the South East in particular there is a potential to exit.

Going back to inward investment, recent research has proven that newly independent nations have had significant increases in inward investment immediately after independence. One of the reasons for this—and I have spent some time working at Scottish Enterprise on inward investment projects—is really about the brand that the country has. It is about putting yourself front of mind. Countries like Estonia, Czech Republic, Latvia, et cetera, have all had increases in inward investment following independence. The fact that Scotland is in the press right now all over the world, and is front of mind, is making people look at us and actually consider us as an inward investment location. Several businesses have said whatever happens they are quite calm about the prospect of an independent Scotland having sensible business-friendly strategies.

The EU referendum is one area of constitutional uncertainty that I think is potentially going to be damaging in the future. The other one is that there are reports, for instance, by the Liberal Democrats and also by a Westminster committee that have said that if there were to be a no vote, there would have to be a UK-wide referendum on further powers for Scotland and the regions. Now, that again means that if we vote no we have a further two, three, four years of constitutional uncertainty. So if anyone argues there is constitutional uncertainty, then there clearly, from my point of view, seems to be more with a no vote than there is with a yes vote.

Very quickly on currency, as a former economist I am very fond of getting into the numbers. We compared the deficits as a percentage of GDP in 2011 using an average of Eurostat, International Monetary Fund and CIA projections and found that out of 170 sovereign states the UK debt level as a percentage of GDP was 150th out of 170. But the really bad news is that when you compare the deficit we found that the UK was 188th out of 192 nations. What that actually means is that if you took the trade that was done between Scotland and England—and by the way it is a two-way trade. I would imagine, and I would have to check up exact figures on this, but I think that Scotland is a significant export market for businesses from the rest of the UK, in fact there will not be any trade borders with independence, we will be in Europe, and, therefore, it only makes sense to maintain the same currency so that it does not affect the balance of trade deficit, which is a major problem because London, and the South East in particular, is overheated and imports a great deal and we as a whole do not manufacture enough as the UK as a nation but Scotland obviously does significantly better there.

Iain was right to say that 5% of GDP is the deficit, which is a couple of per cent lower than the UK as a whole. So Scotland’s economy is stronger. The whole argument really confuses me when people say, “But if you take oil out of the equation”. Well, let us take London tourism out of the equation then. Oil is part of Scotland’s economy. It will be on-going. The trade body UK Oil and Gas suggests, at least 40 to 60 years of profitable extraction are left there. That is enough time to put Scotland’s economy back on its feet and undo the damage that has been done to it by London-centred Westminster policies over the last few generations, which have de-industrialised Scotland significantly.

Finally, one last thing on volatility. When we had devolution, the oil price was $10 per barrel. Last year the average was $110 per barrel. It has been extremely volatile but in a massively upwards direction. Jackpots tend to be volatile but nobody gives back the lottery jackpots because the next one it is less or more than what they have just won. I think that the way to deal with volatility is to have a sovereign oil fund, just as Norway have done, just as almost every nation in the entire world that has oil as a significant part of their GDP has done, except the UK. I believe that the fact that the UK Government as a whole has not dealt with volatility does not mean that they should actually be able to use it as an argument for voting no right now.

Chair: There are a number of issues I think I am tempted to take up. I am conscious of the time. I should emphasise that as a Committee we may well write to you with further questions arising from evidence that you have given us and we would be grateful for a reply. I am going to give you a quick supplementary, Ann, because you did ask, and then I want to bring Paul in. To a certain extent, Paul, the questions have been covered but you may want to—

Paul Blomfield: I will ask them.

Chair: Yes, but I will just bring in Ann quickly.

Ann McKechin: Could I just follow up the point that you made, Gordon, about creating an oil fund that has been regularly mentioned. Some analysts and economists—and I listened to a number of them last week—were stating that because Scotland is likely now to inherit a pro rata share of Government debt it is not at a very high level. They would suggest that the first thing that an independent country should do is actually pay off the debt rather than create an oil fund. Would you concur with that?

Gordon MacIntyre-Kemp: You have various options. One thing I would like to point out is that the long-term debt is secured at a 2% to 3% interest rate, maybe slightly more, or slightly less, but within that sort of area. The Norwegian oil fund last year returned 13%, it returned a massive profit. You are balancing up a couple of per cent versus significant profits in the oil fund. It has been proven that everywhere that has had an oil fund has actually been beneficial.

Ann McKechin: Apparently, it took quite some while to gather that amount because that oil fund, as I understand it, has been in existence for many decades, whereas we would be starting from scratch. With such a high debt level, many people have suggested that economically, with credit possibly being at a higher cost, the incentive recommended by the markets is to pay down the debt.

Gordon MacIntyre-Kemp: No, you are making an assumption that the debt would be at a higher cost but the UK has lost its triple A rating. I personally see no reason why Scotland would not actually be able to attain a triple A rating, with the assets we would have, the 26% of the EU’s renewables, oil and gas, and so on. As far as I am concerned there are also significant savings from independence. Take, for instance, that an even larger conventional armed forces without nuclear weapons could cost £1.5 billion less a year. We talk about the deficit. Last year, if you look at the Revenue Scotland report, the GERS report, you will see that £4.1 billion came straight out of—

Ann McKechin: I am talking about debt rather than deficit, just to clarify.

Gordon MacIntyre-Kemp: The deficit adds to the debt, doesn’t it? Every year the debt increases if you run a deficit. So £4.1 billion of that deficit was actually on interest payments from the UK’s debt. I would definitely invest in an oil fund and use other savings to pay back the share of the debt that we take on.

Paul Blomfield: If I could just follow up on the question of membership of the EU, which has firmly been central to a number of comments that you have made. I would agree that membership of the EU is important for an independent Scotland. Do you think, therefore, that it is important to have absolute clarity on the issue of whether an independent Scotland has to reapply for membership of the EU? The question is whether it is important to have clarity.

Iain McMillan: I think we would like as much clarity as we can get but opinion seems to be divided on this. I think that one does need to look at the opinion that has been given by the President of the European Commission. That is a pretty high level of seniority in the European institutions. He has made it clear that Scotland would be a new state, the remaining part of the UK would be the continuing state, and that Scotland would need to apply. That is controversial. Others have said no, that is not the case, although I do understand that the Deputy First Minister of Scotland fairly recently did concede that negotiations would be required. I expect these negotiations would require unanimity and the 27 countries of the EU to put these negotiated points into effect. There is a lot of uncertainty there. It is not something we like. It is not something that we would like to go forward with, but it does look for now as if it is going to be two sets of opinions.

Paul Blomfield: Are there any other views?

Gordon MacIntyre-Kemp: Yes, I would just like to point out that the European Union will not give an official response on this to the Scottish Government because the Scottish Government is not, in effect, the member; the UK Government is. The UK Government could actually ask, could write to the European Union and ask for an official response, but they have refused to do so. They have, in fact, been criticised by the House of Lords for doing so as well. This is a case of someone, an actual organisation, that does not want Scotland to become —

Paul Blomfield: For not doing so.

Gordon MacIntyre-Kemp: For not doing so, yes. This is a case of an organisation that does not want Scotland to become independent refusing to seek the clarity that they themselves are claiming does not exist but only exists because they will not renegotiate.

Paul Blomfield: I think—

Gordon MacIntyre-Kemp: I am sorry but if you let me finish here, basically the only way to get clarity is for the UK Government as the member state to seek clarity. I would actually wonder why they have not. Is it because they are afraid they might get the sort of clarity they do not want to receive?

Paul Blomfield: Can I just ask you, Gordon, because I think that the President of the European Commission has made the position fairly clear, but I understand that the Scottish Government has taken legal advice. Do you think it would be helpful if that legal advice was made public?

Gordon MacIntyre-Kemp: I am actually not here to speak for the Scottish Government.

Paul Blomfield: No, I am asking for what you think.

Gordon MacIntyre-Kemp: In terms of the President of the European Commission, I do not believe he is in a position to actually make a decision.

Paul Blomfield: I was asking what you think about the Scottish Government making its legal advice public.

Gordon MacIntyre-Kemp: I know, but you put two points in the question so if you will let me just answer one and then the other. The President of the European Commission is a politician who has moved on to a new role. He has made a statement, as it has been said by Iain himself; others have contradicted that statement. I have looked at the evidence myself personally to see whom I believe, and I find the Scottish Government’s position that we will be able to renegotiate terms from an existing membership from within the European Union—which is what we have always said and we have never changed that—to be compelling.

In terms of what the Scottish Government intends to do, I think that in October this year they are writing a White Paper, which will set out the definition of the type of independence that people are going to be asked to vote for. Two things will come out of that. One is a great deal of clarity, and I think it is right they have taken the time to do that properly. The second thing is that separation will not be on the ballot paper. A mature, interconnected and interdependent independence within the EU is what they are going to be asking people to vote for and I am sure that the legal advice will cover that then.

Paul Blomfield: Can I just come back briefly, Chair? Let us assume for a moment that Scotland does have to reapply for membership of the European Union. A prerequisite would be joining the euro. In those circumstances, what view would you have on the impact that would have on the Scottish economy?

Iain McMillan: Well, the first thing is that that would introduce an exchange rate differential between Scotland and the rest of the UK because the rest of the UK would remain outside the euro. Therefore, cross-border trade, cross-border business between Scotland and England would become subject to costs of exchange and it would become subject to exchange rate risk. Now, okay, there is hedging, but hedging comes at a cost. That would be the most immediate and the most impact, I would suggest, that would happen in the island of Great Britain.

Jo Armstrong: Yes, it would certainly add transactions cost to businesses in Scotland whose major trading partners are in England. It would add transactions costs; there is no doubt about that. It would depend on the terms of trade at entry, and that again would actually be negotiable. But it would certainly add to transactions costs so potentially in the short term reduce growth.

Gordon MacIntyre-Kemp: It is a false question, the assumption—you say let us assume we would have to join; we would not have to join. In order to actually adopt the euro you have to join the ERM mechanism for two years. Now, to do that you have to commit your own currency to that. We do not have our own currency right now so we would have to first launch our own currency and then have a referendum deciding to join and then we would have to commit it for two years and meet all the criteria, and even then it is optional. You can decide whether you want to do it or not. I would not recommend joining the euro. I have, since 2005, recommended an independent Scotland keeping the pound, and that is exactly what we will do. That will be beneficial for both parties. So I think it is a loaded question.

Also, the idea that the EU would force us into various things is quite interesting, the UK, because of its size, is often said to have these four big opt-outs. Well, Denmark, which is a smaller nation than Scotland, has five opt-outs. We can actually look at the likelihood of that happening. When you make an assumption you have to decide is it a likely assumption, and it is a completely and utterly impossible assumption that we would be forced into either, in my opinion.

Paul Blomfield: I think it is a very reasonable assumption and very reasonable question, but I will leave it there.

Mike Crockart: It is a question really to you, Gordon, on your website you have argued that independence would act as a catalyst for Scottish people to become more entrepreneurial, confident, successful, ambitious and international in their outlook, which is quite a big claim. What evidence do you have to support that assertion?

Gordon MacIntyre-Kemp: Well, basically it is not a claim from myself; it is a claim that all 500 members have actually signed and agreed to. Scotland deciding to vote yes, which I believe it will do, is making a significant statement of confidence. It is one of the issues about our country that for several generations we have witnessed a deindustrialisation; we have witnessed an eroding of economic opportunity; we have seen massive economic migration from Scotland to London and the South East. In my own family, I am the first generation to actually come back to Scotland; there are a lot of them in Hexham in Northumberland.

If you actually look at the publicity that Scotland is having right now, the inward investment that that has, according to Ernst & Young, started to generate, and actually consider the publicity we will get from the opening of the polls to the actual announcement of the result, an English advertising agency said that if you were to buy that as advertising time on international TV it would be between £800 million and £1 billion worth of TV advertising. I think if we have £1 billion to spend as a nation on building our brand, what do we want to see? Do we want to say we are a confident, entrepreneurial, international, outward-looking nation that wants to talk to the rest of the world on our own terms? Or do we want to spend all that money sending out a message that we are no more worthy of nationhood than Shropshire? That is no insult to Shropshire. That is what Tony Benn said, Scotland had no more right to nationhood than Shropshire.

Basically, I think that one of the most single biggest cultural jumps that Scotland could ever take is a statement of intent and of confidence and I think it will have a major impact on the confidence of the nation and, of course, business and entrepreneurship as well.

Mike Crockart: All those things are now already happening. Yes, we are using the benefits of the publicity, but the inward investment is already happening. Talking particularly about entrepreneurship, there are lots of things happening in Scotland right now about business start-ups. We have a higher business start-up. That is happening under the present system, so what are the things that you are arguing are holding us back? I have an Entrepreneurial Spark set up in my constituency. Business England Network seems to be very healthy in Scotland. There do not seem to be the barriers that you think are there that independence will help particularly.

Gordon MacIntyre-Kemp: Traditionally, start-up rates in Scotland are a problem , I worked with Scottish Enterprise for about five years and it was something we struggled with and something that Scottish Enterprise and the Scottish Government since devolution have put an awful lot of effort into. I think we are seeing the results of their efforts there. We have struggled for generations with start-ups and we are getting an awful lot of self-employed people nowadays, which is contributing to the start-up rate. What we really need to see is a lot of fast-growth companies, those that can actually accelerate away and start employing a great deal of people. Something that I hear on a regular basis is the lack of headquarters of businesses in Scotland, and also the lack of inward investments in terms of European headquarters, and so on, because fast-growth start-ups tend to spin out of headquarters. The skills of marketing and finance and operational management, these sorts of things, there is not enough of those people starting businesses in Scotland or contributing to start-up teams. I think that the corporation tax plan, which we used as part of a suite of products to increase inward investment and European headquarters, and so on, into Scotland, will help create a situation where the opportunity to create a better type of start-up will happen. But there has been some increase. I am pleased to hear you say we have been using the publicity to good effect, but I think that there is still a great deal of room for improvement.

Mike Crockart: I agree, but I think what you have outlined is that there are a lot of major steps forward caused by devolution, so that would be the first step. We are running out of time. If I can turn to a question around the banking system but more as to how it relates to small businesses, and it is more really to the whole panel. In Scotland the banking system is much more dominated by really two players, HBOS and RBS. How do you think that dominance would affect bank lending to business in an independent Scotland?

Jo Armstrong: I think, on the issue of bank lending, at the moment we have a problem of bank lending and small businesses are saying they cannot get access to finance almost at any price let alone at an affordable price. Again, we are starting from a position that is difficult. If we are talking about two large banks effectively being the only two routes to finance for small businesses in Scotland, then we get worried about potential anti-competitive pressures that might bring so we have to look to regulation to make sure that did not dominate. But if we are talking about, again, at the local levels and talk about regional banks as a route to restructuring the banking sector to make it more business friendly, more business focused, we start to ask the question: if you have regional banks in regions within the UK, what is the difference that that might create in terms of monopoly power to what might be within Scotland at the Scottish level if it had only two banks, two regional banks, as opposed to one regional bank, for example, in the northeast or one regional bank in the southwest? Again, it is about understanding how the regulatory framework will work to make sure that monopolistic power might not be abused.

Mike Crockart: There will in turn be a greater need for Scotland to regulate?

Jo Armstrong: I think there is a need across the UK to make sure that small business—I think small businesses, as someone who worked in the banking sector, do not find it easy to hop around and look for competitive pricing. They look for a banking relationship. That banking relationship, once gained, will have a potential for them to look for the cheapest price. It is about a suite of products that small businesses need access to. I think that is about how the regulation framework works in the best interests of businesses, and I do not think it is working at the moment at all. Potentially, we are going to have an independent Scotland with two large non-local banks.

Iain McMillan: I think I would endorse a great deal of what Jo has said there. We are in a very difficult place. The UK banks have had to shrink their balance sheets. The regulators have required them to have more tier 1 capital. Under Basel II that will increase yet again. That is less money that they have to lend when it is in that sort of capital framework.

Over time, regional banks, yes, I think that would help; anything that improves competition. I think that would help but again there are risks ahead here. One risk is currency. If Scotland becomes independent, adopts the pound sterling—I really do have to add here Scotland cannot demand its way into a sterling area. It needs the consent of the UK Government and Mr Osborne has made it clear that that consent is not certain and that even if there is consent then it may not endure. What would happen if Scotland fell into the pound sterling area, you would have all these businesses with liabilities in pounds perhaps having to repay them in the Scottish groat or whatever the currency that might be adopted here. The same is true for the fund management business. That would stray into that. The costs and risks around the currency question are considerable and it could affect small businesses just as much as it could affect large businesses.

Gordon MacIntyre-Kemp: Can I just answer? I need to come in on that. First of all, we had a global banking crisis that was largely created by the lack of regulation by governments and one of those two leaders of those governments around the world that was—

Mike Crockart: Alex Salmond.

Gordon MacIntyre-Kemp: No, not at all. He had nothing to do with the deregulation of the Scottish banks.

Mike Crockart: He was a champion for it.

Gordon MacIntyre-Kemp: In what respect? He actually was not the person who knighted the leader of the bank and then the leader of the No Campaign actually complained when his knighthood was stripped. I am not here to defend or to talk about any particular politician. I am talking about the system of government that we operate under.

As I was saying, I go back to my point, which is that we have had a global banking failure caused by a failure of governments. One of the two leaders of that deregulation was the UK Westminster Government, and the way to respond to a global banking crisis is to have global banking regulation in place. A large amount of the regulation, about 70%, will come from the EU in the not too distant future. One of the key reasons for leaving the EU that a Conservative politician that I noticed on TV a while ago said was he wanted to make sure we do not get put under the thumb of those draconian EU banking regulations. Now, as far as I am concerned, that is actually quite a worrying thing. I think that that is something that we need to put on record as well.

In terms of the actual pounds sterling, sterling is owned by the people of Great Britain as an asset. We in Scotland have a percentage population share of that. We are not adopting it. We already have it. We will be keeping it and I believe that after a yes vote there will be no political posturing on that because, as I have said before about the size of the deficits, it would actually be extremely silly for the rest of the UK not to want to keep Scotland’s exports within sterling in order to strengthen the sterling zone. Political posturing aside, coming at it from an economist point of view, I would have to say I would expect that deal to be done fairly quickly and sensibly because after the referendum is done, most politicians will start to behave in a more sensible way.

Chair: Interesting point. We will not pursue that particular line.

Katy Clark: Iain mentioned earlier the need for new regulators. What institutions or regulators do you think would need to be established in an independent Scotland? Has anyone made an assessment of the cost of that?

Jo Armstrong: I think the Scottish Government has produced a fairly broad-brush paper on the regulatory framework they would be looking to establish, and we accept that certainly some of the skills needed to run it efficiently and effectively we do not have in Scotland at the moment. We would be looking to have some sort of arrangement by which some of the regulatory structures continue to perform for the benefit of Scotland until such time as we have the skill sets necessary.

They also point out two quite interesting things. One is that of all the regulated structures none of them are set it stone and are constantly having to change to accommodate how the market reacts to the regulatory structures that they are facing. The cost structure, therefore, for some existing UK regulators may actually be a bit bloated, and I would argue that there are efficiencies to be had if you restructure and I would argue that there would be some for Scotland.

They are also suggesting that they have a model in Scotland that has worked fairly well for water and they would like to build on that as a mechanism for better regulation within Scotland. The water regulator in Scotland that regulates Scottish Water, which is the whole water and sewerage provider in Scotland, has through its management generated something like 40% savings and efficiencies, created an infrastructure that is vastly improved given its starting point, and is now one of the cheapest providers of water and sewerage for domestic customers in the UK. I think it is important to note, however, in order for them to have done that they have had to rely on Ofwat’s data sets, knowledge and experience and they have used that very effectively. They are now helping Ofwat develop, one might argue, the shape of the sector in England and Wales by introducing competition to their own domestic part of the market in England and Wales.

That is a relatively small part of its regulatory requirements, so there would be a requirement to piggyback off the back of existing activities in the UK. Again, we enter a world of negotiation and potential service level agreements or transition periods, which again I come back to how long is that, what is the cost and at what point do you then wean yourself off it? One assumes given our commitment to the EU that we will continue to have competition law equivalent to what we currently have, but it is interesting potentially that if the focus is on the Scottish dimension rather than the UK dimension it might focus on different activities than what we would currently happen because it is too small for the Competition Commissioner really to be interested in. You could argue that some aspects of greater efficiency or greater innovation might occur as a consequence of a greater focus on Scotland.

Iain McMillan: Well, I think that is correct but it would also mean duplication of regulators unless in some instances the regulators were shared. I think that has been mentioned. Again, if regulators are shared, then there could be economies of scale there, but perhaps the UK regulator would not regard a small matter in Scotland as being top priority, whereas an independent regulator in Scotland might well do. I think there are going to be some tensions there, but we would certainly see a situation where businesses that currently have to deal with one regulator would need to deal with two.

Now, on the financial services, for example, we have not taken an opinion on this ourselves, but our friends and colleagues in Scottish Financial Enterprise are on public record as saying that there would need to be a separate financial services regulator in Scotland and that the EU law requires that. That is one example of where there could be additional costs for business. Again, it is not just the regulators; it is the whole panoply of laws and rules and taxes as well. Over time, businesses may be dealing with a different corporation tax regime, for example, north and south. Corporation tax may come down in Scotland. The business rate has not. There is power for that now; it has not come down. The corporation tax could, but then it would have to come down to at least an extent that would offset the cost of having to segregate taxable profits north and south of the border and also the compliance costs with HMRC south of the border under Scottish revenue authority. Again, this is quite an expensive thing to look at.

Gordon MacIntyre-Kemp: Can I just say that, as I said before, I do not think separation is on the ballot paper and this is where a lot of business people are very interested—trying to understand what form of independence people are actually being asked to vote for. When the Government White Paper comes out in November we will get a much clearer view of that, but my form of independence ahead of that, that I actually believe in, is one where we understand that there are thousands of unions between not just ourselves England, Wales and Northern Ireland but ourselves and other countries, Ireland in particular. Some of those unions work, some of them do not. The political union and the economic policy that we get from Westminster, the one-size fits all, does not work and that is one of the things we want to lose. My form of independence is one where we keep the bits where collaboration and cooperation work and we lose the bits where it does not.

In terms of regulators, I think that if you are going to have a common market it makes sense to have, in some cases, a common regulator across that common market. We are seeing a lot of that across Europe right now. We have mentioned banking as well. There will be the European super grid, there will be a completely free energy market across Europe as well. Regulation has to be within a defined market, not within an old-fashioned sort of boundary. I think that is the mistake that a lot of people are making when they look at this. Moreover, we already have a separate judiciary, a separate accounting exam, and so on, those sorts of things. There are an awful lot of things that we currently do differently already in Scotland and companies do not seem to be complaining about that.

The final point is on tax, which is that devolution has already allowed us—should we vote for a Government that wants to use it—to change income tax. With the Scotland Act we will be able to change tax to a greater degree, so the power to vary income tax across borders exists with devolution and it is not an independence question specifically. On corporation tax, businesses deal and trade internationally. They will handle the different corporation tax rates. It is not too much of a problem, but can I just say that I think the problem with corporation tax right now is the variance that we do have between Scotland and England because right now we are giving 100% corporation tax rebate to some companies.

Katy Clark: We will be coming on to the issue of tax, but specifically on regulators, do you think it is feasible that Scotland would share some of the regulators with the rest of the UK?

Gordon MacIntyre-Kemp: The point I made was across open markets, yes. If you want a complete trade zone it is reasonable to say yes to that.

Katy Clark: The answer is yes?

Gordon MacIntyre-Kemp: Yes.

Chair: Just quickly, you talked about effectively collaborative regulation, where it works and does not work, as you have said. Do you not think there could be a problem that, if you like, some collaborative regulation works for Scotland but might be perceived in England not to work in England’s favour and, therefore, you may not have a choice of that?

Gordon MacIntyre-Kemp: Sorry, that is the situation we currently have, isn’t it, that we have one regulator for the whole of the UK? If issues do not work for Wales, Northern Ireland or for the north of England, where I was brought up, then nobody really gets a say. If we have a shared regulator, then I would guess that we would have more say than we have currently. I think that is actually an improvement and not a problem.

Chair: You do not think it is a problem if England decided that it did not wish to share the regulation with Scotland?

Gordon MacIntyre-Kemp: There is a huge piece of negotiation to be done. Whether we go for changing devolution on a slow basis towards independence, which is the route that we are on right now, or whether we take the leap as a country and go for what I believe to be the optimal answer, there will be renegotiations either way. I believe that when cool heads get together following the actual referendum campaign we will find that there are ways and means to come up with an optimum solution in terms of regulation for both Scotland and the rest of the UK.

Chair: A lot of this seems to depend on belief.

Ann McKechin: It is estimated in Scotland that of firms with more than 250 employees only 18% of those companies are actually registered in Scotland. Would an independent Scotland be more or less attractive as a country to which headquartered companies would be attracted? What factors would you believe would have the greatest influence on it?

Jo Armstrong: I suppose the issue about headquarters is: is it large headquarters or small headquarters because all SMEs have their headquarters in Scotland. I think it is important to distinguish that that is an important driver if we are talking about the real powerhouse of job creation and economic growth.

If Scotland was independent, then we probably would find that Scottish development and national-type activities would be even more to the fore. They would be seeking more options to try to attract, probably requiring tax breaks to make that happen if you are talking about mobile capital. I certainly disagree with Gordon’s views about the Ernst & Young report. We are talking about size of projects that are being brought in as a consequence of tax incentives and the like. Scotland is a small jurisdiction. Within the EU it is an attractive location.

Ann McKechin: Part of the thorough investment, certainly the oil and gas business, as Gordon has referred to, has been going through a growth period at the moment, clearly, that would include the figure that is currently going into the oil market.

Jo Armstrong: Yes, but most of the headquarters would be outside Scotland, I would think, than in Scotland. So in terms of balance of payments issues it is actually a moot point as to whether or not it would be net beneficial to the UK if (inaudible 10.55.25) are already transmitted out of Scotland at the moment. It would be attractive. How much more we could attract will depend on how much mobile capital is willing to come. The attraction is not just about tax but clearly it is important. We have good transport systems. We have a highly educated population. We have wonderful countrywide, which are all important factors in attracting inward investment. But if it is about attracting inward investment, then because, as the Ernst & Young report clearly said, it is a highly competitive marketplace and though Scotland has done very well, it is becoming much, much harder to be that attractive and probably tax incentives will have to increase rather than diminish to be able to attract yet more of that capital because there are many, many more places for them to go.

Iain McMillan: I think that is right. It could also be argued that the success of inward investment to Scotland has been as a result of access into the English market. It is absolutely seamless. There are no barriers at Hadrian’s Wall. The tax system is becoming more competitive for businesses. What would happen after independence if these things started to change and businesses thought, “We did want that access to the rest of the UK, but you know what, if we go into Scotland their health and safety laws are different, their employment laws are different, they have shaved a couple of pence or three pence off corporation tax, they have done a few more things, but it is risky. They might have a separate currency one of these days and who knows. Let us just go to Tyneside”. I am not making a forecast or a prediction, but businesses would have that in mind and would certainly factor these parts in.

Jo Armstrong: To counter that, I would argue that they would come into Scotland to get access to the European market because England is out.

Iain McMillan: Well, you could argue that as well. Let us remember we are on the periphery of Europe up here. The further north you go, the more the connectivity disadvantages you.

Gordon MacIntyre-Kemp: I would like to thank Iain for pointing out the lack of infrastructure investment from Westminster and the lack of direct flights because of lack of powers to change things like fuel taxes and air passenger duty, and so on. I think that Scotland is aiming to be at the heart of Europe and in terms of headquarters businesses, I agree completely with Jo that if we are looking to grow Scottish businesses that have started here and help them to grow more quickly to give them direct access and direct help from Scottish Government assets in having a direct relationship with the EU, then helping to get them to go faster would be the best thing we can do for Scottish business. But you do need to, as part of a suite of products, attract HQs here. I think that if we have the rest of the UK after independence leave, then we will see a massive migration of headquarters from England to Scotland so they can actually stay within the European Union.

Ann McKechin: Can I just play devil’s advocate? Two of the largest headquarters with thousands of staff in Scotland are the Royal Bank of Scotland and HBOS. Do you think it might be better for Scotland’s economy if it was independent that actually neither of those companies have their headquarters here given the issues and problems that they have?

Gordon MacIntyre-Kemp: No, I think that is a bit of a bizarre question. We were actually told that as a result of the UK Government’s bailout one of the key things would be that we would maintain jobs in Scotland and we have seen about 8,000 jobs go from the Royal Bank of Scotland, for instance. I do not think that the current system has anything to really boast about there.

Ann McKechin: I am not talking about the actual performance of the companies. I am just talking about their actual situation as a headquarters.

Gordon MacIntyre-Kemp: Lots of small countries all over the world have large multinationals based there. I see that as being a benefit and in terms of HBOS I am actually quite unclear. Maybe on paper they are based here, yes, but it appears to me that their HQ and most of their operations appear to be in England —

Ann McKechin: That was my point because legally they are based here and it is their legal headquarters, which in terms of liability and debt is a key point. But the problem is much of their business is actually out with Scotland.

Gordon MacIntyre-Kemp: Certainly, I know that 80% of RBS losses came from the London operations. What I would say is that especially if those corporation tax cuts, as part of a wide range of economic boosting measures from an independent Scottish Government, I would say that would be attractive to not just them but other large corporations to headquarter themselves here.

Ann McKechin: Thank you.

Chair: I want to bring in Robin Walker now. His question is to Iain. Some elements of it I think you have already covered, so we will be grateful in view of time if you did not repeat them.

Mr Walker: Picking up on both your comments today and the follow-up paper that you sent to Scottish Government, it raised a number of questions about tax rates, duties and levies. Is the primary concern in that area about raising sufficient revenue and giving the Government a sustainable tax base, or is it more about the competitiveness of the Scottish economy?

Iain McMillan: I think it is three things. Firstly, certainly, is the ability of an independent Scotland to fund itself in the long term, and that includes all the costs of social welfare and other things like that. It is something that most business leaders care about. But it is also about the degree to which Scottish businesses would be competitive after independence. There are signals being sent out that corporation tax, for example, in an independent Scotland would be lower. Firstly, that would require the political party that makes these promises to fulfil them, and weigh the balance of corporation tax versus other taxes. How do they fund the agreed degree of public spend?

But there is also the issue for business, the costs for business. At the moment, a business can operate across the UK and pay one set of corporation tax on its taxable profits. If Scotland becomes independent, these taxable profits will have to be struck for the two jurisdictions, the rest of the UK and Scotland. That is actually quite complex, and it is also something that would need to be policed extensively by HMRC and the Scottish Revenue Authority, because these authorities would want to be sure that transactions are being passed from one jurisdiction to the other at full economic value, and that the highest taxable profits will not be taken in the lowest tax jurisdiction falsely. That could be quite an expensive thing to do, and it would be expensive for companies as well. Here is an example, and it is only one example, of a different jurisdiction introducing costs into business that are not welcome. That is two of the three. What was the third one?

Mr Walker: It was really balancing out those two. I just wondered, are most of your members taking the view that, in the event of independence, overall taxation in business would be higher or lower?

Iain McMillan: We don’t know. What we do know is that the cost of servicing the two tax regimes will inevitably be higher, for the reasons that I have mentioned.

Mr Walker: Does anyone else want to come in on the tax point?

Gordon MacIntyre-Kemp: Yes. Basically, Scotland has, for the last 30 years, almost every single year—in fact, I think every single year—contributed more tax to the UK in percentage terms than it has received. Last year, for instance, 9.9% of tax revenues versus 9.3% of public spending. I also saw a lovely headline in, I think, The Telegraph a few months ago, where it said, “North Sea bonanza will give a £25 billion boost to George Osborne”, and I thought that was quite interesting because I would quite like to see some of that money spent in Scotland because I think we have underspent for many years. In terms of the point about taxation having sufficient revenues on-going, I think only independence really fully guarantees that.

We can talk about barriers as well in terms of taxation variances. Actually, under advanced forms of devolution, those barriers still exist, in the existing form of devolution, and I don’t think they are barriers at all. I think they are opportunities. If there was a tax cut, for instance, that had the effect of reducing the overall income that Scotland got, the only reason for applying that is that it stimulated the economy and got more and more people into work and contributing to the economy, and therefore I don’t think that cutting one tax necessarily means that the overall revenue will fall. If we can boost the economy, overall revenue should go up, and I think corporation tax, used in the right way as part of a suite of products, is one of the things that can have that effect.

Jo Armstrong: Can I possibly come back on that?

Chair: Quickly.

Jo Armstrong: I think it is very important we do not get caught on the fact that from 1980 to now, it is a 30-year period, which is when the North Sea revenues kicked in—life started before 1980. The future for North Sea tax revenues is downward, not necessarily for North Sea jobs or North Sea output, but for North Sea taxes it is downwards. Tax competition currently exists. I cannot believe that at this point George Osborne is currently struggling with Google et al, but that issue exists at the moment, let alone that it might or might not stop happening in Scotland. Scotland’s productivity, as with the UK’s, has improved by 10 percentage points in the last 10 years, when we have had massive boosts to public spending. That is still taking us to the top of the third quarter in the OECD, so we are woefully behind the curve on productivity, and if tax competition is the route to improving productivity, which is where it is needed to grow economic growth, then we have interceded probably, because if we drop taxes in Scotland, they are definitely going to drop taxes in the rest of the UK.

Gordon McIntyre-Kemp: I would have to disagree with that.

Chair: The next question is being directed to you, so perhaps you will have a chance to incorporate your response in that.

Ann McKechin: I want to talk about corporation tax. I anticipate perhaps most of the members that you represent do not pay corporation tax, because most SMEs do not. What other key decisions and tax regulation do you believe is necessary to deliver that boost to the Scottish economy, which you have been talking about passionately this morning? Is it a lower income tax regime? Is it more business taxes? You mentioned that that had not been lowered in Scotland. What other levers do you think we should be using to achieve that level of growth and productivity that Jo was just referring to?

Gordon MacIntyre-Kemp: I think this is the key issue here, that there still are economic problems in Scotland, and one of the things that people say of the Scottish Government—regardless of what party is in charge—is “Why hasn’t the Scottish Government managed to solve all of those things?” If a really good golfer plays a not very good golfer, and the really good golfer only has a sand wedge and the not very good golfer has the full set of tools, then I know who I am betting on. I did actually use Tiger Woods versus myself in that example, somebody pointed out I might not still be able to beat him.

Basically, there are significant powers and economic tools that would come to Scotland as a result of independence, ones we can use. I think I have mentioned air passenger duty before. There are tobacco duties, inheritance tax, alcohol duties, vehicle excise duty, all these sort of things.

Ann McKechin: Would it be lower or higher? Can I just ask you? What do you think the general trend would be? Do you think it would be a lower tax economy that you would be looking for in your group?

Gordon MacIntyre-Kemp: The referendum is a referendum. It is not an election. Whether the taxes are higher or lower depends on who Scotland votes into government, and I personally believe that, regardless of who we vote into government, having a government that is answerable only to the people of Scotland will make better decisions for Scotland and be able to use these tools better, so I do not particularly care what party governs Scotland afterwards.

Ann McKechin: Increased taxes for their members, they have increased tobacco taxes. Your members will be quite happy with that?

Gordon MacIntyre-Kemp: Let me just give you an example. When we launched, a few people said, “Look at all these right-wing supporters of independence. They are only interested in making money and so on”. Then, one after the other, when our members stood up to introduce themselves, they all talked about the distribution of wealth, the inequality of opportunity and so on, so I think my members are more motivated by improving Scotland as a whole and see independence not as an end but the beginning of something better.

Ann McKechin: What kind of tax incentives or regulatory incentives would be different, then, from that which already exists in the rest of the UK? Are you talking about a higher taxation system with improved public services or are you talking about, which would certainly be an issue, focusing the budget on the business sector? I think it is fair to know where we stand.

Gordon MacIntyre-Kemp: The point is that it depends on who we elect as to whether or not we will have that.

Ann McKechin: I am not asking who you elect. I am just asking your view.

Gordon MacIntyre-Kemp: The view of Business for Scotland members is that if we reduce some taxes as part of an overall strategy, which will improve the economy, then we support that. If we increase our taxes as part of an overall suite of activities, then there is a possibility that we would also support that. We are not, unlike some other organisations, just dead against all sorts of tax raises or for tax cuts. What we are for is coming up with an economic policy that is driven by the needs of Scotland, not the needs of the south of the UK, which has a radically different economy to Scotland in many respects.

Jo Armstrong: It doesn’t have a radically different economy to the rest of the UK. Scottish economy mirrors the UK, by and large.

Gordon MacIntyre-Kemp: I don’t agree

Ann McKechin: Thank you.

Chair: Thanks. Last question. Just a moment. We need to conclude this session. We are running over time. Just Caroline Dinenage, and I would be grateful if you could give a very quick summary of the response to it.

Caroline Dinenage: Thank you very much, Chair. Yes, it is quite a simple question, but quite a complex answer, probably. What would be in your view the implications of the ownership, assets and liabilities of businesses that are either wholly or partly owned by the UK Government in the case of independence?

Iain McMillan: That is a very good question, and I think it would be a very complex answer. There are some assets that would be reasonably straightforward to negotiate and to maintain, but there would be other assets that would be extraordinarily difficult to do that. For example, how would you disaggregate the UK’s defence command and control system between Scotland and the rest of the UK? It would be almost impossible, and in fact Scotland would probably have—

Chair: Can I just intervene at this point and suggest that, by all means give a fairly off-the-cuff answer, but you might want to think of this in more depth and give a written response after further consideration? I do appreciate that it is a complicated question. Jo?

Jo Armstrong: Again, it seems to me it is coming down a negotiated position, as it is in many of these things, which calls into question if split negotiation is possible, because if you cannot clearly articulate what it looks like now, then, as you get into negotiation with civil servants—sorry to the civil servants in the room—it takes longer, not a shorter time.

Gordon MacIntyre-Kemp: I buy into the principle that an independent Scotland would have a percentage share of the assets and take a percentage share of debts and so on as well. I believe, I agree with Jo, it is down to negotiation, and it depends on what the two Governments—the Government of an independent Scotland and the Government of the rest of the UK—believe, but I am sure there would be a mutually beneficial agreement coming out of that.

Chair: Thanks very much. This is a huge subject that perhaps we could have spent all day discussing. I am conscious of the fact that I have listed a whole lot of supplementaries that I would have liked to ask, but resisted the temptation in view of the shortness of time. I think we will follow up with some further questions that we would like to ask you, and we will be grateful for your responses. In some of those, if you feel there is a question that we should have asked you but did not and you would like to reply to, we would prefer you to give your evidence in supplementary written form, and it will be given appropriate consideration. Thank you very much. That is extremely helpful. Could we have our next panel, please?