LABOUR'S approach to devolution could seriously affect inward
investment in Scotland and lead to major companies transferring their
headquarters south of the Border, the director general of the Institute
of Directors warned yesterday.
Mr Tim Melville-Ross said the likelihood of heavier tax burdens would
be bad news for the Scottish economy and would be ''likely to destroy,
rather than create, jobs''.
The director-general of the right-wing group also cast serious doubts
on whether the Scottish economy could survive separation. ''To
disentangle it, to tear it apart and go back to the drawing board, would
be very damaging because important parts would cease to exist,'' he
said.
The comments by Mr Melville-Ross, made at a Glasgow news conference
before he went on to address business leaders at an IoD lunch in
Edinburgh, were immediately dismissed by Shadow Scottish Secretary
George Robertson and Scottish National Party leader Alex Salmond.
Mr Robertson, who earlier this month addressed the IoD in the capital,
said: ''The IoD would command greater respect if, before attacking
Labour's devolution plans, it bothered to find out what they are.
''Dogmatic opposition based on a deliberate ignorance of what is
proposed simply tells the Scots and Scottish business that these
southern-based politico-business pundits have nothing to offer them.
''A devolved Scottish parliament will not change the rules for
Scottish business but it will bring government much closer to hearing
what the real business community wants.''
Mr Salmond was equally vociferous in his condemnation of Mr
Melville-Ross's comments. He said: ''Scottish businessmen and women are
not as flighty as Mr Melville-Ross seems to think. Indeed, it may come
as a surprise to him to learn that increasing numbers involved in
business in Scotland are recognising the benefits that independence
could bring to their companies.
''It is the union, not independence, that poses the threat to Scottish
jobs and future inward investment. The Scottish people know that to be
true. They have seen it all around them.''
Mr Melville-Ross, who claimed his views were broadly representative of
Scottish businesses, warned that major constitutional change, with quite
different powers both in terms of limited tax raising and legislation,
as proposed by Labour, would almost inevitably lead to ''more difficult
rather than easier business conditions''.
''What the Scottish business community has to do is create conditions
in which people actually want to come here to do business,'' he said.
''If you are discouraging inward investment by a different and less
business friendly approach, that clearly has to be bad news for the
Scottish economy.''
He said Scottish business such as Scottish and Newcastle, Morrison
Construction Group, Standard Life, and Scottish Widows were very closely
integrated with the rest of the UK and their ability to create and
maintain wealth depended on this. But devolution could result in them
moving their headquarters south of the Border, he claimed.
''The impact would not be immediate. Clearly, if you have made an
investment of say #60m, you are going to stay with that. But over a long
period, you would see a gradual drain of investment away from Scotland.
After all, why have your main base in Scotland when the tax regime is
more favourable in England?''
A statement from Scottish Widows appeared to broadly support the IoD
chief's comments. It said its overriding priority was to protect the
interests of policyholders and added: ''Any assessment of the impact of
constitutional change on our policyholders is bound to be purely
hypothetical at the present time. However, if constitutional change were
to come about with a consequent impact on our policyholders'
investments, we would respond to the situation accordingly.''
Morrison Construction Group said: ''We have not had any discussion
with the IoD which could have prompted Mr Melville-Ross's comment
concerning Morrison. We don't base corporate decisions on hypothetical
situations and would just add that we place great value on our Edinburgh
group office presence.''
Mr Scott Bell, Standard Life's group managing director, said: ''We
have continued to speak to politicians of all political parties and we
have told them again of the sensitivities of the financial services
sector in particular to constitutional change.'' No-one from Scottish
and Newcastle was availabe for comment.
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