The Battle for the Undecideds

Mark Diffley, Director, Ipsos MORI Scotland

Who are the referendum swing voters?

Mark Diffley, Ipsos MORI Scotland
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22 November 2013

An historical perspective
4

60

50 Support for independence (%)

Introduction of the poll tax in Scotland Devolution referendum

Scottish Parliament opens

40

SNP form majority government

30

20
SNP form minority government Edinburgh Agreement signed

10
Devolution referendum

1978

1997

1999

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1998

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Data taken from MORI and Ipsos MORI polling (1999-07 data taken from Scottish Social Attitudes Survey)

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2013

 and the current state of play

5

August 2011

December 2011

January 2012

June 2012

October 2012

February 2013

May 2013

September 2013

35%

38%

39%

35%

30%

34%

31%

31% Yes No

60%

57%

50%

55%

58%

55%

59%

-59%

Base: All certain to vote. Data collected among c1,000 Scottish adults

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Some significant differences in opinion

6

Q. Should Scotland be an independent country?

Men Wome n Gen. Y Gen. Baby PreX Boomer war s SNP Labou r Cons. Lib Dem

71% 41% 26% 40% 34% 34% 25% 16% 50% 62% 52% 54% 56% 64% 79% 95% 84%

12%

3%

11%

Yes No

Base: All certain to vote (4,432). Data collected among quarterly among c1,000 Scottish adults Jan 2012 September 2013

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Mapping the Yes vote

% Yes <25% 25%>35% 35%>50% >50%

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Its 2:1 Against among committed and decided voters but

Q. Should Scotland be an independent country?

September 2013

Yes
33%

67%

No
Base: All certain to vote and definitely decided how they will vote. Data collected among c1,000 Scottish adults 16+, 9th-15th September 2013

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51%
are certain to vote and have decided how they will vote
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49%
Scots who
may not vote (27%) will vote but are undecided (7%) will vote but may change their vote (15%)
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The proportion who give a voting intention but say they may change their mind is growing
Have you definitely decided to vote in this way or is there a chance you may change your mind before you vote?

11

Jan-13

Sep-13

Certain to vote
30% 25%

Yes

No

Men Women

11%

24% 13% 21%

8% 14% 13% 21% 8% 24% 19% 30% 3% 5% 10% 26% 13% 20% 14% 30%

Pre-War

20% 15% 10%

Baby Boomers Generation X Generation Y

Con

5%
Lab

0%
Jan-13 Apr-13 Jul-13 Oct-13

Lib
SNP

Base: All those who are certain to vote and give a voting intention. Data collected among c1,000 Scottish adults

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Those who may not vote are more likely to be

12

Generation Y (41%)

Women (27%)

46%
More deprived areas (27%) Labour supporters (28%)
of undecided (potential) voters
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Those who will vote but are undecided are more likely to be

13

Women (12%)

More Scottish than British (15%)

SNP supporters (13%)

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Those who will vote but may change their vote are more likely to be

14

Generation Y (26%)

More affluent (18%)

Generation X (22%)

More Scottish than British (30%)

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15

As well as
Yes voters (21%)

SNP supporters (27%)

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Engaging uncertain and potential voters

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Uncertain voters see the debate like this...

17

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They want more information about

18

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Conclusion
19

Engagement

Events

Economy

Election

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Paste cobrand logo here

Thank you
mark.diffley@ipsos.com | 0131 240 3269 @IpsosMORIScot

Ipsos MORI

This work was carried out in accordance with the requirements of the international quality standard for market research, ISO

Its the Economy

Professor David Bell, Professor of Economics, University of Stirling

The Economics of Scottish Independence

David Bell ESRC Research Fellow Stirling Management School University of Stirling Scotland, UK

2014 is a bad time to hold a referendum on independence (if you want to win) UK debt is rising to record peacetime levels the Euro crises has exposed the difficulties of managing a monetary union population ageing will soon have an impact on public spending North Sea oil revenues are falling

large economies are becoming increasingly irritated by tax competition from smaller jurisdictions and tax avoidance by large corporations

1979 would have been a much better choice North Sea oil just coming on stream Oil revenues were an unexpected bonus to the Thatcher Government Aggregate oil revenues since1980/81 = 177bn

but Ally Macleod was in charge of the Scottish football team and the 1979 referendum failed

Key questions 1: Monetary Arrangements

If there is to be a Scottish/rUK Sterling zone there will be one monetary authority how should it regard the fiscal policy of the two states? who would set the inflation target and appoint members of the Monetary Policy Committee? who would appoint members of the Financial Policy Committee? would the Prudential Regulatory Authority need to take account of the fiscal capacity of host governments? who would represent this new sterling areas interests in international negotiations? how would this sterling area manage a big crisis? who would control activity by the bank as lender of last resort? who would provide deposit insurance?

Key questions 2: National Debt

UK debt due to peak at 86 per cent of GDP in 2016/17 Will then fall due to growing economy and continuing austerity How will debt be allocated to Scotland? Population share of debt 8.38 per cent ~ 118bn in 2016/17 Historic balance of spending and revenues Contingent liabilities Unfunded state pension Public sector pensions PFI/PPP contracts
Scotland's Historic Fiscal Balance 1980-81 to 2010-11 including oil
10,000 5,000

Million

0
-5,000 -10,000 -15,000 -20,000 1980/81 1982/83 1984/85 1986/87 1988/89 1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07 2008/09 2010/11

Net Balance = 38bn

Key Question 3: Fiscal Balance

2011-12 Revenue
25,000 20,000 m 15,000 10,000 5,000 0
0 m

2011-12 Spending
25,000 20,000 15,000 10,000 5,000

56,871m

64,458m In the red!

Key Question 4 - Interaction of monetary and fiscal policy

Both Scotland and rUK would start with relatively high debt levels. Puts upward pressure on long-term interest rates (default risk) Pressure on Scottish Government to tighten fiscal policy from: Markets and/or Partners in the sterling zone

Scotland would pay liquidity premium on debt NIESR estimate - 63 basis points liquidity premium Estimated 10 year yields: Germany 3.6%, UK 4.1%, Scotland 4.82% to 5.75%

Key Question 5: Pensions

State pension affected by demographic pressures Scotland has a higher old-age dependency ratio than rUK Pay-as-you-go public sector pensions liability relatively high in Scotland Scottish Government commitment to triple lock time limited, but potential hostage to fortune Pensions industry in Scotland will be significantly affected by exchange rate risk if sterling zone cannot be agreed Issue relating to cross-border schemes which could potentially affect millions of holders of private pensions If Scottish bond yields high and life expectancy relatively short, funding pensions might be relatively cheaper in Scotland if it sticks with rUK regulation Nevertheless these risks may be small in relation to political risks!

Great Britain or Little England?

Possible political configurations Status quo

The Economist

future\present rUK Scotland

UK In In In

EU In In In

Scotland independent, rUK stays in EU, joins EU Scotland independent, rUK leaves EU Scotland stays in UK, UK leaves EU

rUK

Scotland
rUK Scotland rUK Scotland

Out
In Out In In

In
Out In Out Out

The Pound in Your Pocket

Charles Livingstone, Associate, Brodies LLP

The Pound in Your Pocket

Scottish Independence and currency change Charles Livingstone 22 November 2013

ABERDEEN EDINBURGH GLASGOW BRUSSELS

www.brodies.com

Currency and monetary issues Plan A

Sterling zone Bank of England retain authority: Payments and settlements Interest rates Requires rUK agreement Currency union may not be attractive to rUK without strict fiscal controls on Scotland (if at all)

Plan B?
Unofficial Sterling use (sterlingisation / the Panama option) No transaction costs / forex risk with rUK No control over interest rates / money supply Borrowing in a foreign currency Independent Scottish currency Floating or fixed exchange rate Independent monetary policy Transaction costs / Forex risk

The EU & the Euro

Copenhagen criteria issues with retaining Sterling? Euro membership Transaction costs / forex risk with rUK but not EU Monetary policy set by ECB Commitment to join Euro is standard condition of EU membership

Opt-out?
The Swedish model? Transitional arrangements required

Contracts and redenomination

Currency change usually means redenomination of contracts into new currency e.g. Franc / Deutschmark etc. into Euro Official conversion rate BUT Sterling would still exist Unprecedented Scottish Parliament could choose to automatically redenominate Scots law contracts (and claims) into new currency Official conversion rate (slightly easier with Euro than new currency) Parties could agree to convert back

Contracts and redenomination

What if legislation silent on the issue and parties not agreed? Courts try to work out intention of parties Option 1 Obligations remain in Sterling Contract refers to Sterling qua Sterling?

Option 2 Obligations convert to new currency, at official rate Contract refers to Sterling as currency of Scotland at the time?
Same approach for non-Scots-law contracts with a Scottish connection

Forex risk?
Mismatch: Revenues and obligations Loan value and repayments / securities Cross-border (i.e. intra-UK) contracts Networks of related contracts Projectco established to deliver infrastructure project Projectco is for-profit, has equity investors Lender loans money to Projectco and has security over Projectco receipts from Public Authority; entitlement to repayment (Loan agreement) Projectco employs staff, buys material etc. (employment contracts; supply contracts etc.) Public Authority makes regular payments to Projectco for construction of infrastructure (Project agreement)

Project & funding agreements To re(denominate) or not to re(denominate)?

Redenomination: Good for Authority revenues (taxes) and payments (to Projectco) both in SCP Mixed for Projectco? revenues (from Authority) and outgoings (wages, supply costs etc.) probably both in SCP, but equity investors may want returns in GBP Bad for Lender? original loan and security in GBP, converted to SCP No Redenomination: Bad for Authority revenues in SCP, payments in GBP Mixed for Projectco? revenues and equity returns in GBP, but outgoings probably in SCP Good for Lender? loan and security remain in GBP Partial Redenomination?

Currency and redenomination

Strategic thinking / contingency planning Steps can be taken now to review existing contracts and frame new contracts to encourage, or protect against, one outcome or the other

The Pound in Your Pocket

Scottish Independence and Currency Change

Charles Livingstone Associate 0131 656 0273 charles.livingstone@brodies.com

publiclawblog.brodies.com

Brodies LLP 2013

Scotching the Tax Myths

Elspeth Orcharton CA, Director of Taxation, ICAS

Scotlands Tax Future

Principles, talking points and practicalities

Tax system principles

UK Government
Efficient and support growth; certain and predictable; simple to understand and easy to comply with, fair, reward work, support aspiration, and ask the most from those who can most afford it

Scottish Government
The burden proportionate to the ability to pay, certainty, convenience and efficiency of collection; delivering sustainable economic growth for Scotland and meeting the distinctive needs of Scotland

Fiscal Commission
Simplicity, stability, neutrality and flexibility

Copyright ICAS 2011

Size of tax system

Revenue as % of GDP in 2011
Source: Taxation trends in the European Union, 2013 edition

Copyright ICAS 2011

Shape of tax system

Share of total tax %, 2011
Source: Taxation trends in the European Union, 2013 edition

100%

90%
80% 70% 60% 50% 40% 30% 20% Social security Indirect Other Corporate Personal

10%
0% UK
Copyright ICAS 2011

Ireland

Germany

Romania

UK and Scottish tax current state

Source: Institute for Fiscal Studies Taxing an independent Scotland

Copyright ICAS 2011

The corporate tax rate debate

Source: EC Taxation trends in the European Union, 2013

Copyright ICAS 2011

The corporate tax rate debate

Will the tax rate differential be deliverable, or beneficial? IFS argues highly speculative and suboptimal, with alternatives worth reading Inward investment attractiveness is more complex Germany threatens UK/Scottish leadership Tax base may matter more than headline rate International treaties determine tax base Fiscal Commission also suggested alternatives

Copyright ICAS 2011

Oil tax revenues

Population v geographic bases negotiating the line But still disagreement on geographical calculations; GERS > HMRC by 1.3bn, 2011-12 Still varying views of future revenue Managing the influence of the few Whos got the tax expertise?

Copyright ICAS 2011

Practicalities for Scotland

Timescales or cut and paste (again) HMRC system constraints Infrastructure design and build What would it cost? International treaties

Copyright ICAS 2011

Practicalities for business

Locational Cost v Benefit decisions uncertain Employee location decision Transfer pricing burden for businesses across jurisdictions a better way? New hurdle to growth? Fees!

Copyright ICAS 2011

Two Constitutions into One?

Professor Alan Page, Dean of the School of Law, University of Dundee

Checks and Balances in an Independent Scotland

It is of little avail to ask whether the Parliament of Great Britain can do this or that without going on to inquire who can stop them if they do.

The Constitutions
The United Kingdom constitution Unwritten, can be freely amended, power hoarding rather than power sharing

The Scottish constitution Written, entrenched, fundamental rights built into the constitution, judicially enforceable, a power sharing constitution?

The post-independence constitutions

The constitution To be drawn up by a Constitutional Convention after independence day. In the meantime The constitutional platform Like the referendum, will be made in Scotland Entrenchment, fundamental rights, judicial enforcement, power sharing

The Parliaments
Westminster bicameral, Commons elected by first past the post, unlimited legislative competence, an arena rather than transformative legislature Holyrood unicameral, elected by additional member system, bounded legislative competence, a transformative legislature?

The Supreme Courts

Acts of Parliament No power to strike down but can declare incompatible with Convention rights and disapply if incompatible with EU law Acts of the Scottish Parliament Can strike down if outside limits on legislative competence which include Convention rights and EU law Judicial activism v judicial restraint