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"Two months to go but critical questions remain in referendum debate", says Law Society

14 July 2014 | tagged News release

With little more than two months to go until the historic referendum on Scottish independence, a series of critical questions remain to be answered, the Law Society said today.

In a comprehensive analysis of issues which have arisen in the last year, the professional body for Scottish solicitors has today published a new paper setting out questions for both sides of the debate.  It also highlights several areas where there is a need for clear and detailed contingency plans ahead of any negotiations with the UK and European Union.

The paper, which follows up on the Society's discussion paper from last year, focuses on the economy, a Scottish tax regime, currency, EU membership, education, justice and the legal profession.

Alistair Morris, President of the Law Society of Scotland, said: "In just over two months, each Scot will be asked to cast a vote, arguably the most important vote in their lifetime. It is essential that everyone is equipped with the right information so each person can make up their mind and collectively deliver a decisive result.

"Yet despite much debate, a major White Paper, devolution commission reports, analysis papers and a draft Independence Bill, many of us believe important questions on Scotland's future remain unanswered.

"There continues to be uncertainty on fundamental issues including the currency we would use, EU membership, how our economy would succeed and what taxes we would pay. There are also questions over how further devolution can and would be delivered in the event of a no vote.

"These issues go to the very heart of the referendum debate.  Both the referendum campaigns and the political parties still have time to answer these questions and ensure people can make an informed choice in September."

The Law Society's new paper covers the following areas.

Currency (pages 28 and 53)

Since the publication of the Law Society's last paper, the Scottish Government has reaffirmed its position in favour of adopting the pound sterling as part of a formal currency union with the UK.  However, Treasury spokespeople from the main UK parties have since made it clear they would not support a currency union.

The Society's earlier paper called on the Scottish Government to provide a contingency plan in the event that its preferred option of a currency union was not achieved. Such a contingency plan has not been published.

Alistair Morris said "One of the most fundamental questions in this referendum debate is the currency which an independent Scotland would use.  Whilst there are a range of options available to an independent Scotland, there remains real uncertainty over which is most likely to be adopted. These issues ultimately come down to negotiation, not just with the UK in terms of a currency union but also with the EU in terms of whether Scotland would need to join the euro.

"The Scottish Government could not have been clearer in terms of its preferred option but, given that there would be a negotiation, there is still a clear need for a contingency plan if agreement on a currency union cannot be reached."

Tax and the economy (pages 11-17).

The paper recognises how newly devolved taxes, Land and Buildings Land Transaction Tax and Scottish Landfill Tax, have brought practical solutions to Scottish problems and properly reflect Scots law and practice. However, they are just two taxes in the complex network which make up the current UK tax system and there are key questions about the transitional arrangements whilst a new tax regime was established for an independent Scotland.

Alistair Morris said, "Creating a new tax regime in the context of independence could provide an opportunity for a simple and creative system designed to assist taxpayers. However, it could take years to properly set up a tax system for Scotland.  That is why transitional arrangements would need to be in place to provide tax payer certainty.  There is also a question of whether the principles of a tax system will be included in any constitutional platform."

The paper also comments on how an independent Scotland would need to protect consumers through a new merger control scheme and competition arrangements.

EU Membership (pages 25-32)

Substantially more information on the issue of EU membership has been made available since the publication of the Law Society's last referendum paper.

The Scottish Government has said that negotiations on membership of the EU will be concluded within 18 months of a yes vote.  However, the Law Society has questioned what contingency plans would be in place if negotiations for membership admission were not concluded in that time.

Alistair Morris said, "The issue of Scottish independence would present the EU with completely unchartered territory.  Politics in this matter will be as important as the formal legal position.  After all, EU treaties have no provision for cases of secession.

"We cannot take for granted that any negotiations would be concluded within the Scottish Government's 18 month timeframe and as such, there is a need for clear and detailed contingency plans in the event that such negotiations for Scotland's membership of the EU were not completed in time.

"Would 'independence day' be moved back to allow for conclusion to negotiations?  Is the 24 March 2016 a fixed date so requiring Scotland to leave the EU and then rejoin once negotiations were concluded? Alternatively should a middle way be considered so discussions on fundamental issues can be concluded prior to March 2016, with other less significant matters being left until afterwards?"

Education and tuition fees (pages 20-25)

A new area considered by the Law Society is the issue of education and student tuition fees.  The Scottish Government has stated that an independent Scotland could maintain the current policy on tuition fees by charging fees for students based in other parts of the UK, while allowing Scottish students and those from other parts of the EU to receive free higher education.

However the Law Society paper raises issues of potential indirect discrimination against students from the rest of the UK if it became an independent country. The paper questions whether an independent Scotland would be able to continue its current policy given that the European Court of Justice has made it clear that directly discriminatory fee structures are inadmissible.

Alistair Morris said: "Like many professions, the Scottish legal profession is hugely dependent on excellent and well-funded universities and a flow of high quality and well educated graduates.  That is why we have a real interest in how our universities would be funded in an independent Scotland.

"The Scottish Government argues that Scotland's unique characteristics such as shared land border, common language and qualification structure with the rest of the UK, would be enough justification for the continuation of the current policy.  However more evidence is required to be able to justify the status quo.  That is why we ask whether the Scottish Government has commissioned independent research to underpin their policy position."

A no vote (pages 43-45)

The Law Society has also presented a number of questions for those who are advocating a 'no vote' and called for more information from the main pro-union parties in terms of further devolution.

Each of the main UK parties has now produced detailed reports on further devolution, particularly additional tax powers.  However, there remains policy disagreement between them in terms of what specific new powers should be devolved to the Scottish Parliament. The Society believes that clarity on this is necessary before 18 September so people can make an informed choice.

Alistair Morris said, "We now have detailed devolution blueprints from the main UK parties and they have offered a collective guarantee that further powers will be transferred after a no vote.  However, whilst there is some agreement between the parties, some of the proposals from their individual commission reports are diametrically opposed.

"We need to know how those differences would be reconciled.  We also need a clear process and timetable by which collective agreement would be reached and how civic Scotland outwith the political parties would be engaged in that process.  After all, significant devolution has come, not from political parties working in isolation but through engagement with people and organisations from right across Scotland."

Justice, security and home affairs (pages 33-35 and 46-49)

As the professional body for Scottish solicitors, the Law Society has also considered issues relating to justice and home affairs.

The Scottish Government's White Paper made clear that the Scottish Supreme Court would replace the UK Supreme Court for Scottish cases.  The White Paper also clarified that the European Convention on Human Rights will apply to all law in Scotland in the same way as it does currently to devolved legislation.  However, the White Paper does not deal with the issue of cases pending before the UK Supreme Court or other cases before the Competition Appeals Tribunal or Special Immigration Appeals Commission in the event of independence. The Society believes there would need to be clear transitional arrangements in place.

The Law Society's paper also calls for clarity on how the independence of the Lord Advocate as prosecutor and the Crown Office as the prosecutorial department will be entrenched in a new constitution for an independent Scotland.  The paper also follows up on research on how change will impact Scottish solicitors directly.

Alistair Morris said: "Alistair Morris said: "In preparing this paper we carried out significant research among solicitors to try to identify what impact independence might have.   Inevitably, there were varied views and the setting up Lawyers for Yes and Lawyers Together underlines the range of different views that exists amongst the profession.

"We know there would be significant legal change following independence and, in the event of a yes vote, the negotiating ability of Scots lawyers would be of particular value.  Even with Scotland remaining in the UK, the high likelihood of further powers for the Scottish Parliament would mean the expert advice and professionalism provided by Scottish solicitors would become even more critical for companies, organisations and individuals."

ENDS

Notes to Editors

The full paper is available on the Law Society website.

This paper follows on from the work carried out in 2013 when we published Scotland's Constitutional Future: views, opinions and questions and responds to the White Paper Scotland's Future: your guide to an independent Scotland.

The Law Society of Scotland is a firmly non-partisan organisation and has assessed the Scottish Government white paper from a neutral standpoint. There is no comment on parts one or two of the White Paper (the case for independence and Scotland's finances) which is, in our view, political in nature.  Examining parts three, four and five (analysis of potential changes, building a modern democracy and questions and answers) allowed us to consider the legal issues raised and to ask the questions of the Scottish Government.  A summary of issues raised can be found at the end of each section.

In preparing this response we consulted Law Society committees in many specialist areas including competition law, pensions law, rural affairs and constitutional law.  We also consulted the profession more widely at faculty meetings across the country, at the Law Reform Committee convener meeting, and in a survey of commercial firms whose business is UK and international.

FOR FURTHER INFORMATION:

Please contact Kevin Lang on 0131 476 8167 / 07972 201 890

Email: kevinlang@lawscot.org.uk

14 July 2014

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