UK Government Independence Report

Business Secretary Vince Cable has rejected accusations of scaremongering in the independence debate, describing the UK Government's latest analysis paper on the subject as ``positive and optimistic''.

The paper, the latest in a series of reports which consider the issues of independence, sets out what Mr Cable described as the risks and costs of a Yes vote for businesses, covering areas such as the UK single market, business regulations, communications and transport. 

Mr Cable said breaking up the UK single market could ``destabilise the economy and potentially put jobs at risk''. 

The barriers that such a move might create could, according to the analysis, negatively affect Scotland and the rest of the UK. 

The paper also raises potential problems with mobile phone and postage charges, costs to Scottish hauliers travelling across the UK, extra administrative burdens for cross-border trade with the UK and tax issues such as VAT exemption. 

Deputy First Minister Nicola Sturgeon dismissed the analysis as ``seriously flawed'' and called on the Business Secretary to withdraw it. 

But at the paper's launch in Glasgow today, Mr Cable said: ``These are questions which we raise. We are saying there are very considerable positive benefits from being part of a single market. 

``If you chose to opt out of that arrangement then the corollary is that there are costs. Now that isn't scaremongering, it's just a matter of logic. 

``We are not definitive about what these costs are, we're just saying these are things that you have to consider.''

Mr Cable also dismissed SNP suggestions that the report is part of the so-called Project Fear of the No campaign. 

``This report is argued very empirically,'' he said. 

``There is no emotional language. It's positive and optimistic in tone.'' 

Defending its analysis of the impact of independence on mobile phone charges, Mr Cable said the report notes a potential problem with roaming charges on calls to the rest of the UK, resulting in higher mobile phone bills under independence. 

But the report recognises that proposals from the European Commission to end international roaming charges could solve this, he said. ``We're completely fair minded. We accept that this could be dealt with; it might not be,'' he said. 

``We set out the risks and the costs. We don't assert there is some massive problem; there could be.'' 

The report also argues that if Scotland leaves the UK, it could raise the cost of sending letters and parcels between the two countries.

Meanwhile hauliers could be hit with extra road costs when driving in the rest of the UK because they might no longer benefit from measures to offset charges for domestic carriers. 

On VAT, the report raises questions about the future of exemptions. 

Items such as food and children's clothes are exempt from VAT under a deal negotiated by the UK with the EU. If an independent Scotland is not able to negotiate the same agreement, VAT of a minimum of 5% would have to be charged on zero rated items, the report says. 

``All of the current derogations would have to be renegotiated. They may well be deliverable,'' Mr Cable said. 

``It raises an uncertainty because you would be starting from scratch having to negotiate that.''

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