Home rule for Scotland should prompt a fundamental rethink in how the North is governed, regional leaders said last night.
Former prime minister Gordon Brown announced his cross-party package of measures to save the Union on Monday, giving Scotland greater control over spending, welfare and taxation in the event of a No vote in next week’s referendum.
However, many of the region’s leaders say Scottish ‘home rule’ would only exacerbate the region’s need for a more federal system.
Newcastle peer Lord John Shipley says a narrow No vote would fast become “a race to the bottom” between Scotland and the English regions.
“I’m not in favour of Scotland controlling its own rate of corporation tax,” he said.
“I’m in favour of a standard UK rate on air passenger duty and standard licencing rates on alcohol.
“If Scotland has its own bespoke tax rates we stand to lose out by our very location. Inward investors would likely look beyond the Border.
“I fully support a federal Britain having long believed in home rule for Scotland but this implies a new structure for England and the time has come to deliver this.
“Under devo max Scotland gets much more control over taxation and spending and we must examine the distribution of public spending across the whole of the UK, which is what I want to see in the event of a No vote.”
Ross Smith, director of policy at the North East Chamber of Commerce, said businesses need to know just how flexible Scotland’s taxation rates will be if the region is to remain competitive.
“If Scotland has the scope to vary taxes that could put the country in a very different competitive position compared to the North East.
“A lot of our policies are set by London. This will place Scotland in an advantageous position if they get more flexibility over taxation and spending.
“The concerns of businesses in the North East is what’s the competitiveness of the North East compared to Scotland? Also, how easy is it going to be to trade across the Border post referendum?”
Professor Keith Shaw, who leads politics at Northumbria University, says no matter the outcome of next week’s vote, fresh calls for a North East assembly will undoubtedly be made.
He said: “If we have a regional assembly that will give us greater powers to work alongside the Scots not against them.
“Whatever the outcome we need a fundamental change in how we do things in the North East.
“This could mean giving the combined authority or the North East LEP greater powers, but we need an elected voice.”
Former North East LEP official Edward Twiddy, however, is convinced the region’s competitiveness will not falter under any set of circumstances driven by Scottish independence or further devolution.
He said: “Even in a federal system England will have more predictable tax receipts than Scotland, where banking and oil are bigger drivers of the corporate and personal tax takes.
“So why is it that England would not lead a charge towards lower levels of corporate taxation rather than anticipating that this would be a race won by Scotland?
“We are competing in international markets for talent, capital and supply chains.
“We have demonstrated that we can do this successfully, and the analysis for the Adonis review showed how our biggest competitor regions across the EU are also our biggest trading partners.
“This already happens with Scotland and it is not about to stop in the future.”