Robust fiscal regime key factor in success of financial services sector in a further devolved Scotland - IFoA panel debate concluded

• Tax rates will have major impact;
• Fiscal framework needs to stand test of time and extremes;
• Scotland could build competitive advantage in the sector

A panel debate on the implications of further devolution on the Financial Services Sector, held by the Institute and Faculty of Actuaries (IFoA) last night (16 April) has flagged up a number of key issues.

The panel consisted of leading economic and industry experts, Professor David Bell, Angus Armstrong, and Jeremy Peat, who discussed issues affecting the sector including tax implications, fiscal framework, and potential competitive advantages.

The panellists concluded that personal tax rates could have a major impact on the financial services sector, as advantageous policies could draw highly-skilled professions to Scotland, however disadvantageous policies could see companies move away if they cannot attract financially skilled workers.

They said that a strong and transparent governance of Scotland’s fiscal regime is important, especially as there are concerns about the capacity of the Scottish Fiscal Commission and the lack of an equivalent to the Office of Budget Responsibility or the Institute of Fiscal Studies.

The panel stressed the importance of a durable fiscal framework that would implement the Smith Commission recommendations and can stand the test of time and fiscal extremes.  Worst case scenarios and how Governments and bondholders would react if debts are not repaid needs to be addressed.

The panel was optimistic further devolution could allow Scotland to build competitive advantage as a distinct financial services centre.  Angus Armstrong suggested that it’s possible Edinburgh could be to London what Boston is to New York City, a centre of excellence for asset management and fund management, which could set a new standard for ethical conduct for financial services.

Martin Potter, leader of the IFoA’s Scottish Board, comments,

“A fascinating discussion took place about what might lie ahead on the devolution roadmap with some great insights, particularly on the economic challenges, that further devolution might bring.

“It’s clear the impact on the financial services sector could be significant and the IFoA looks forward to continued involvement in the development of this devolved future both in Scotland and across the UK.”

~ENDS~

For further comment or to answer any questions that you may have please contact Annette Heninger at the IFoA on 07525 592 198 or by emailing annette.heninger@actuaries.org.uk

Editorial notes:

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