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Scottish Independence Could Hurt Business, Says BAE Systems Boss

Defence Giant Warns Against Scottish Independence
Asa Bennett
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PORTSMOUTH, SCOTLAND - NOVEMBER 06: A Union Jack flag flies above the BAE systems yard at the HM Naval Base in Portsmouth dockyard following the announcement that the company will be cutting jobs on November 6, 2013 in Portsmouth, England. The cuts are being made following a decline in orders, with 1775 jobs going between the yards in Scotland and England with the end of shipbuilding altogether at the Portsmouth yard. (Photo by Matt Cardy/Getty Images)
Matt Cardy via Getty Images

Scottish independence would damage the "certainty and stability" needed for investment, the boss of defence giant BAE Systems has warned.

Ian King, chief executive of the Barrow-based firm, used an internal company blog to warn about the potential "unhelpful" impact if Scots vote to break away from the United Kingdom in September's referendum.

“If Scotland became independent and subsequently joined the EU, our pension schemes, along with many other UK company schemes, may be caught up in EU regulations relating to cross-border pensions," he said.

“The reality today is we can’t say how our pension schemes would be affected. There would be a number of possible outcomes.”

BAE Systems has 3,500 of its 80,000 employees based in Scotland. The defence giant caused controversy last year when it announced that 1,775 jobs would be cut, with 835 going in Glasgow, Rosyth and Filton.

King said in his blog that the company was awaiting an official decision on naval procurement as it decided how to overhaul its shipbuilding operations in Glasgow.

BAE Systems was "investing in facilities for the future" in Scotland "based on an expectation that the Government will make their major production decision for the next generation Type 26 frigate by the end of this year"," King said.

"If Scotland became independent, we would no longer have that certainty and stability. We would then have to talk to our major UK customer, the Ministry of Defence, and jointly work out a plan for the future."

See also: 10 business leaders who have warned about Scottish independence

Business leaders who oppose Scottish independence
PricewaterhouseCoopers(01 of10)
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PwC’s UK chairman Ian Powell said: “From a PwC perspective, we believe in a United Kingdom and we believe that the right thing is you do have as big an economic unit as you can.”
Lloyds Banking Group(02 of10)
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In its annual report, Lloyds warned: "The impact of a 'yes' vote in favour of Scottish independence is uncertain."The outcome could have a material impact on compliance costs, the tax position, and cost of funding for the group."
Barclays(03 of10)
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The bank said that Scottish independence would hurt business by "introducing potentially significant new uncertainties and instability in financial markets, both ahead of the respective dates for these referenda and, depending on the outcomes, after the event".
BP (04 of10)
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Bob Dudley, chief executive of the oil giant, claimed there were ''quite big uncertainties'' over issues such as currency, European links and tax regimes if Scotland voted for independence.Maybe that's why David Cameron felt happy to pose on a BP oil rig.
Standard Life (05 of10)
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The investment giant has threatened to move some its operations out of Scotland if voters back independence.
RBS(06 of10)
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Under EU law, the Royal Bank of Scotland would have to move its headquarters to England if Scotland broke away from the United Kingdom.
Power generator giant Aggreko(07 of10)
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Generator giant Aggreko, which employs around a tenth of its 5,749 worldwide employees in Scotland, warned that Scottish independence would create years of uncertainty and hiatus".
Duncan Bannatyne (08 of10)
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The Scottish gym club tycoon and Dragons' Den star tweeted last year: "We might be a small island but we are a great country made up of Scotland, England Wales & NI that should stick together as 1 & not separate"
Sainsbury's chief Justin King(09 of10)
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King warned that Scottish independence would see food prices rise.
Asda (10 of10)
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Asda chief Andy Clarke suggested that food prices would have to rise in an independent Scotland - unless the new administration softens the blow with a massive tax cut.

King's warning comes after Ian Cheshire, the boss of DIY chain B&Q, warned that the company would "put a pause" on its investments in Scotland in the event of a Yes vote.

Cheshire, whose multinational firm Kingfisher owns the B&Q stores, was speaking at B&Q's warehouse in Port Glasgow.

“It would put a pause on everything. If we have differences on VAT, currency, it just puts everything into hibernation as we try to figure out what it will mean," he said.

“At the end of that we have to consider what is the trading environment.

“Because Scotland is such an important part of B&Q, there’s no way we’re going to let it go, but it would be more complicated, probably more costly and less likely to attract investment.”

B&Q employs more than 2,600 people in Scotland, while Screwfix, which Kingfisher also owns, employs just under 400 people.

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