Independent booksellers’ businesses may be more vulnerable to the adverse economic impact of an independent Scotland than chain retailers, should the referendum see a Yes vote.
A major concern for the trade if Scotland becomes independent after the referendum on 18th September would be the possibility of it losing the zero VAT rating applied to printed book sales across the UK. While larger chains may be able to cushion the extra tax blow, independent booksellers are likely to be more exposed to the rising prices in an industry that already sees multiple pressures adversely impacting on indie retailers.
Sydney Davies, head of trade and industry at the Booksellers Association, said the organisation was “keeping a watch on developments” in the run up to the referendum. He said: “There have been some suggestions that an independent Scotland would no longer benefit from the zero rating of VAT on printed books and would therefore have to move to a positive VAT rate of at least 5%. The BA believes that reading and learning should never be taxed and we will continue to work hard to ensure that books on sale in bookshops remain zero rated, wherever the bookshop is located.”
Rosamund de la Hey, owner of independent Mainstreet Trading Company in St Boswells, said she was especially troubled by “huge questions” over VAT and currency. She said: “The EU is already unhappy with the UK’s zero VAT rating for books and any independent Scotland would have to reapply to be a member of the EU, so I don’t think there is a chance of us retaining a 0% VAT rate.” De la Hey said she would vote against independence.
However, Agnes Dickson, from indie Achins Bookshop in Inverkirkaig, Sutherland, said she was going to vote in favour of Scottish independence. “In terms of how it will affect business, it is a ‘wait and see’ situation, because it is impossible to predict,” she said. Dickson did add that she wasn’t particularly concerned about the impact on VAT.
James Daunt, m.d. of Waterstones—which has 25 shops in Scotland—said the company already had experience of running stores outside of England (in Ireland, Amsterdam and Brussels). “Because of this, I think if Scotland was to go independent, the overall business would be all right whatever happens,” he said. “We would have some challenges longer-term if things happen there which would not happen here—business rates would be a longer-term concern and if Scotland lost its 0% VAT rating on books, it would make them more expensive in Scotland and that would not be a good thing. However, on the positive side, it would be a big opportunity to sell products in-store related to Scottish independence.”
Scottish market punches above its weight
Whether or not an independent Scotland would be good or bad for the Scottish trade depends on many variables, which, frankly, will not be answered unless it comes to pass. While Scotland’s books business is certainly struggling under the many challenges facing the industry worldwide, there is a strong underlying trade, one that fares well against other nations of a similar size.
BookScan data show a printed books market that has had a deeper recent decline than the UK as a whole. From 2010–2012, sales through BookScan in Scotland dropped by 5.1%, 9% and 8.2% year on year; the UK (with Scotland stripped out) fell 1.3%, 7.6% and 4.4%. However, print sales rallied a bit in 2013, with Scottish sales dropping 6.6% year on year, in line with the rest of the UK (6.5%).
Yet new figures suggest that the Scottish print declines are being offset by “e”. Steve Bohme, UK research director at Nielsen Book, presented data at the Publishing Scotland (PS) conference earlier this week that showed Scots are reading digitally at a far greater rate than the rest of the UK. Drawing on data from Nielsen’s UK Books & the Consumer Survey, Bohme said that because of greater e-book penetration, book purchases in Scotland between January and November 2013 in all formats were 26.8 million units—which means sales were down just 2.8% year on year.
UK sales, of course, tell only part of the story. PS reckons that publishers in Scotland had invoiced sales (including export) of £345m in 2012; compare that to £3.3bn of invoiced sales of all UK publishers (as per the Publishers Association Yearbook) in 2012. If we strip out Scotland’s publishers from the rest of the UK, they were responsible for 0.27% of Scotland’s GDP, which is more than publishers in England, Northern Ireland and Wales contributed to the rest of the UK’s GDP (0.21%).
More pertinently, Scotland’s publishing business looks stronger than other small-market Anglophone nations with similar populations. New Zealand—an important enough territory to be the 2012 Frankfurt Book Fair Guest of Honour—has a market value of around £175m, and is in freefall: print volume sales through BookScan NZ declined a whopping 19% year on year in 2013.
The Irish trade’s recent travails have been well reported—sales plummeted 15% year on year by value through Nielsen’s ICM in 2013. Scotland even dwarfs the semi-Anglophone territory South Africa (population 51 million), which had invoiced sales of 4.1bn ZAR (£227.4m) in 2009, the last year figures were available.
The difficulties of a small market in the shadow of a larger one are great—ask Canadian publishers—and which territory Scottish rights would fall under is another contentious issue. But if Scotland is to go it alone, its trade looks to have a solid enough base.