The United Kingdom: For Richer, not for Poorer.

305 years ago, the Scottish Parliament passed an Act that sent waves of resentment throughout the country. Riots erupted on the streets of Edinburgh, indignant petitions flooded in from glen to glen, and a state of martial law was imposed.

With the bells at St. Giles Cathedral supposedly ringing out ‘Why Should I be so Sad on my Wedding Day’, the island of Great Britain put aside centuries of grievance and conflict, and declared itself united.

Time to split up the China?

The honeymoon is now long over, and these awkward bedfellows look more dysfunctional than ever. 2012 has seen a flurry of skirmishes between Westminster and Holyrood, with David Cameron’s Conservative Party drawing first blood by calling for an early referendum on Scottish independence.  Ed Miliband, leader of the opposition Labour Party, weighed in today by promising a ‘fair, just United Kingdom’.

The Scottish National Party (SNP), led by the prolific Alex Salmond, has since hit back by backing a vote in autumn 2014 and calling for ‘a beacon for progressive opinion south of the border’. The SNP began consultations last week.

 
But in the heat of this political melee, there is a risk that the Scottish public will be the real casualty.

Polls consistently show that the majority of Scots favour ‘Devolution Max’, over independence or the status quo. Outright independence appeals to roughly a third of voters, while 68% haven’t bought Salmond’s ‘land of milk and haggis’ narrative and would prefer to leave foreign and defence policy in London’s hands, with most other powers being devolved to Edinburgh.

Both sides are using this to undermine the other – the SNP wants a three-option referendum (though Salmond would rather let ‘civil society’ say this for him), while the Westminster Unionists are pushing for a simple in-or-out ballot, based on Canada’s Clarity Act of 2000.

If the SNP gets its way, the pro-union vote will be split in two, and the nationalists may be able to snatch victory from the jaws of public opinion. Meanwhile, if Westminster gets its yes/no referendum, the voices clamouring for ‘devo max’ would be sidelined, creating an artificial mandate for the status quo.

 
But the problems with any referendum run far deeper than wording. This is because the vote will turn around the financial implications of independence, and until a final agreement is hammered out, nobody really knows what these would be.

 
Nick Clegg last week called for some ‘basic answers’, but the questions are far from basic. And this is important – support for independence is likely to hinge on the terms of the settlement, with polls showing that most Scots would vote with their wallets. One recent survey showed huge swings in favour of independence if it left Scots just £500 better off a year. This is not a union for richer and for poorer.

 
And the unknowns are many. No EU nation has ever split into two before, but when Czechoslovakia dissolved in 1992, 30 treaties and some 12,000 legal agreements were required to iron out the details. Clearly, the terms must be clarified before any meaningful debate can take place.

 
But Alex Salmond has ruled out a second referendum after negotiations, claiming that one provides ‘sufficient clarity and confidence that the people wish Scotland to become an independent state’. Except any campaign around such a vote would be rife with speculation and interpretation. So what are these sticking points that have such drastic implications for Scotland’s future?

The Scottish Parliament in Edinburgh.

The Big Questions

The Scottish Armed Forces
Removing the UK nuclear base at Faslane is high up on Salmond’s agenda, as is his declaration of Scotland as a neutral country. Just how the international community would react to the ejection of NATO forces remains to be seen. The Americans, who account for a healthy chunk of Scottish tourism, would be particularly unhappy.

Scottish EU Membership
A strong voice in Europe is a cornerstone of any nationalist strategy. But how realistic is it? Malcolm Anderson, Director of the Centre of European Governmental Studies, says that Scotland would have to re-apply to the EU, but due to ‘a fund of goodwill in the member states’, this would be a formality. That is, unless the UK vetoes the application.

His view is backed up by Nicola McEwen, Senior Lecturer and Co-Director of the Institute of Governance. ‘Scotland is already deeply embedded within the EU; Scottish citizens are EU citizens. My hunch is that the European Commission would want a quick resolution that saw Scotland remain in the EU… There is simply no precedent for a part of an existing territory seceding and rejoining’.

The Scottish Euro
So EU membership may have a straight answer. But all new members have to sign up to the single currency, and Scotland would be unprotected by the UK’s opt-out. With the current turmoil in the Eurozone, joining the Euro would be a referendum deal-breaker. On the other hand, keeping Sterling would require permission from the UK Treasury, and would leave the Scottish economy at the mercy of the Bank of England’s interest rates.

 
David Howarth, a senior lecturer in International Political Economy at the University of Edinburgh, thinks this contradicts the logic of independence. ‘If Scotland becomes independent the irony – made plain to everyone by the present British government – is that it would have to use a foreign currency that it had no say over and a monetary policy which was designed in no way to consider the impact on the Scottish economy’.

 
The Scottish Deficit
Debt is the word on everybody’s lips right now, and the UK government would be keen to offload as much as possible on its new neighbour. The Scotland Office claims that Scotland’s fair share of the UK’s debt would be £65 billion, while the SNP wants a more modest £43.5 billion. But different methods of measurement yield different figures – the Institute of Economic Affairs has put the number as high as £110 billion.

 
Dr. Howarth was bearish on Scotland’s ability to manage its deficit: ‘Frankly, given Scotland’s demographics, a population ageing faster than the UK, and arguably marginally lower growth prospects…. [controlling the deficit] will be a great challenge’. Just how much debt the Scots took on would be a key determinant of the new country’s prosperity, chances of joining the Euro, and of holding a AAA credit rating.

 
There is also the financial elephant in the room – the Royal Bank of Scotland. Propping up this behemoth, a cornerstone of the Scottish economy, cost the UK taxpayer £40 billion, a price Scotland could scarcely afford on its own.

 
The Scottish Welfare State
Over a quarter of all jobs in Scotland come from the state, the public is broadly left-wing and Salmond himself harbours strong Keynesian instincts. At present, a £9.5 billion subsidy from the UK treasury pays for free higher education and elderly healthcare, among other highly popular policies. But with an ageing and declining population, strict Eurozone spending caps, and an economy that generally grows slower than England’s, could such luxuries still be afforded?

English students also make up a third of places at some of Scotland’s universities, and a constitutional quirk means that they pay up to £36,000, while Scots and other EU citizens go free. These fees plug a funding gap of at least £150 million in the system. An SNP spokesperson claimed that ‘independence in Scotland would mean that a Scottish government could truly ensure that education will remain free… and would be able to take full responsibility for providing for its students’, yet a new source of funding would have to come from somewhere.

An oil rig in the North Sea.

Scotland’s North Sea Oil:
In the past, the North Sea’s vast oil and gas reserves have kept Scotland in the black. About 100,000 Scots still work in this industry, and the SNP thinks there’s £1 trillion worth of black gold remaining in Scottish waters. But even if a breakaway Scotland could wrest these vast resources from the UK, reserves have been declining since 1999, and prices are too volatile to be counted upon to foot the state’s bills.

Constitutional Warfare

We’ll have to wait and see who will win the constitutional tussle, and with it the right to dictate the terms of the referendum. Westminster has the legal authority, while the SNP has the electoral mandate, and of course the advantage of branding any action by London as more meddling from ‘perfidious Albion’. And this is a card Salmond plays deftly: invoking memories of the hated Poll Tax, he’s labelled Cameron’s intervention ‘almost Thatcher-esque’, based on the arrogant assumption that ‘London knows best’.

Moreover, Salmond has the political space to devote his considerable talents entirely to this battle. While he may be itching for a stand-off in the Supreme Court, Cameron and Osborne have a global crisis to grapple with. They don’t need a constitutional showdown to add to their woes.

And Salmond is no provincial small-fry politician. His majority in the Scottish Parliament was something nobody, especially not the SNP, was supposed to achieve, and triggered the resignation of all three opposition leaders.

Whoever comes out on top, this is looking to be a remarkably undemocratic referendum. George Robertson MP dramatically declared in 1995, ‘Devolution will kill Scottish nationalism stone dead’. It may still do so, but it may take Scottish democracy down with it.

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About Chris Berkin

Political Journalism MA, City University London. @Chris_Berkin

Posted on January 30, 2012, in General. Bookmark the permalink. Leave a comment.

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