From the Scotland Bill to Scottish independence…

The inclusion of the Scotland Act amongst the UK Government’s 22 Bills has pushed Scotland’s place in Britain back up the discussion list in many quarters. Personally I am surprised that the Conservatives have moved so quickly on the issue when it potentially poses such a risk for the continuation of the union, particularly given that David Cameron claims to have the Union Jack stamped onto his insides like a stick of rock.

For me, the implementation of the Calman proposals is something of a red herring and will not come to pass once it is debated in the House of Commons. The proposal to cut income tax rates by 10p in the pound and then let the Scottish Government decide whether it wants to add on a remaining, 9p, 10p, 11p or so to the basic rate while adding the needlessly constricting condition that any increase must also apply to the top rate of tax is too complicated and ineffectual to be taken seriously. Any future Scottish Government, be it Labour, SNP and/or Lib Dem will not amend the tax rates above or below what we currently have and so we will effectively have ‘Barnett Formula light’, as if that formula wasn’t light enough already.

Let’s consider this – a Scottish Government that reduces the income tax rates will be letting the richest off while reducing spending and a Scottish Government that increases income tax rates will face a Pavlovian reaction from the Opposition of the day that it is hurting the working majority. At the very least, the access to the basic and top rate of tax has to be decoupled to allow a Scottish Government to increase tax for the richer and/or reduce tax for the poorer, if it sees fit to do so.

I suspect, however, that once the devolution of fiscal powers to Scotland is discussed in detail, with English resentment about public spending still growing, with the federal Liberal Democrats in coalition and with the Nationalists pushing hard for as much as it can get, full fiscal autonomy will emerge as the preferred solution to the current imbalance where Scotland can spend money that it doesn’t raise.

The past decade has shown how flawed the current system is, where a country’s budget can double in size and, despite a looming recession, no scope for saving money in the boom years to prepare for the bust is available. Full fiscal autonomy, full national responsibility, is the clear answer and the Con-Lib administration won’t opt for the falling between two stools that the Calman suggestion represents.

Were one to consider the Scottish budget just another treasury block of spending to be allocated out from UK coffers then it would be easier to continue with the Barnett formula, much like the NHS budget or the schools budget can go up and down. However, the crucial difference is that we can’t order the NHS or schools to spend only what it earns. Scotland can and, objectively speaking, Scotland should.

However, despite the apparent inevitability of fiscal autonomy for Scotland, a picture emerges of how it in turn would lead inevitably to Scotland becoming an independent nation.

With Holyrood raising its own funds and spending what it raises on health, schools, policing and so on, there are only a few remaining Westminster considerations for north of the border MPs. The new fiscal arrangement would presumably involve Scotland paying a recharge to Westminster to fund Defence (Trident), UK affairs (the Royal Family) and Europe (still under Europhobic Tory control). I just don’t see Scotland remaining comfortable with an arrangement that is so clearly at odds with the country’s generally differing stance on the above issues. This awkwardness could only be exacerbated if North Sea Oil revenues are excluded from any future arrangement. This would, either quickly or in time, lead to a stirring resentment and a real questioning of Scotland’s place in Britain from outside the McChattering classes aswell as within.

With fiscal autonomy bedded in and one tartan leg already outside the union as a result, the polls showing those in favour of independence would finally creep higher and higher until the last remaining protests against holding a referendum are vanquished. Note that this would be irrespective of who forms the next Scottish Government, there is even an argument that a Labour Government having to cut budgets with the Conservatives in power at a UK level would hasten the support for going our own way.

The referendum itself, when it does come, could prove to be a false choice if the majority of Scots perceive the status quo at the time of asking as Scotland being effectively independent of London and the rest of the UK anyway. How can one differentiate between choosing (a) independence or (b) the status quo when they both feel the same already?

With the SNP (and resurgent Greens) pushing the message that Scotland taking the last few powers north of the border would result in stronger representation in Europe, more control of our Renewables destiny and more flexibility in how the country engages with the wider world, it’s not difficult to imagine a ‘Yes’ vote in the referendum of some 60-70%, primarily due to the mindset-changing work having already taken place with the successful switch to fiscal responsibility, not to mention the overwhelming sense that the Scottish Parliament is the real seat of power rather than an ever foreign feeling UK Parliament.

An innocuous Bill it may seem, but in the length of time it took the Queen to read out the detail, the Scotland Bill may have already set in motion seismic changes for Scotland’s future and the nation’s eventual constitutional settlement.

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  • Driftwood

    given that David Cameron claims to have the Union Jack stamped onto his insides like a stick of rock.

    But which one?

    http://www.telegraph.co.uk/comment/personal-view/3644508/Vote-for-your-favourite-Union-flag.html

  • Mick Fealty

    Studiously ignoring the spicy meat in Jeff’s tax sandwich I see Driftwood? For me the critical point is as much about fiscal politics as anything to do with independence.

    Just listen to this exchange between Jim Wells of the DUP and Patrick Nolan of the Reform think tank ( it starts at 49.45):

    http://url.ie/6awq

    Frankly, when faced with selling cuts, as Wells quite correctly explains, no party in Northern Ireland could expect to get re-elected. That’s because there is no link between the money we spend and the money we raise.

    So instead of legislators we have administrators who (if they have any sense) will run a mile from making any serious decisions on our collective futures. Take the ridiculous example of Martin McGuinness protesting a decision to slash Tyrone County Hospital, which was made by his own party’s former Health Minister. It’s a prime example of the sort of reality-on-stilts that befuddles sane political discourse here.

    According to Jeff it is the same for Scotland (except their more open parliamentary system has the compensation of offering a bit more drama for the buck). Except here he has drawn a rough picture of what might help bring Scotland closer both to independence and the kind fiscal responsibility that currently seems to frighten the hell out of our politicians.

  • Driftwood

    So much of Scotlands public sector employment and financial services sector in Edinburgh is based on its remaining in the Union.

    In Northern Ireland terms, what is the actual point of the Assembly? What legislation can it pass that affects substantive change to anyones life here? The House of Keys at Tynwald has more responsibility.

    Hospital closures and school amalgamations etc are carried out by Quangos.

    Being an MLA (108!!!) must be the life of Reilly.

  • Mick Fealty

    If you will permit me to say so, that’s a typically cynical response to a serious question…

  • Dewi

    Great to see Jeff posting here.

  • Thanks for the opportunity for the post Mick.

    Driftwood: “So much of Scotlands public sector employment and financial services sector in Edinburgh is based on its remaining in the Union.”

    I flatly disagree that that is the case and there is no good reason why continental Europe can’t prosper alongside each other as independent nations but the countries that make up the UK can’t.

    Yes, there is an issue with Scotland’s flabby (perhaps even bloated) public sector but Edinburgh is amongst Europe’s strongest financial sectors and Scotland is more than competitive against European countries of a similar, or even bigger, size. There’s no reason why Scotland couldn’t trade through oil and FS (and the rest of our products and services) to find the most appropriate public/private mix.

    First step to get to that optimal mix is with full fiscal responsibility so let’s hope that Cameron delivers it and we can crack on.

  • Mark

    I think Scotland’s/UKs public sector will be slimmed down anyway.

    I don’t see many public sector jobs (other than Faslane & National Savings) dependent on the union. I also see lots of public sector functions are largely provided down south, e.g. OFCOM,Foreign Office, DWP, HMRC, BBC etc. which could actually shift north

    Financial services will stay as long as the regulatory and tax regime are right.

    The BBC used a good example of the Union being like a pizza.
    With each country/slice being tied together by stringy cheese and slowly being pulled apart. Eventually the pieces break away.