No chance of a Sinn Fein Scotland

Jim Gallagher in his days as a civil servant one of the architects of developing Scottish devolution and still a leading authority on the Scottish Question discusses rival scenarios for Scotland’s future in the Scotsman, concentrating on the bottom line issue of control over tax and spend. Either way, whether the outcome is “devo more” as he calls it, or independence, he makes it clear that the English can’t be left out of the Scottish story. The detached reader might well conclude that things for Scotland might be better left where they are.

It seems unlikely that any scheme of markedly greater devolution – let’s call it devo-plus since no-one knows what devo-max is – could be implemented without some answer to .. English concerns. If Scotland were to have more tax powers, and so be more dependent on tax income arising here, it would have less call on shared UK taxes. If the principle is greater self-sufficiency, then there’s less equalisation according to need. If more taxes are decided in Holyrood, not Westminster, would England tolerate so much Scottish representation there?

By contrast, if Scotland votes for independence, the Barnett formula and the West Lothian question join the Schleswig-Holstein question in the history books. English views cease to be relevant. Or do they?

All the economic theory suggests the UK is pretty much an optimal currency area: goods and services, finance and labour move freely throughout the country with no legal barriers, and the economies of the different parts of the country move more or less in step. Independence would change that a bit, but it would probably still make sense for Scotland to share a currency with England. It will make sense for the rest of the UK only if, by doing so, they don’t import risks to the stability of their currency and financial system that they cannot manage. Hence you can expect an objective for their negotiators will be to ensure that monetary union, if it is to happen, gives the rest of the UK similar influence over Scottish fiscal policy to what the Treasury has today.

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