Thursday, 18 September 2014

Hell and high water

Voting is under way in the independence referendum in Scotland.  The media and politicians keep telling us how important a decision it is, so naturally I ask myself what they're lying about.  Westminster politicians of all parties have promised more devolution if the answer is 'no', whereas the (devolved) Scottish government intends to "work in partnership with the rest of the UK" if the answer is 'yes'.  What difference does it make which way the vote goes?  If the vote is 'yes' (the bookies are quoting 4 to 1 against that) there will be 18 months of negotiations to decide what actually happens, so we don't know.  But we can at least look at what the parties say...

An independent country is responsible for its own foreign policy and defence.  The Scottish government intends to stay in the EU and NATO: the only concrete change would be that "we would make early agreement on the speediest safe removal of nuclear weapons a priority. This would be with a view to the removal of Trident within the first term of the Scottish Parliament following independence."  There's no good alternative to Faslane as a base for Trident-carrying submarines, so if the Scots sticks to this, the logical choice for the (rest of) UK government would be to abandon plans to replace the current system, and plan to phase out the system from 2016.  They hate that option*, so they'll make continued use of Faslane a priority in the negotiations.  It's less important to the Scottish government, so I'd expect the roUK to win this point.

Scotland needs a currency: the Scots government says it will keep the pound.  No one can stop any country using any currency it chooses, so that's certainly possible.  Osborne says he won't agree to any sort of currency union, which means that Scotland would get no say in UK monetary policy, instead of almost no say as at present.  It could try to negotiate a seat for itself on the BoE's Monetary Policy Committee - I don't see why the roUK shouldn't agree to that, since the Scot could be outvoted 8-1.  But much more importantly, the Bank of England would not act as a lender of last resort to Scottish banks.  So if Scotland wants any sort of financial sector, it would need to set up its own central bank.  However, the Scottish government blithely claims that "The Bank of England, accountable to both countries, will continue to provide lender of last resort facilities".  I don't think Faslane is enough of a bargaining chip for it to win this one.

Scotland would get most of the oil.  That would make Scotland a bit richer than the rest of the UK.

Scotland would get some of the debt, and it would find itself borrowing to fund the debt at a slightly higher interest rate.

Sorting out the separation would be difficult and expensive.  And in the end, there would be more politicians and civil servants, costing more money.

Scotland would get its own team in the Olympics.

Scotland would no longer send MPs to Westminster.  The Conservatives won no MPs in Scotland in the 1997 election, and has won one in each general election since, with the result that Labour gets a net gain of about 40 MPs.  Without Scotland, the Conservatives would have a majority in the House of Commons, and the Liberal Democrats would not be in opposition as usual.  However, the overall result of most UK general elections would be unaffected.  Over time, one might expect the political centre to shift a little to the right as Labour strives to improve its electoral prospects.

Overall, independence would make some difference.  Arguments for it are:
- smaller states are more democratic
- it's a cleaner constitutional settlement that increased devolution, in which the role of Scottish MPs in Westminster would be questionable.
- if you don't want Trident renewed, you might get your way
- if you're a Scottish athlete not quite good enough for the UK team, you get to go to the Olympics anyway
- if you're a Conservative politician in the rest of the UK, you're more likely to get into government.
- if you're Scottish, your country gets the government share of future oil revenues

Arguments against it are:
- separating two countries is difficult and expensive
- if you want Trident renewed, you'll run into difficulties
- the Olympic ceremonies will get that bit longer, and the roUK will win fewer medals
- if you're a Labour politician in the rest of the UK, you're less likely to get into government.
- if you're in the roUK, your country loses the government share of future oil revenues.  And if you're Scottish, isn't it a bit tawdry to demand independence just because you've lucked into some mineral resources?
- we'd need to think of a better name that 'roUK' for the rest of the United Kingdom,

* Because having nuclear weapons makes politicians more important globally.  Or perhaps because they think Trident is needed to stop Putin invading.

1 comment: