The current discussions about a referendum of the people of Scotland on separating Scotland from the United Kingdom, or alternatively receiving more powers short of outright separation (so-called devolution max), bring into sharp focus the lop-sided (“asymmetric”) nature of Scotland’s present constitutional position vis à vis the rest of the United Kingdom: England, Wales and Northern Ireland.

The shortcomings of the present arrangements though are as nothing compared with the catastrophe which would ensue if, eventually, Scotland were to separate itself from the UK – a catastrophe not only for the Scots themselves, but for the English, Welsh and Ulster peoples.  The ingredients of what would be a self-inflicted disaster of the first magnitude when the whole country is facing the problems of intense competition for markets across the globe and an ageing population at home are outlined below.

Prime Minister Cameron slow to catch on to the impending catastrophe

The major immediate concern to all UK citizens though must be that the Prime Minister of the United Kingdom, David Cameron, whose government actually has exclusive powers on the constitution under the devolution settlement (Scotland Act 1998) which set up the Scottish Parliament just ten years ago, seems only just now to have woken up to the dangerous threat posed to the United Kingdom by the leader of the Scottish National Party, Alex Salmond, (whom the London Times ludicrously named Briton of the Year for 2011).

Salmond actually said that Cameron’s saying he would like the referendum date to be earlier than that proposed by Salmond (October 2014) was “interfering” in the Scottish people’s “democratic” rights.  This is absurd: not only does Salmond’s SNP government have no legal right to stage a binding referendum on any constitutional matter, but should Scotland ever be established as a new state, independent of the United Kingdom, its effects would be felt by every single United Kingdom citizen.  Of course the SNP government can run polls on any constitutional subjects it likes, but their legal effects would be no different from an opinion poll run by any commercial organisation, that is to say nil.

It is a great pity that Cameron has not emphasized this point more strongly, not just to Alex Salmond, but to all the British people.  Instead of letting Salmond make all the running, the British government should counter Salmond’s independence referendum proposal with a properly thought-through scheme of constitutional reform which would provide a place not only for a Scottish parliament with amended powers, but also an English parliament with broadly the same powers and matching changes to the Welsh and Northern Ireland parliaments.  One such symmetric settlement is outlined at the end of this article with the idea that any proposed constitution could then be put to all the British people for separate approval in the four parts of the United Kingdom individually, instead of just a Scotland-only referendum.  If approved it would be expected to last, with minor working adjustments, for at least another 100 years, not just 10.

Usual muddle and defeatism in government circles

Far from there being any sign however of a coherent, systematic response to the SNP threat to the integrity of the United Kingdom, there is a nasty air of defeatism in official circles about the prospects of Scotland’s remaining in the United Kingdom. Thus Sir Peter Housden, an Englishman who is head of the civil service in Scotland, has circulated highly partisan memoranda to his civil service subordinates urging them to join the SNP’s “journey” towards constitutional reform, and expresses the view that a vote in favour of independence would be a “positive” result[1].

Housden also recommended to his subordinates a play about the English army’s alleged attempt 1,000 years ago to impose order in Scotland as genuinely speaking “to our (sic) present condition as a nation”.  A more recent briefing said that he expected “substantial negotiations with UK ministers after a ballot”, clearly anticipating that the Scottish voters would choose separation from the UK.

In the same vein, Housden’s boss, Sir Gus O’Donnell, until 31 December 2011 head of the UK Civil Service, rejected complaints about Housden’s outrageous partisan behaviour, saying in effect he was entitled to help the SNP break up the United Kingdom.  In a valedictory address on 22^nd December, he said that it will be “an enormous challenge” to prevent the break-up of the United Kingdom.  An “enormous challenge” is Civil Service speak for “impossible”.

This is all defeatist nonsense – really a betrayal of their duty to the United Kingdom, their employer[2].  The 1707 union of Scotland with England and Wales[3] is the oldest union by far of any distinct pre-existing self-governing nations.  Even among federations, the oldest with anything like its present-day borders and constitution is Switzerland (1815).  With the exception of Denmark[4], all the other present Western countries are much more recent: Germany 1953, Italy 1870, France 1871, Spain 1976, Norway/Sweden 1905, Finland 1917, Belgium and the Netherlands 1830.

Besides its longevity, the Union of England and Scotland has been the chief governmental force behind the two foremost world-transforming enterprises of the last 300 years – the industrial revolution and the British Empire – as well as providing a quite disproportionate share of the scientific revolution which accompanied these.  In the first half of the twentieth century, the United Kingdom[5] and its Empire have fought history’s two most terrible world wars from beginning to end, from initial defeat to ultimate victory.  The second half of the twentieth century has seen an unparalleled rise in its people’s living standards and the final vanquishing of the external communist challenge in 1990, in which Britain has played the second most important role after the United States – itself offspring of the British Empire.  And for 300 years its flag, the Union Jack, has been the most widely recognised symbol of freedom throughout the world, especially in the 19^th Century with the suppression of the Atlantic and Indian Oceans slave trades.

With all this achieved together, why should the notion of Scottish separation from the United Kingdom have attained so much support over a period of years now?  Around 28-35% – say a third, of the Scottish electorate have told pollsters they would support what the Scottish National Party (SNP) is always careful to call “independence”, but is actually separation from an already independent country.

Opinion in England, according to the most recent ICM and You Gov polls, reports even more voters in favour of Scottish independence, undoubtedly born of resentment at the claimed £1,300 per person more spent by the UK Exchequer on people in Scotland, compared with the UK average (£10,000) and £1,400 more than the average in England itself (the result of the so-called Barnett (1979) formula).  An even greater source of English resentment is charging their university students up to £9,000 a year, when Scottish residents and EU (i.e. foreign) students pay no fees – a situation which many Scots themselves regard as absurd.  Scots students even pay nothing to study in England!  Scottish and Welsh MPs voting on exclusively English issues, such as the National Health Service in England, is another potent source of grievance.

Problems which would arise from the Separation of Scotland from the rest of the United Kingdom

In looking at these problems it is most important for English people to recognise that Scotland has been a kingdom in its present boundaries almost as long as England, certainly from the reign of David I (1124-53), and continued as such even after the union of the crowns in 1603 until the union of parliaments in 1707.  Even then, Scotland retained and has continued to retain its distinct legal system, as shown for instance in the definition of which parts of the Continental Shelf are subject to which legal system – English or Scottish Law (Regulations 1999)[6].  Scottish pride in their distinct nationhood is a potent fact as is Welsh and Northern Irish pride too.

As against this Scottish distinctiveness (akin to the Québécois in Canada but without the language difference) must be set the huge intertwined complex of relationships – family, business, military, cultural, governmental, which have grown steadily over the last 304 years and continue to grow as all four of the United Kingdom nations grapple with the tremendous challenges of earning their living in the world and caring for their rapidly ageing populations.

The view of this writer is that compared with these huge problems, the present day grievances of the Barnett formula and student fees on the one hand and the division of oil and gas revenues and the alleged lack of English respect for Scotland on the other are mere trifles which with all the intertwined interests listed above can and should be settled by a new constitutional settlement for the United Kingdom as a whole as well as its individual nations.  The outline of such a settlement, termed “equality-max”, is given in the final section of this article.

While money isn’t everything, it is worth trying to assess how well Scotland, Wales and Northern England are doing economically as parts of the United Kingdom.

Gross Value Added (GVA) per person

As assessed by the National Statistical Office (NSO) and HM Revenue and Customs (HMRC) the GVA for each English region, for Scotland, Wales and Northern Ireland is proxy for Gross Domestic Product (GDP) and Gross National Income (GNI) per head used to compare the wealth of countries recognised by the World Bank.  In 2005, relative to the average for the UK as a whole (100), GVA for 12 areas of the UK was as follows: London 135; South-East England 115; East of England 107 (excluding oil and gas); Scotland 96 (excluding oil and gas); South-West England 94; Northern Ireland 80; North-East England 79 and Wales 77, with West and East Midlands, North-West England and Yorkshire & Humberside in between.  So in a UK context, Scotland is 4^th out of 12 on this measure.  If oil and gas production from waters off the Scottish coast are included, Scotland moves up to about 101.

A word on oil and gas revenues

This is a big bone of contention for the SNP because HM Treasury rigidly refuses to apportion its offshore tax revenues as between England and Scotland[7].

Arguably the most devolved of all federations is Canada.  But even Canada holds offshore[8] mining and extraction under the control of the central (Federal) government (as it must for practicality and to conform to International Continental Shelf Agreements).

The UK tax revenues (principally Value Added Tax and Royalties) arising from North Sea oil and gas have ranged in recent years between £6.8 billion (2010) and £11.2 billion (2009) while production has decreased steadily from a peak in 2002 of 215 million tons of oil equivalent[9] to about 50% of this in 2010.  The added value is greatly affected by the oil and gas prices.  Brent crude rose from $70 per barrel in 2002 to $130 per barrel (briefly) in 2009/10 and has since fallen back to around $110[10].  With further production declines in prospect, UK tax revenues from total offshore oil and gas reserves can be reasonably estimated as declining from about £9 billion in 2011 to £5 billion in 2020[11], not allowing for major flows from the BP owned concessions North-West of Scotland area should they become actuality[12].  The short-term effect of this investment however would actually be to reduce oil and gas revenues because capital expenditures can be offset against tax liabilities arising from production.

Given the 15-20% oil and gas flows from wells clearly off the coast of England on the median-line basis, hydro carbon tax revenues off the coast of Scotland could well be down to £4 billion by 2020, of which £3.2 billion would be accounted to VAT and £0.8 billion to royalties.

This £4 billion – a serious figure – can be compared with the “Barnett” formula for public expenditure in Scotland of about £58 billion (extrapolated to 2020), of which perhaps £6 billion would be the excess over the UK average.  So if the Barnett formula were updated to be strictly the same per person in the UK (Barnett mark II say) and 85% of net hydrocarbon tax revenues were allocated to Scotland over and above Barnett mark II, Scotland would be worse off than today by about half the difference between Scotland and England based on an unchanged Barnett formula.  Overall though the sums are barely bigger than accounting errors and surely not worth splitting up for.

CONSEQUENCES FOR ENGLAND AND SCOTLAND IF SCOTLAND WERE TO SEPARATE FROM THE UNITED KINGDOM

Financial Consequences

1          At £80 billion, the bailouts of the Scottish domiciled banks HBOS and RBS represent 61% of Scottish GNP, more than their share of UK national debt and impossible for Scotland to have found from its own resources.  Scotland can hardly escape responsibility for its own banks.  The Republic of Ireland had to receive loans from the UK and the EU for Bank debts of similar magnitude together with IMF loans and oversight by the UK, EU and IMF.

2          As noted above it is unlikely that even if Scotland acquires 85% of current oil tax revenues, this sum will make up for the loss of excess revenues under the Barnett formula, even if an independent Scotland were otherwise able to fund public services at the level of the UK average.

3          If Scotland retained the Pound Sterling as its currency, the Bank of England would not stand as lender of last resort for the Scottish government.  This would mean that Scotland would not have a triple A rating and as a consequence would not be able to borrow to fund the 10+% fiscal deficit it would undoubtedly have at the 2% interest rate which the UK government is currently able to borrow at.  Lenders might require somewhere between the rate charged Italy (7%) and Greece (15%).

If the Scottish government adopted its own Scottish currency, it would still pay more in borrowing costs and also introduce huge complexities for its citizens and business in trading with its major markets, such as the rest of the UK which buys about 70% of the goods and services Scotland sells outside Scotland.

If the Scottish government were allowed to adopt the Euro, the same complexities would apply and in addition it would be subjected to the deflationary measures currently being applied by Germany to Greece, Italy and the Republic of Ireland.

The lesson of the continuing Euro-crisis must surely be that long-term you cannot have monetary union without fiscal union (i.e. virtually political union) and you cannot borrow yourself out of trouble without bringing deflation and unemployment on to your people.  Borrowing against future, diminishing, oil revenues would be exceedingly unwise for Scotland.

4          Because of oil revenues, Scotland would have a positive balance of payments, while they lasted.  Correspondingly the loss of all but 15% of oil and gas revenues would increase the UK’s huge balance of payments deficit by about £15 billion in 2018-20. 

Defence Consequences

1          Scottish regiments of the British Army

In an era of reduced UK defence budgets, Scotland has done extremely well to mitigate the worst consequences.

Scotland has retained 5 regular Army infantry battalions for a population of 5 million, when the rest of the UK is down to 18 for a population of 57 million.  Scotland maintains, like the rest of the UK, an extremely strong martial tradition, which the British Army and successive UK governments have respected by retaining a disproportionate number of specifically Scottish units.  It is for the advocates of Scottish separation to tell the Scottish people if their future defence budgets would allow for this disproportion to continue, or if reduced to the present UK average, which three of the present 5 famous Scottish regiments would lose their last remaining battalions.  In addition it will need to explain whether Scotland will maintain small (8%) versions of the British Army’s specialised units: the Royal Armoured Corps (tanks and armoured cars), Royal Artillery, Royal Engineers, Royal Electrical & Mechanical Engineers and the Royal Corps of Signals, without whose expertise it will be impossible for the Scottish infantry battalions to function in an independent operational role.

2          UK Nuclear Deterrent

The Nuclear Deterrent carrying Trident submarine fleet is based at Faslane on the Clyde.  The cost to the UK defence budget would be some billions of pounds if it had to be moved to England or Wales as a consequence of Scottish separation.  However, it would not be crippling because considerable on-shore expenditure (some billions of pounds) will be necessary anyway to accommodate the Trident submarine replacements due in 2018-2030.  Such a move would however ruin the lower Clyde economy.  Moreover, Scottish industry involved in pumps, boilers, condensers, pipe-work, control systems, etc, would not be able to tender for work on the new submarines, nor on the new Trident installations.  Externally, NATO would clearly be very unhappy at the prospect of uncertainty in the operability of a weapons system which is assigned to its defence.

3          Royal Navy and Royal Air Force

It would surely be a tragedy for Scottish families with long Naval and Air Force traditions not to see careers for their sons and daughters in what are after all the oldest and most successful services of their kind in the world.  The new Astute class of ultra modern hunter-killer submarines, the new Trident submarines, the new aircraft carriers due in 2018 and their JSF aircraft would not be open to them.  In a world where professional job opportunities in the public services are going to be extremely limited, it must be assumed that English, Welsh and Ulster candidates will have priority.

The Republic of Ireland, which the SNP likes to compare Scotland to, operates 8 patrol craft and the Irish Air Corps operates 17 unarmed fixed wing aircraft and 13 helicopters.  One doubts if this establishment would fire the imagination of young Scots interested in service careers.

Effects on UK standing in the world

1          In the EU

If Scotland were to separate and apply for membership of the European Union (EU), the EU would try to reduce the UK’s number of votes in the Qualified Majority Voting system it uses to agree future laws and directives.  There is talk of reducing the UK (population of 57 million after Scottish separation) to the level of Spain (40 million), i.e. from 29 votes like France (62 million) and Italy (58 million) to 27 votes.  If the UK were still in the EU at this point, its government would be under huge domestic pressure to resist any reduction in its voting power.  The EU would then in all likelihood make Scotland accept less than the proposed 7 votes (like the Republic of Ireland) as a condition of entry to the EU.

2          At the United Nations

If Scotland were to separate itself from the UK, the UK would come under renewed pressure to give up its seat as a permanent member of the UN Security Council, leaving France as the sole European nation with the power of veto against any proposed action by the UN.  It is not clear how this loss could possibly benefit Scotland, even if it did take its place as one of 195 members of the UN General Assembly.  In the wider world, the Scottish taxpayer would have to pay for its own UN delegation and offices, possibly 30 embassies and high commissions.  This would be an attractive job creation exercise for university arts graduates, but will do nothing for the Scottish man in the street.

Consequences for Immigration Control

Scottish separation would give the UK a second land border and England its first land border with a foreign country, immeasurably increasing the problem of controlling immigration into England.  While England is already under siege from a considerable fraction of the 2,000 million in the Third World who would give anything to settle here, as well as from a large proportion of the remaining 90 million poor East Europeans who are doubtless thinking about it, Alex Salmond has apparently declared he would like to encourage immigrants to settle in Scotland to offset the constant drain of Scottish people to England, Canada and Australasia.

Whether the Scottish people would approve of an increased flow of foreign settlers is another matter, but what is for sure is that such a policy of encouragement of immigration into Scotland would be seen by millions of potential immigrants as an easy way into England.  To combat this, England would have to put in border posts and checks along the Cumbrian and Northumberland borders with Scotland at least as intense as those in place along the Northern Ireland border, or else Scotland would have to accept the UK Border Agency at its ports and airports as now.

These are not matters that English voters can or ought to shrug off.

Position of the Crown

If Scotland were to vote to separate, it appears that Salmond as Prime Minister in waiting would invite the Queen to be Queen of Scotland in much the same way as she is Queen of Canada, Australia and New Zealand.

Clearly something of the kind could be set up formally, but in fact the Queen’s position would be fundamentally changed in fact.

Her position in Canada, Australia and New Zealand has evolved very considerably from that which the Statute of Westminster 1931 refers to as the Dominions and the UK being united in “common allegiance to the Crown”.  Today, following the Constitution Acts of 1982 (Canada) and 1986 (Australia), it is clear that there are now separate Crowns occupied by the same person – the Queen of the United Kingdom.  This makes no trouble in practice because there are no political differences between the four senior realms of which Elizabeth II is Queen, or ever likely to be because they are a long way from each other and their legislative separation has been entirely amicable.

That would manifestly not be the case if Scotland were to separate.  Negotiations over the Trident nuclear submarine base at Faslane, the Services, oil and gas revenues, the disentangling of the tax and benefit systems among many other complexities referred to above, would be fraught, and afford plenty of ground for grievance mongering in Scotland and England.  Certainly separation would spark a feeding frenzy among London and Edinburgh lawyers when many people in England and Scotland would feel that they are well fed enough from the public purse.

The Queen could very possibly be placed in the position where the two realms to which she felt closest would be in conflict with each other – the EU and the currency being the most likely problem areas.

A MODERN CONSTITUTION FOR BRITAIN

Alex Salmond and the SNP’s bid to separate Scotland from the United Kingdom by a vote solely of the people of Scotland needs to be countered, not just by rhetoric and appeals to the past, but by a proposal for a properly thought through constitution for all parts of the United Kingdom.  This would be voted on and need to be approved by a majority of voters through referendums in each of its four parts separately.  The Canada Act (1982), which established Canada’s legislative independence from the British parliament and is now that country’s constitution, is an instructive model in this respect[13].

A fuller description of the proposed new UK constitution will be given shortly in a separate post on Britain-Watch.  Here we indicate only the guiding principles.

Guiding Principles of a new UK Constitution

These are equality and simplicity.  While lawyers and politicians will try very hard to make a new constitution complex, the other 62 million of us must make sure they don’t succeed.  The urgency of the situation – less than 3 years to Salmond’s preferred Scotland only referendum – should concentrate minds.  A shorthand description of a new constitution could be “Equality-max”, as opposed to Salmond’s one-sided devolution-max for Scotland.

Principle of Equality

1          Parliaments

Each part of the United Kingdom shall have a parliament or assembly with broadly the same devolved powers from the United Kingdom Parliament.

This means of course that England would re-establish its own parliament which, like Scotland’s until 2008, was absorbed into the Union parliament in 1707.

2          Voting and Membership Qualifications

In parallel with electoral law in the other Crown realms of Canada, Australia and New Zealand, only citizens of the United Kingdom, 18 years or older would be admitted to the electoral roll.

For electoral purposes, the categories of Commonwealth citizen and Republic of Ireland citizen, presently included on British electoral rolls, would be abolished.

On the same equality principle, all members of the upper House of the United Kingdom Parliament would have to be British Citizens and be elected.  The hereditary and appointed categories in the present upper house (the House of Lords) would be abolished.

Simplicity

Within constitutional limits, the individual parliaments and assemblies would be free to choose their method of election, but the lower, legislative house of the United Kingdom Parliament, the House of Commons, would retain the first-past-the-post, single member constituency basis.  MPs elected for English constituencies would form the English parliament[14].

The upper house of the UK parliament would be renamed the Senate (in line with the other large English-speaking countries).  Its members (referred to as Senators) would be elected by universal suffrage in each of 12 roughly equal population areas of the United Kingdom, all as independents – no party political allegiances permitted.

CONCLUDING REMARKS

While Scotland and the rest of the United Kingdom could be split into two separate sovereignties in law, the processes of disentanglement of over 300 years of being one sovereign state, and the costly physical and administrative changes which would be needed especially in Scotland for the future, would constitute massive losses to all the people of the United Kingdom.

Despite the current economic gloom, there are many bright spots in UK engineering, manufacture, the arts, and the overseas commercial opportunities which are arguably greater today than they have been at any time since World War II.  There is as well the need to keep our defences strong against all the threats to our island’s security.  All these should not be hazarded by giving in to Alex Salmond’s vanity, the anti English grudges of some members of his party, and short-sighted exasperation of the English voter, when such grievances can be rectified by the adoption of a designed-for-purpose Constitution for all parts of the United Kingdom.