Back in November 2013, the
Scottish Government published their White Paper outlining the case for
independence. The referendum is scheduled for the 18th September
2014 and The Clog will now analyse some of the key aspects of this weighty 670
page tome and provide some commentary on the referendum that could reshape the
nation.
Initial start-up costs for
independence in the shape of setting up new agencies are mentioned in passing
throughout the White Paper. Since the document was published, estimates ranging
from £200 million to £2.5 billion have been floated by different groups. Whilst
the lower figure seems much more appealing, it is worth remembering that the
construction of the parliament building was originally up to £40 million but
ended up finishing at £414 million. It is pointed out that Scotland will
receive some of the assets from the UK though it can be assumed that computer
systems in different agencies will have to be adapted and that there may be
differing personnel requirements.
One of the centrepiece economic
proposals is the introduction of an Energy Fund to capture the oil and gas
revenues to secure the long term future of the country, a model that is similar
to Norway’s sovereign wealth fund. In Norway, this is used to invest in the
future of the country in order that the country has developed a range of
industrial expertise after the oil reserves have run out. The Energy Fund
proposal could help provide investment in key areas of Scottish life. The fund
would receive more stimulus after the national debt is in a downward trajectory
though no timescales are suggested for this.
Interestingly, one of the growth
areas of the energy economy is Shetland, an area that is more Norse than
Scottish in terms of culture. It will be interesting to see if they will decide
to stay with Scotland or if the newly empowered islands decide on their own
path for the future.
Three currency proposals are
outlined in the document. These are:
-
Keeping the Pound as the national currency.
-
Joining the Euro
-
A newly minted Scottish currency.
The recommended course of action
is to keep the Pound. In this scenario, the lender of last resort would be the
Bank of England. This is the most sensible option from the point of view of
continuity though key decisions on interest rates would still be taken by the
Monetary Policy Committee and it is questionable if they will put the interests
of Scotland on the same footing as England. There is also no guarantee that
Scotland will be accepted into a Sterling bloc, indeed all major Westminster parties
have already said no, though if they were to soften their stance, the Bank of
England may decide to ask for control over Scottish borrowing limits and
regulatory framework. Arguably, Scotland would be already handing back some of
its sovereignty to the country back to the UK if the Sterling Bloc solution did
happen and the Eurozone has showed that currency union without political union
is a difficult situation.
Scotland could keep using the
Pound unofficially, a proposal that was hinted at in recent televised debates, though
this could have serious credit rating implications and many businesses
potentially removing capital from the country. This would also affect ordinary
citizens in terms of borrowing costs and inflation.
A key theme running through the
document is the need to become a fairer society. This is an excellent sound
bite but is not properly quantified. No one can argue that the need for food
banks is a scar on society though the world has just endured its greatest
economic convulsion since The Great Depression and the Trussell Trust network
of food banks provides a sustenance safety net that nourishes thousands every
week. This is a sign that society is now better equipped to deal with those
that are struggling unlike the days of the Great Depression though it can be hoped that these will be a temporary phenomenon. Even in the much
heralded country of Norway, there are food banks present such as the
Fattighuset in Oslo.
Another key proposal put forward
in the document is the removal of the “bedroom tax”, there are no fewer than 34
times where this tax is mentioned, 30 more times than the term “job creation”
is used. This area of welfare reform reduces payments to claimants if they are
considered to have too much living space in their rental property. The idea
behind the reform is to manage housing capacity appropriately and was part of a
wider package of measures to encourage people back into the workplace. There
have been different arguments for and against the reforms though it is clear
that the founding principles of the welfare state should be to give a hand up
and not a handout. Our welfare state must provide people with incentive to
progress rather than being a haven for families to survive for generations
without working. To this end, it was disappointing to see that the White Paper
didn’t seem to have much to say for Scotland’s working and lower-middle classes
that power our economic motor.
Throughout housing estates in
Scotland, there are ordinary working people who are now home owners with all
the latest electrical goods, have at least one car in the driveway and the
ability to go on at least one foreign holiday a year. This is a much more
positive outlook than that recognised by those who grew up in 1960/70’s working
class Scotland. Extensive proposals are recommended for child care with a
Scandinavian style proposal for 30 hours of childcare for 38 weeks of the year
from the age of 1 till starting school, this is very bold and has the potential
to free up parents who want to get back to work, though it may require a tax
increase to be funded properly. The concept of the fair society is laudable
though there are far more unfair places than our own nation.
The White Paper and ‘Yes’
campaigns maintain that the NHS is best maintained under an independent
Scotland in order to prevent internal market competition reforms. Our health
service is important to all citizens and the huge investment in a service fit
for the 21st century is evident with the imminent opening of the
south Glasgow hospital campus on the site of the Southern General. Citizens are
keen to preserve free at the point of use healthcare though it would’ve been
useful to read of more wide ranging proposals in order that people can get
access to an increased range of treatment plans rather than only a “one size
fits all” solution.
Transport provides another area
of lively discussion within the White Paper. The plans for the rail network
include a Scotrail franchise for a ten year period with the Sleeper being split
off as a separate entity, representing the importance of this service to rural
areas of the highlands. The latter of these has since been appointed to be run
by Serco who had previously run the Docklands Light Railway very well, the
former of which will be appointed next year. Interestingly, the electrification
of the rail network is mentioned, an initiative that would assist in reducing
emissions, though this would be an expensive undertaking for the western and
northern highland lines. Alternative ownership structures including public
supported and not-for-profit models though whether these would look anything
like the pre-1997 British Rail model is not known. Interestingly, the transport
tycoon, Brian Soutar, has provided support to the independence movement though
it isn’t known if he will play some part in any of the rail network changes in
an independent Scotland.
There are also economic stimulus
plans through using the nation’s borrowing power to fund road network
upgrades. The plan to dual the road
network between all Scottish cities by 2030 is a worthy aim with potential economic
benefits though a Keynesian style infrastructure spending spree on borrowed
money with an as yet undefined credit rating, may increase the burden on the
taxpayer.
It is clear that the Scottish
Government see the future of an independent Scotland as a full and active
member of the European Union. In the past, small nations such as the Republic
of Ireland did very well from EU membership in the days of the ‘Celtic Tiger’
economy. The White Paper seems to ignore the fact that the smaller EU nations
paid a heavy price during the credit crunch when they had to be bailed out by
European Central Bank and strict austerity measures were necessary. Although
development grants may still be available from EU funds, the alliance has now
grown to 28 nations and potentially could leave Scotland with a smaller share
of the pie. The engine of growth in the EU is Germany and the German media have
put the Bundestag under pressure over the colossal sums of money that their
taxpayers have had to commit to propping up smaller nations.
There is also the possibility
that Scotland would not get immediate membership as countries like Spain would
be concerned that it could encourage Catalonia to forge ahead with their own
separation agenda. At the time of writing, the EU has announced a quantitative
easing plan to bolster the sclerotic economic performance of the Eurozone,
demonstrating that the pace of recovery is still slow across some member states.
Another argument for the pro-EU
stance is for Scotland to attract people from other nations to come and settle
there. The White Paper rightfully distances itself from some of the British
Government policies such as driving around vans encouraging immigrants to go
home. It is important that appropriately skilled migrants are encouraged to
Scotland though equally important that this is in the context of secure
borders. Politicians forget that immigrants also grow old and we may need
future waves to keep the economy growing which may lead to a demographic Ponzi scheme
as extra people will also place extra pressure on public services.
The White Paper proposes that
Queen Elizabeth would stay as the Head of State in an independent Scotland.
This proposal is advocated by Alex Salmond and is reasonable considering The
Queen is recognised as the greatest living statesperson. The late Queen Mother
was also born in Scotland and the current Princess Royal has stayed loyal to
her Scottish heritage and is a regular presence at Scottish international rugby
matches.
Maintaining the status quo in
terms of monarchy is a clever move from a political astute First Minister
though the document concedes that if a ruling party favoured a change in this
position and gained enough support, this situation could change. The document
steers clear of mentioning that the House of Stewart are the heirs to the
Scottish throne and there could potentially be a challenge from some of their
supporters, perhaps at a time when the present Elizabethan era draws to a
close. Such a development would have the potential to inflame tensions between
Protestant and Roman Catholic communities.
There is also a proposal to
nationalise the Post Office in Scotland, reversing the privatisation measures
that were put in place by the UK Government in 2013. Many Scottish politicians
voted against this proposal, mainly due to concerns over potential cost
increases and service reductions. It is important that the rural areas of
Scotland are being served appropriately by the postal authorities though the
placing the Scottish postal service back into public hands will have substantial
cost implications. The White Paper doesn’t offer some form of concession to
working with the privatised entity.
A key defence proposal is that
Scotland takes its place in the NATO alliance. One of the more controversial
recommendations is the removal of the UK nuclear submarines from Faslane and
the base to be converted to be the joint headquarters of the Scottish armed
forces. A timetable has not been set for the removal of the submarines though
it is likely to take several years to find somewhere suitable to rehouse these
ships and it would be naïve to think that there would be no cost to Scotland
for their removal. Considering the strategic importance of the nuclear
submarine base, there is no discussion on how this could potentially affect the
relationship with our NATO partners though there are other smaller, nuclear
free states within the alliance. In an ideal world, there wouldn’t be the need
for a nuclear deterrent though some of the unsettling developments in the
Middle East and Russia taking over Crimea from the Ukraine suggests that we
should not be letting our guard down in order to embrace the kind of utopia
visualised in Imagine by John Lennon.
A populist proposal is made to
reinstate the old Scottish regiments that disappeared under the restructuring
plan of 2006. Some of the old names like the Black Watch and Seaforth
Highlanders are among the most storied in the British Army. It would be welcome
to see names from Scotland’s military heritage make a comeback though whether
they will have all the hardware necessary to make a difference will depend on
any independence negotiations.
In terms of Navy requirements, it
is thought that Scotland will qualify for two frigates from the Royal Navy
fleet and will commission two more in order to reach the optimum number of
four. A recommendation is made to increase in dedicated coastal protection
vessels Expertise to build new vessels for an independent Scottish Navy exists
within the nation though it is uncertain whether an independent Scotland could
rely on future major projects from the Royal Navy. An example of this would be
continued involvement with the Queen Elizabeth class aircraft carrier project,
especially with the historic Portsmouth dockyard lying mothballed. Air Force
provisions would include a squadron of 12 Typhoon fighter jets with proposals
to increase to 16. Russia has tested our air space in the past and a rapid
reaction to such incursions is essential for national security.
The White Paper is an interesting
and imaginative document in some respects though its key flaw is that the
start-up costs for independence are not adequately outlined and there is no
guarantee that Scotland will be welcome in the Sterling zone. Indeed the more
recent implication that Scotland could potentially default on its share of the
national debt if a currency union was not granted, could leave the fledgling
independent nation as a financial pariah. Even in the occurrence of a currency
union that resembles the status quo, Scotland could be seen to live out an
existence of independence light with key elements of sovereignty still resting
in London. Defence proposals will leave the nation in a transitional state as
new shipping options may take a few years to commission.
Since 1997, the Scottish
Government has had some important successes such as free personal care and
prescriptions. Other gains include removing the tolls from strategically
important road bridges and the introduction of the M74 extension in Glasgow
that has been of great strategic benefit in linking up the west of Scotland
motorway network. The new Queensferry Crossing opening in 2016 as the new Forth
Bridge also represents a first class infrastructure project that will benefit
the nation. The First Minister posed the question “if not us then who, if not
now, then when?” and it is certainly true that Scotland is more than capable of
managing its affairs. The positivity of the First Minister and his deputy are
beyond doubt, though the timing of the separation would seem unusual
considering the world is just recovering from the worst financial crisis in 80
years and the UK has weathered the storm better than many EU counterparts.
A key mantra in the White Paper
is “Scotland’s future in Scotland’s hands”, the destiny of Scotland’s place in
the United Kingdom rests in the hands of the Scottish people though the
direction of that destiny will be shaped by the invisible hand of the markets.
The anti-independence campaign
has not covered itself in glory and has not always made itself heard in a more
positive manner if it wants the United Kingdom to endure. The referendum should
also be a wake-up call to a London-centric UK government and Westminster should
take the opportunity to pay more attention to other regions of the UK and learn
more about their needs. The proposal for new powers for the Scottish Parliament
would offer a situation more like “Devo Max” rather than the reduced
sovereignty version of independence that is the alternative. It is welcome to
see key Westminster figures belatedly put this on the table, though this should
also include further proposals for devolution across the Union in order that
each nation will be able to deal with local issues and share the burden for the
big decisions in terms of the economy. The challenging conditions faced in our
world suggest that now is the time to remake rather than break the Union.
Throughout the nation, it is
difficult to go far without seeing the Saltire on ‘Yes’ or ‘No’ propaganda. Our
flag is a symbol of the martyrdom of our patron saint, who gave his life as he
wasn’t willing to compromise for the message of hope to all mankind that he
believed in. It is doubtful whether the flag that resonates with such profound
meaning, has been best served by the nature of the referendum campaign.
The Scandinavian social model is
clearly in the thoughts of the Scottish Government as a culture to emulate. In
the advent of an independent Scotland, It will be difficult to replicate the
egalitarian lifestyle demonstrated in the popular Danish drama, Borgen, on Balamory money.
