August is festival time in Scotland. For weeks, no evening has been allowed to pass without an outing to a comedy show, and no weekend without a self-improving visit to a book festival.
So I found myself last weekend at the generally excellent Beyond Borders festival at Traquair House. I sat through a variety of talks that I am pretty sure improved me, one way or another. Then came the independence debate (“Time to decide”), which I am absolutely certain did not.
We’ve been at this so long now – James Naughtie points out that a UK election campaign lasts about three weeks, but the referendum row has been going on for ten times that – that it seems there is nothing new to be said (having said that, do see this week’s cover story in the magazine for more on this – it’s out on Friday. If you’re not already a subscriber, subscribe to MoneyWeek magazine).
So there was some bickering about currency, along with the usual pointless arguments about how long it would take Scotland to get into the EU (pointless, because the point is that no one knows).
But behind the repetition and low-level rowing, there are a few consensus assumptions forming that could do with a bit more challenging – from either side. Two closely related ones particularly bother me.
The first is that Scotland has different values from the rest of the UK. By this, it is meant that Scotland has a heightened sense of social justice, and as such would – were it given the powers – have totally different policies from the UK. Scotland, said one of the participants, is the “UK’s social conscience”.
This is mostly nonsense. One of the things we are finding out as the debate goes on is just how similar the Scots are to the rest of the UK. Some 60% of Scots said last year that they’d like to leave the EU, or at least reduce its powers. A mere 42% would like to see government spending increase (against 60% just over a decade ago) and 52% think that unemployment benefit is too high.
You can mull over all these numbers at length if you go to natcen.ac.uk, the website of the UK’s biggest independent social research agency. But it won’t take you long to conclude that the social conscience of the rest of the UK is just as developed (or under-developed) as that of Scotland.
One example for you: in the UK, 49% of people think the government should spend less on benefits for unemployed people. Not much difference there.*
The key point here is that all the statistics tell us that the Scots don’t want much that is different from the rest of Britain. In a way that’s lucky.
The second irritating assumption is that a Yes vote can really bring independent control over policy, rather than just a legal separation and expensive replication of institutions.
Let’s start with the currency. It has been much noted already, but you can’t have full fiscal independence without monetary independence. As Mark Carney has made clear, if Scotland were to share the Bank of England as well as to keep using the pound, it would not only be ceding monetary policy, but would need to give up a good amount of fiscal freedom – just as the countries inside the EU (where the SNP intends to stay) are having to.
Only a few days ago, Mario Draghi was saying of Europe that “it would be helpful… if fiscal policy could play a greater role alongside monetary policy and I believe there is scope for this”. Not much independence there.
A new report just out by Ewen Stewart of the Scottish Research Society** looks more closely at this theme. The pretext for separation is to give Scotland the right to make its own laws, says Mr Stewart. But let’s not forget that many of its laws already originate in the EU (some “17 in 20”, it says).
And in the EU, a new Scotland representing just 1% of the EU population would likely find its ability to influence legislation “at best minimal”.
Then, consider defence. The UK is still a significant military force with the add-on of sophisticated anti-terror agencies – which presumably is why only 27% of those in Scotland think their country should have its own army, navy and defence force. That’s dependence, not independence.
On to energy: right now, Scotland is not in hock to the fluctuating price of oil (oil revenues make up a very small part of the UK’s GDP). Post separation it would be – and would have to tread a “parsimonious fiscal line” given that from year to year, it would have little idea how much there would be in the kitty.
Then renewable energy: a separated Scotland would be dependent on England both as a customer for its surplus wind power and as a supplier of ‘baseload’ when the wind was not blowing. In either direction Scotland would have “no control over price and therefore no energy independence”, the report says.
Now consider tax. A new Scotland could set its own tax rates, but it couldn’t introduce much in the way of tax rises: the border is too close and the high-earning population too mobile for that.
If we vote Yes, we won’t be free of other people’s central banks, we won’t be free of Europe’s laws, we won’t have a new head of state or our own defence forces and we won’t be doing much to change the NHS or education. Independence – in policy terms at least – will amount to not much more than a little fiscal fiddling.
But the fact that separation is unlikely to create much in the way of real policy change doesn’t mean you shouldn’t worry about it. The pound is down 2.5% against the dollar in the last month. There could be all sorts of reasons for that, but it is hard to think that Alex Salmond’s suggestion that Scotland might abandon its share of UK debt isn’t beginning to be noticed by the markets. A taste of things to come, perhaps.
A man told me last week that, while he didn’t much understand the numbers involved, he was voting Yes for the “excitement”. If he gets his way and sees how much his excitement costs, he might wish he had dealt with his midlife crisis by taking up skateboarding instead. As Mr Stewart’s report says: “Much cost, little benefit.”
* There’s a good blog on this here.
** The Scottish Research Society is affiliated with the No campaign.
• A version of this article was first published in the Financial Times.