Scottish independence: two nonsense assumptions

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, 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.

  • Poorjohn

    Interesting view, and may indeed all be true. But the only place I’ve ever experienced personal hostilty to me as an Englishman was in Glasgow.
    And if you think there is no difference perhaps you should compare and contrast the Church of England with that of Scotland.

    You omitted the biggest dishonesty of all. It’s British oil. There is no Scottish state to have rights over it, it “belongs” to the UK and can only be redistributed by negotiation.

  • Greg

    I think the countries are different – you mentioned social justice, I think that’s true, Scottish voters generally appear to be more left wing than the rest of the UK.

    If I was Scottish I would vote Yes to independence because Westminster is too London centric and so out of touch with the rest of the UK – including other regions of England.

    Merryn you appear to be Euro-sceptic but surely English resenting Brussels involvement is not much different from the Scots resenting Westminster telling them what to do?

    I hope they get their independence – it will be a wake up call to Westminster and the 3 main political parties. I also hope that will eventually result in less emphasis on London and devolved powers to the regions – particularly places like the North East, Wales and Cornwall.

  • AndrewCormie

    I’d like to highlight the fact that a person answering “Yes” to the question “Should Scotland be an independent country?” is thereby agreeing that if Scotland becomes independent it cannot use the British Pound, because if it did it would not be independent.

    This is such a basic consequence of the phrasing of the question, that I am amazed that no-one appears to have recognised this.

    Contrary to Salmond’s statement in a recent debate to the effect that people voting “Yes” are indicating a wish to keep the Pound, it is obvious that a “Yes” vote is for not using the Pound as to use it would make Scotland dependent on the UK financial system and not “an independent country”.

  • ronnie

    Spot on Merryn I think Mr Salmond has uttered the words “a more prosperous fairer Scotland” so often that he has brainwashed some of the electorate but these are the sort of highly dubious claims all politicians make before every election!
    Let us not forget the firebrand politics Mr Salmond came from, the days when being an SNP supporter was often the preserve of the sorts that poorjohn encountered in Glasgow what a transformation into the monarchy loving statesman he has now become, but of course the Yes campaign isn’t just about Alex Salmond (yet another myth being peddled)

  • Neil John

    Devolution and the further proposed changes should give any right thinking Scot all they would wish for, yet we hear the bleat that only independence can save the NHS or save Scots from the Tories. This appears to strike a chord with many – but why?

    The NHS is not under threat (yet is a financial challenge for any government) and whilst I appreciate the NHS, I haven’t seen my life as a dedication to a health system. At 71 years of age I am still more interested in keeping healthy and living a meaningful life than worrying about how I’ll fare when ill.

    And exactly what is so evil about the current mainly Tory government? After all, it has turned the biggest financial crisis in our history into the fastest growing European economy – and had the courage to tackle stifling social handouts. I think much of the anti-Tory jibe is just prejudice. If the way forward for independent Scotland is socialism, then just look at the mess France is in.

    In the tv debates, Alistair Darling has been ineffectual in countering the Tory jibe simply because he is a Labour politician and that has strengthened the Nationalist voice. I would have liked to have seen Scots who are Tory MP’s up in Scotland, giving a different view on things (e.g Michael Gove, Liam Fox) with the support of the very able Scots lib Dem minister , Danny Alexander, oh, add in Esther McVey, she’s not Scots but a northener and a good down to earth talker. They would be well capable of giving a good idea of the benefits of being Scottish and British against the myopia of the Nationalist argument.

    When I left Scotland in 1970 to move to Yorkshire then to Lancashire, I didn’t feel there was much difference between my Scotland and the north of England, mainly one of dialect. Mind you when I left Scotland, Aberdeen’s population had declined and had fallen behind Dundee – then oil was discovered!

    But as we know, at some point in time oil will become insignificant then it will be gone. Who then will nationalist Scots blame in their declining socialist utopia?

  • EM99

    I live in Scotland and I have lived in London for 10 years. I don’t think the Scottish people are that different from anybody else (English, Estonian or others that don’t begin with ‘E’).

    The author may be happy with the current way we are ruled, but lots of people see it as Oxbridge dominated, Establishment protecting and, in a word, corrupt or to put it less strongly, undemocratic. How do you explain that the Houses of Parliament spent 700 hours debating the fox hunting ban and 7 hours on the invasion of Iraq (figures from Private Eye). Dear reader, did they represent you when they did that?

    What we are voting for here is better democracy. The chance for the people that live and work in Scotland to have their views listened to and responded to by a Parliament that is dedicated to their needs and their place in the world. We want full representation at a transparent Holyrood not diluted at an opaque Westminster.

    Most serious commentators believe that Scotland would be a successful independent country (check out the FT editorials, and Business for Scotland for starters). What causes some distress among people is that they are being asked to choose where their first loyalty lies: is it Westminster or Holyrood. Until now people could claim to being equally Scottish and British. Now those with a vote are being asked to decide which takes precedence. I can understand that this causes a tug of the heart, but it is also a useful process in determining personal and national identity.

    I think many people have seen through project fear, of which this article is an eloquent reminder. The Better Together camp have been very good in making risk asynchronous. All the risk is associated with becoming independent, no risk is talked about in remaining in the UK.

    It has been great to see Simon Jenkins writing in the Guardian overcome his prejudices to the referendum and change his mind from No to Yes. He mentions the risks but sees it in the round. I wonder in 5 year’s time, when journalists look back on their coverage of the referendum debate, will they feel pride in their objective, professional judgement or will they wince and think, actually I should have been a bit more detached and tried harder to be fair.

    There is a great debate happening in Scotland at present. If anyone gets a chance come and hear how ordinary people are discussing women’s rights, the economy, disability, apprenticeships, how we make and export things that people want, the current account deficit (no really they are), nuclear weapons etc. every night of the week in miners’ clubs, community centres, church halls and lecture theatre. Come to a meeting, you’ll be very welcome.

    Best wishes,


  • TrevorJohn

    Forget about social justice and better or worse democracy – it’s the economy that really matters to voters!

    The biggest issue for the developed world is surely how it can achieve lower government spending and balance the books. What is needed in the future is less government not more – Scottish independence would cost billions. Everything promised by the SNP will cost more than now – so who’s going to pay for it?

    Scottish revenue from personal taxation is less than 7% of the UK’s, with the risk of many companies moving south, corporate tax won’t make up the shortfall and oil revenues are declining. Therefore, Scotland would have to borrow more and surely at higher interest rates than the UK (Salmond’s comments about reneging on existing debt hardly fills lenders with confidence). The alternative is what we residents of Scotland fear most – raising taxes. As the currency devalues along with our hard earned assets when does the mass exodus start?

  • Pinkers Post

    Polls galore, speculation reaching fever pitch, the self-appointed protagonists running around like headless chickens… and, of course, the media (rightfully!) pouring oil on fire. These are exciting times for the United Kingdom!

    Big business has argued convincingly that uncertainty surrounds a number of vital issues including currency, regulation, tax, pensions, EU membership and support for Scottish exports around the world. And uncertainty is bad for business. Very bad, indeed.

    The currency issue is, of course, at the heart of the debate. As your editor John Stepek points out, the fact is that ” [a] country cannot be fully independent if it doesn’t have its own currency. He is right in saying that it is “… ridiculous that the status of the pound should even be a debating point…” and that “anyone who genuinely wants independence for Scotland should be appalled by the idea of keeping the pound”. The fact is that a country without its own currency is not a sovereign state.

    However, it seems odd that the emotional debate has not been addressed by most of the self-appointed top pundits: Little regard has been given to national pride or, indeed, the emotional appeal of self-rule. Perhaps one should raise the question whether or not it is better to be governed badly by one’s own than to be ruled well by a foreign state? The sheer will of a people can be a very powerful weapon: Ignore it at your peril. Further to this:

  • RTag

    I have to agree with Pinkers’ last paragraph; I think the SNP and ‘Yes’ campaign are playing a very dangerous game with Scottish emotions (in many cases promising to write cheques that aren’t even theirs to sign!) and we are ALL going to end up hurting in the pocket because of it – with the man in the street in Scotland hurting the most.

    On Merryn’s comment about having an enhanced ‘social conscience’ – there’s a huge difference between ‘a collective social conscience’ – as demonstrated by the Nordic nations – and being ‘socialist’! I think the Scots are confusing the two. The midland valley is most definitely in the latter category, and as a whole I don’t believe Scotland has the collective mindset or willingness to pull together in the way that Scandinavian nations do. Nor would they accept the kind of tax burden that Swedes and Norwegians have to pay for it all – although I suspect, if Mr Salmond has his way, that that choice will be out of their hands.

    The glaringly obvious truth that hangs over ALL the debate is that nothing ever really changes in the political environment – only small tweeks. As Merryn outlines here, we’re all trapped within an interdependent political and financial system that is now bigger than any one country. Any Scot buying into the promise of a ‘bright new future’ in an independent Scotland is going to be sorely disappointed – it’ll just be more of the same, with increased costs from unnecessary duplication of new government departments.

    Aside from monetary separation and the headaches that will create (I live in Northern Ireland so I’ve had plenty of experience with a two-speed, two-currency economy!), I worry about an independent Scotland creating an Enterprise Zone -a low corporate tax environment – in an effort to promote inward investment. This could seriously mess up the other peripheral regions of the UK (Wales, NI and the SW) as they struggle with similar geographic challenges. It’s not a topic I’ve heard mentioned in the various debates.

    One last point. Where does the Yes campaign get their sense of entitlement over North Sea oil? Did they carry the risk in the initial years of establishing the oil fields? Have they not already benefitted very nicely via the net payments travelling north of the border, and the huge quantities of local investment into onshore facilities and their associated services?

    They obviously view it as a cash cow, to be raided as and when necessary. They will be amazed at just how quick companies will back out of there as soon as that starts happening!

    I think a fairer way to do it would be to leave current North Sea assets belonging to the UK, and allow Scotland to own and manage any future discoveries of oil or gas around its’ shores. That way they can truly lay claim to it, having participated in the risk, licensing, government support and other factors that take place behind the scenes!

  • John George

    Could I please add a third nonsense assumption: that Scotland could walk away from its debt. It is nonsense for these reasons:

    1. Under international law a country cannot unilaterally declare independence. For a new independent state to be recognised by other states, the independence needs to be ratified by the original umbrella state. Such ratification only comes if there is a settlement agreement.

    2. The UK has an arsenal of tools at its disposal to force Scotland to take its share of the national debt. For instance, it could turn off the Barnett formula immediately if Scotland does not want to enter into fair negotiations. It would leave Scotland massively out of pocket before it is even independent. It could veto Scotland’s EU entry.

    3. No international partner would like a precedent of a part of a highly developed country becoming independent ridding itself of all public debt. Why? (a) Because of the government bond markets. Once such a precedent is said, Flanders could walk way from Belgium without taking any of the Belgian public debt. rBelgium would be left with a Public debt / GDP ratio of over 200%. If a precedent were set, it would also be priced in for other countries facing separatist movements. (b) China, India, France, Italy, Spain, Romania, i.e. all countries dealing with domestic separatist movements would simply not want to see such precedent as it would be a massive boost for their domestic separatist movements. In fact all these countries have a vested interest in an iScotland failing. (c) Other countries such as the US would not want a precedent that could be a source of instability. It would be too easy if regions could just walk away from failed or unsuccessful states without taking their share of the debt.

    4. If Scotland did not take any of the public debt, it would also not be entitled to any of the public assets. The Crown Estate which owns the seabed is just one example. Infrastructure assets are another example.