Sunday, 13 September 2020

Beware federalists bearing gifts


I came across a headline in The Times about Scottish Home rule while scanning the newspaper headlines in a shop in Loch Inver. I had just travelled through some of the most stunning scenery in Europe, but its beauty was due essentially to its emptiness. Scotland is divided into a narrow strip along the East coast that continues to Edinburgh and then on to Glasgow. This land is fertile, not especially beautiful, rather dull, but productive. The rest is beautiful but largely barren. It has always been this way.

Passing SNP Yes signs, noticeably not in Gaelic, in the Highlands I wondered how these people would cope with self-sufficiency. There are no obvious sources of revenue in the Highlands apart from tourism and it was crystal clear that the locals would prefer that tourists were not there at all.

There is hardly a community or an island in the Highlands that could survive without subsidy. The standard of living enjoyed by the inhabitants is not down to their own labour. Crofting produces meagre crops from much effort, but little profit. The cost of each small village having a doctor, a school and similar public services and benefits to every other British citizen is not paid by the people of these places. Home rule for each of the pretty places I went through would lead to poverty and depopulation.

So where do they expect the money to come from so that their standard of living is maintained? If Scotland had home rule would the more profitable parts with good land, large towns and cities be able contribute enough to make up the loss of money from the UK taxpayer?

This has always been the problem for Scotland. Our geography made us pretty but poor. Sixty-five million people can afford to provide public services in Ullapool that are as good as if not better than in London, but can five million afford to do this? Too much of Scotland is essentially empty and barren for the small fertile part to maintain with ease. This is why Scotland was one of the poorest parts of Europe until we joined forces with our larger more profitable southern neighbour. It was this alone that brought the Scottish renaissance in the eighteenth century and which historically raised our standard of living. This is the fundamental fact of Scottish history that cannot be escaped now.

Home rule is another word for Devo-Max. Sometimes it is also called federalism.

Faced with an apparent surge in support for Scottish independence, some clever people propose to give still more powers to the Scottish Parliament. There is a certain logic to it. I too would prefer Home rule to independence. At least we would remain part of the UK at least we wouldn’t have to go through the turmoil of either using the pound unofficially or else creating our own currency and then probably joining the Euro.

But we need to carefully investigate what is on offer.

A three-question referendum must be ruled out from the start. It cannot be possible for the SNP to win independence with just over a third of the vote. 34% cannot be allowed to overturn 55% in 2014. That is grossly unfair and makes Devo-Max appear like as Trojan Horse. Beware federalists bearing gifts.

Full fiscal autonomy would mean that Scottish taxpayers plus Scottish borrowing would pay for absolutely everything in Scotland. During Covid we would have received nothing whatsoever from the UK Treasury.

The problem here is that either Scottish debt would be treated as ours alone, or it would be treated as being backed by the UK Treasury. What if Scotland was unable to pay back this debt, who if anyone would pick up the tab. Well given that Scotland was still in the UK it is obvious that creditors would come to London. For Scotland to be allowed to default within the Sterlingzone would be as bad as Greece being allowed to default within the Eurozone. For this reason, Scotland would be borrowing ultimately with the UK’s credit card and the UK would be unable to control Scottish spending. Why would the UK support this?

Currency union as we have been learning over the past years requires a political and fiscal and transfer union. It requires the Bank of England to be able to fund everywhere that uses the pound equally. Devo-Max turns the UK into the Eurozone. It would send us in the opposite direction to that in which the EU is moving. It would make us less united while the EU is intent on becoming more united. Why would the UK agree to this?

The people proposing Devo-Max also propose that Scotland would have a written constitution. They think that this would strengthen the Union. But would Devo-Max prevent the SNP campaigning for independence? If not, what prevents it being merely another steppingstone to independence?

Liberal Democrats and Labour federalists never seem able to learn the lesson from devolution. They always argue that giving more powers to the Scottish Parliament will mean people cease to support the SNP. But the evidence for this is zero. The evidence that exists suggests the reverse. Setting up the Scottish Parliament in the first place fuelled a Scottish nationalism that had not properly existed for centuries prior to that. Giving more powers to the Scottish Parliament, e.g. with the Smith Commission, increased support for the SNP, while doing nothing to address the grievances of SNP supporters.

The only written constitution that would make any difference would be if the UK as a whole included in its constitution either written or unwritten that the UK is indivisible, and secession is illegal.

The Devo-Maxers anyway lose their nerve. They realise that Scotland could not possibly afford Full Fiscal Autonomy. This is why they suggest that the UK would continue to pay a “social cohesion fund”. What can that be other than fiscal transfers?  But that isn’t Full Fiscal Autonomy at all. It is more powers with no responsibility.

Without continuing fiscal transfers from the UK treasury there would be massive cuts in public spending in Scotland. But given that we remained British citizens in the UK, then if healthcare, Covid funding, education or benefits became notably worse in Scotland than the other parts of the UK then Scots would move to where we would get better services. If the same job was taxed massively higher in Scotland than in England, while public services were notably worse, we would move. Full Fiscal Autonomy could only work if Scotland’s deficit was approximately the same as the deficit of the UK as a whole. If it wasn’t then Scots would become the equivalent of Poles moving to parts of the UK which would pay them more.

The only way to sort out the mess that is devolution is either to abolish it and start again or give each part of the UK exactly the same powers. The Devo-Maxers only ever think about Scotland. Is there any thought of Home rule for anywhere else? Making the UK even more lopsided in terms of power, will not help our unity.

 Federalism can only work if like in the United States of Germany, the parts have equal powers and they do not think of themselves as countries on the road to independence. Devo-Max, federalism, Home rule or whatever you call it combined with Scottish nationalism is as toxic as it is when it is combined with devolution.

Scotland is beautiful but empty. The UK population has grown by nearly twenty million since the 1930s. Scotland’s population has grown by two hundred thousand. The Highlands are empty because economics made it more productive to grow sheep there than people. If you want to see them cleared still further, then by all means take away the subsidy that sustains life in places like Loch Inver.  It is a cold, barren and very beautiful place, but you cannot eat heather.