Could the UK rejoin the EU?

 

The UK is divided in multiple ways. It is threatened by Scottish nationalism and Irish nationalism. It is divided by people who wish to rejoin the EU and by those who resent the Remainer rearguard that has continued even beyond our actually leaving. The destruction of Liz Truss and the coronation of Rishi Sunak look oddly like a part of that rearguard even if Sunak supported Brexit because he is King of the Remainer wing of the Conservative Party. But if Remainers and the Tory Wets are once more in control and with Labour likely to win the next election, is it more likely now that the UK will rejoin the EU?

The problem for Rejoiners is that the EU we left like Heraclitus’ river is not the same. You cannot step into the same EU twice. The UK in 2016 had opt outs for the Euro and for Schengen. We had a rebate negotiated by Margaret Thatcher. But more importantly than all that in 2016 we had not yet left.

We have gone through the process of leaving and seen the EU negotiate in such a way that it wished to make it clear to other member states and the UK that leaving must be seen to be detrimental. The price of leaving must be Northern Ireland. The UK must be metaphorically knee capped in a punishment beating.

Well, if the UK wanted to rejoin what would the conditions be? Would the EU wave the conditions of entry in the Copenhagen criteria? Come back you can be just like you were. There is no need to adopt the Euro. No need for Schengen. Or would we still have the tough EU negotiator?

It is impossible to predict how the EU would respond to a UK attempt to rejoin. De Gaulle rejected UK membership because he didn’t think the UK would ever really embrace the project. We didn’t. We wanted a common market to help our trade, but we rejected everything else. There was minimal enthusiasm for “ever closer union” and Euro federalism even among Remainers. Few even among the Lib Dems wanted Schengen and the Euro.

The only UK party at present that supports rejoin, the SNP also rejects Euro federalism, doesn’t want to join the Euro and only wants Schengen if Scotland can stay in the Common Travel Area. But the EU has just told Scotland “No Euro, no membership”. But if it is saying that to Pro EU Scotland, why would it not say the same to Brexiteer Britain?

Ireland has an opt out from Schengen, so if the UK were required to join Ireland would have to join too. But Ireland has no objection to Schengen in principle. It only has the opt out because the UK objected to borderless travel within the EU.

So, this is our problem. In a couple of years, we will probably have a Labour Government full of Remainers. It may depend on the votes of Remainer Lib Dems and Remainer SNP. The Conservative opposition will be dominated by Remainers. But how do they rejoin the EU?

Rejoining the EU involves the following steps

1 Promising to join the Euro

2 Joining Schengen

3 Joining the ERM II (remember ERM I?)

4 Giving up the pound.

 

But this means that the UK Chancellor would also have to give up control of monetary policy. The Bank of England could not raise or lower interest rates, nor could it print Euros. The European Central Bank would instead control everything and be our lender of last resort.

Joining Schengen would mean that not only every EU citizen could arrive in the UK without passport checks, but every non-EU citizen who made it into the Schengen zone. There would be no need for Afghans or Syrians or anyone else to go to the trouble of attempting to arrive on UK beaches by means of dinghies, they could instead get on the Eurostar. The Home Secretary could no more stop them than Canute could stop the tide.

More important than all of these things is that Schengen and the Euro are the means by which the EU wishes to achieve Euro federalism. If every EU member state had open borders and shared the same currency it would be close indeed to becoming a United States of Europe. If the UK were to join the Euro it might be a step forward to persuading Denmark, Sweden, Poland and others to do likewise.

But there is no way that the UK voters would choose to rejoin the EU if it involved Schengen and the Euro. Try winning a referendum on that. The only way is for Labour with the consent of the Conservatives to rejoin the EU without a referendum just like we joined the EC in 1973.

Parliament is sovereign and can do just that. Parliament can vote to join the ERM and adopt the Euro. It can vote to join Schengen. And that would be that.

We learned from Greece in 2015 that once you are in the Euro there is no way out and there certainly would be no way out for the UK as it would involve a default. Giving up the pound to join the Euro only to give up the Euro to regain the pound would make the recent economic chaos look like Truss was our most successful Prime Minister.

But once in the Euro the UK like all the other wealthier EU members would face the prospect of fiscal transfers to the poorer EU member states. British tax payers may be happy to subsidise Scotland, Wales and Northern Ireland, but would we be happy to subsidise Slovakians when we cannot point out Bratislava on a map? Well happy or not we would have to. That is the point of the Euro. It is to turn the EU into a state.

The UK faces long term strategic difficulties caused by our attempt to be half in and half out of the EU and by our failure to defend the UK’s territorial integrity as other nations routinely do. This has left us vulnerable to both Scottish independence and the loss of Northern Ireland due to changing demographics.

The UK can sensibly go down the Brexit route, but it has either to take Northern Ireland with it completely or come to an agreement with the EU and Ireland to lose it. The Protocol is merely a failure to choose.

But to assert the territorial integrity of the UK requires it to reject the Belfast Agreement, which the people of Northern Ireland voted for in 1998 and risks violence. But there is no point pumping billions into Northern Ireland each year if you are going to give it away eventually. There was no point fighting a war for thirty years either. We would have been better to have given it away in 1968.

The Brexit route involves divergence from the EU and undercutting it by making British business and industry more productive, efficient and with less bureaucracy. But since leaving the EU we have not made any such steps at all. We have gained little if any strategic advantage from Brexit, partly because we accepted the EU’s punishment. The Backstop and Protocol hobbled us just as much as if the knee capping were real.  We allowed the EU and Ireland to make Northern Ireland the price we had to pay for Brexit. It is this that prevents us diverging.

The UK is now still half in and half out. We were unenthusiastic members of the EU and we are unenthusiastic non-members of the EU. It’s time to choose, because the Revelation is this. We are neither hot nor cold, which makes us merely lukewarm sick.

Rejoining looks impossible, but it would solve some of the strategic issues. If the UK were to be an EU member state, Scottish independence would cease to have a point. We now know it would involve Scotland ceasing to be a part of the EU and having to apply to join from scratch. This would involve Scotland either using the Euro unofficially or setting up its own currency only to have to join the ERM II and finally use the Euro again.

But for what? If the UK rejoining the EU added rocket fuel to Euro federalism, secession movements would have no point unless they involved leaving the EU. Catalonia leaving Spain looks awfully like Northern California splitting from Southern California. But so too uniting Ireland looks awfully like West Virginia rejoining the rest of Virginia. It would make the IRA bombing campaign as pointless as the British resistance to it. We would all be part of the same country again. Call it the UK or call it the EU. What would be the difference?

The choice for the UK is either to make Brexit work, assert our territorial integrity and diverge from the EU, or to embrace fully the EU including Euro federalism. Failure to choose is more damaging than either alternative and has been so for decades.

 

 

Scottish politics is trench warfare

 

Writing about Scottish politics over the last ten years feels like being stuck in a trench. Now because of my Aberdeenshire stinginess, I sit looking out on a grey October morning without any heating, with every light turned off except one and with the prospect of lukewarm shower to look forward to as I only turn the hot water on for brief moments. With my diet of oatmeal, 70 pence a kilo, root vegetables grown locally and nettles and rosehips foraged nearby, the diet and living conditions of a First World War soldier appear luxurious.

There was the major offensive in 2014 when the Pro UK side went over the top and achieved a breakthrough. For one glorious day we thought we had defeated General Salmond decisively. But the Salmond National Party (SNP) morphed into the Sturgeon National Party (SNP) and contained the breakthrough turning it into a dangerous salient.

In 2015 the SNP attacked from all sides got nearly 50% of the vote and left our side divided and with one seat each. Since then, the SNP trenches have lobbed shells at us, but the Jacobites and Robert the Bruce reenactors have always ended up hanging on the old barbed wire.

General Sturgeon keeps gathering her troops for an offensive. Next year we will have an independence referendum. But whenever next year comes somehow despite a lot of noise from the SNP howitzers we never quite get there.

First there was the Brexit offensive in 2016. Scotland didn’t vote to leave Europe cried the SNP, but this just led to the great retreat of the 2017 General Election where the SNP lost 21 seats and ended up with just 36% of the vote. Not much good when you need more than half.

Next there was the attempt by the SNP to stop Britain leaving the EU. But if Parliament could ignore the result of the 2016 EU referendum, why could it not equally ignore the result of any referendum on Scottish independence? If losers got a second go because they didn’t like Brexit, why couldn’t Pro UK people argue for a second chance if the SNP ever won a referendum on independence?

The stalemate of trying to leave the EU was broken by Boris Johnson’s sacrifice of Northern Ireland as if it were a pawn in the Queen’s gambit. But he didn’t win the pawn back and instead lost his cabinet members, his job and eventually his Queen.

Now in Scotland we stare across at each other using improvised periscopes and look forward to a Highland charge next October except it depends on the Supreme Court agreeing that Sturgeon’s forces can charge and even if they do Pro UK forces might decide to take down all of our wire, refuse to shoot and in general not take part at all. That way the kilted warriors will breach our lines only to find themselves in cavalry country, but with nowhere obvious to go.

Scottish nationalists always claim that their eventual triumph is inevitable. The Pro UK side is old and sniping and tedium have taken their toll. The demographics are against you General Sturgeon tells us. You are dying. We just have to wait for you to die. But even if lots of Scottish nationalists are born each year, some of them must be turning Pro UK as they take on jobs and mortgages and have their own Scottish nationalist babies ready and willing for the Curriculum for Independence.

All those school lessons that deal only with Scottish regiments fighting in the First World War all those Burns days, Scottish days and Tartan days at primary school and all that pointing out how the wicked British were responsible for slavery not us, do not reliably turn Scottish nationalist babies into SNP voters ready to go over the top.

The Pro UK side and the SNP have roughly equal troop numbers. We each have 50% plus or minus five. This is enough to give the SNP victory in every election, but it is not enough to win independence.

It’s all very well looking at what victory and defeat might involve in Ukraine, but what would it involve in Scotland? With numbers on both sides equal is there a compromise that would give each side some of what it wants but not all.

I would accept any compromise so long as Scotland remained permanently part of the UK and we remained British citizens. If the SNP agreed to that I would give them whatever else they wanted, be it full fiscal autonomy, more powers, federation perhaps even confederation, though I don’t see how that could work in practice.

But what would the SNP offer? For Sturgeon not to win completely, i.e., for the SNP to compromise it would have to accept that Scotland did not achieve independence. If Scotland gets independence that is total victory. So, compromise must mean less than that. But what?

The answer perhaps is shared sovereignty. This too might be the long-term answer in Northern Ireland. This might horrify both sides. But the problem in Northern Ireland is that both sides have contradictory wishes. One side wishes Northern Ireland to join with Ireland, the other wants it to remain part of the UK. Well could not the citizens of Northern Ireland be both British and Irish, could not the territory and its costs be shared between Ireland and the United Kingdom?

How this might be brought about is anyone’s guess, but Ireland gained a role in Northern Ireland with the Anglo-Irish Agreement (1985) and extended that role with the Belfast Agreement (1998). If shared sovereignty brought permanent peace and stability, it would be worth grasping.

Scotland is divided but there is not the tension between Scottish nationalists and Pro UK Scots like in Northern Ireland. Still if stalemate continues, or if one side or the other claims total victory with 50% plus one vote, there is every chance that the losing side won’t accept the result and won’t be reconciled to either remaining in the UK or independence.

You cannot build a new state with just over half the population supporting it and the rest against. You equally cannot maintain the UK long-term with majorities in Scotland, Northern Ireland and perhaps Wales wishing to leave.

At the moment the SNP is going down the unilateral route. We will have a vote without permission if you don’t grant it. We will turn a General Election unilaterally into a vote for independence. Implicit is the threat that we will unilaterally declare independence à la Catalane if we win any of these votes.

But the SNP does not have the numbers to be unilateralists, just as we did not have the numbers in 2014 to declare total victory now and forever.

I would prefer that the UK was a single unitary sovereign state like France with parts that happen to be called countries. But my neighbours view the situation differently. We can stare at each other from separate trenches indefinitely or we can find a political compromise that gives each of us some of what we want. At that point we could meet in the middle and find that no man’s land has become a shared space for all of us.

Sunak makes the SNP archaic

 

The recent chaos in the UK has both helped and hindered the SNP. It is easier to argue for separation if the UK is poorly led and in an economic crisis. But it’s also easy to see why even the most ardent Scottish nationalist might decide to wait for calmer times before deciding to put an international border down the middle of our shared island.

While everyone’s attention was on Liz Truss no one’s attention was on Nicola Sturgeon. Which must have hurt especially while she was trying to advance the case for Scottish independence. But that too has good and bad aspects for the SNP as support for independence depends on ignorance of what it would involve. Hard border plus currency change with maybe passport control, tariffs plus in the end the Euro looks worse than we have already to all but those who want independence come what may.

Into this we have a new Prime Minister. Whether you supported Mr Sunak or whether you didn’t. It is time for all Conservatives and British people in general to wish him well.

There is no point complaining that he lost to Truss. If she had not blown up the economy and disintegrated like the Wicked Witch of West on contact with water, then Sunak would have remained on the back benches.  

The Conservative Party has rather gone back to the old way of choosing leaders with the coronation of King Rishi, but how a party chooses its leader is up to it. If what matters is the support of MPs otherwise chaos follows, then leave it up to the MPs to get the leader they want or leave it up to a decision by grey men behind closed doors. What matters in our system is that the Prime Minister has the support of a majority in the House of Commons. His democratic legitimacy comes from his election as an MP not from how he became leader.

The appointment of Rishi Sunak has already calmed the markets and we can hope that in a short time we will be back to where we were before Truss. The cost of borrowing is crucial to our economic future as it will determine how much we can spend on everything else. Sunak will bring it down.

Sunak’s task is to use his extensive knowledge and experience of the markets to gradually improve the UK’s economic conditions. There is no point trying to do too much too soon. The Conservative Party will probably lose the next election whatever Sunak does. But it can somewhat restore its reputation if two years from now there are some signs of growth after two years of stability.

It would help Labour if the economy is in better shape when it comes to power than now, but we must hope all governments govern in the interest of the country. People will think better of both Sunak and the Conservatives if that is their focus now.

While chaos helps and hinders the SNP, stability helps and hinders it too. If two years from now there is no war in Ukraine, if the cost of energy has fallen and Covid has declined to such an extent that we no longer even think about it, Scottish nationalists might think now is a good time to leave the UK. But if we have economic stability and fewer risks than before why leave?

Scottish independence is at best an unknown. No first world market economy and no country in the G20 has attempted to split. Leaving the EU was difficult enough for the UK, but splitting up a 300 year old country would be bound to involve difficulties that are hard to even imagine. So, if things are going better in two years’ time and there is the prospect of a Labour Government why vote for the unknown?

Sunak’s parents were both born in Africa. One was a GP the other a pharmacist. He wasn’t super rich as a child, but studied hard and gained as good an education as anyone in Britain. It says a lot about our country that he can become Prime Minister with hardly anyone caring at all about where his parents were born or what he looks like.

It is unimaginable that either China or Russia would choose leaders who were not ethnic Chinese or Russians. It is equally unimaginable in most EU countries or indeed most countries anywhere.

It is going to be much harder for people like Sturgeon to criticise Sunak in the way she has criticised previous Tory leaders. The SNP relies on a stereotypical view of Tories based on them being like English lords of the manor coming to Scotland to clear poor oppressed highlanders from their homes. But this stereotype does not apply to Sunak. His ancestors did not fight at Bannockburn. His ancestors did not demand the droit du seigneur from poor wee innocent Scottish maidens. His ancestors did not massacre wounded clansmen after Culloden. So, he can rightly respond to the independence marchers and their fancy dress mixture of silver foil armour and Jacobite hats, what has this to do with me?

Scottish nationalism depends on people who hate Britain for a variety of historical reasons. The typical SNP supporter hates Britain because of various historical grievances which it associates with the Tories. Mixed in with this is typically a West of Scotland sectarianism that blames Britain for everything that ever happened in Ireland.

But both Irish and Scottish nationalism are almost exclusively white and are very closely connected with ancestry. The supposed illegitimacy of British people living in Northern Ireland is due to their having been “planted” there in the 16th and 17th centuries. The justification for Scottish independence is grounded in our ancestors writing the Declaration of Arbroath, our ancestors writing the Claim of Right and our ancestors sending your ancestors homeward after Bannockburn.

But Sunak’s ancestors didn’t cause any famine in Ireland. His ancestors did not ride with Cromwell and what has he to do with the sectarianism in the West of Scotland or Northern Ireland. Is he a Catholic Hindu or a Protestant Hindu? If Protestants were planted what about Hindus who arrived in the 1960s? It all looks rather anti-immigration if you are still an invader after 400 years.

Scotland has few ethnic minorities, but many of those support the SNP. Still Sunak being Prime Minister says something about the UK which contrasts with both Scottish and Irish nationalism. While these are grounded in past grievance and an obsession about how our ancestors were oppressed by your ancestors. Sunak shows a way forward where we don’t care who your ancestors were or what if anything they did to my ancestors.

Rishi Sunak can destroy the Scottish nationalist argument by making it appear irrelevant to our shared future that does not require a shared past. Compared to this Sturgeon offers white people waving fake claymores and re-enactments of Bannockburn. It is not a vision of the future, but a failure to accept that history is past. Sunak makes the SNP archaic.

 

 

  

An independent Scotland would never join the EU

 

Since 2016 the SNP has consistently hoped that Brexit would make it easier for Sturgeon to argue for Scottish independence. Scottish opinion was in favour of remaining in the EU, so disappointed Remainers would support the SNP’s argument that the only way to have EU membership would be to leave the UK and join the EU. Many Pro UK Remainers argued and some still do that Brexit was folly for this reason as it made it more likely that the UK would break up.

I argued instead that Brexit would make the case for Scottish independence harder. While it is true that some angry Remainers have moved towards Scottish nationalism the SNP still has to win the argument because it has never addressed the consequence of Brexit for independence. If there were ever to be a proper campaign every aspect of the SNP’s case would be scrutinised. What we learned with the SNP’s latest plan is that the case for independence is not only worse than it was in 2014, it is much worse. So much so that it is hard to imagine Scottish voters choosing it.

The issue has never been EU membership itself. There are good arguments for and against the EU. But what matters for Scotland is having the same EU status as the other parts of the UK. If the UK were a member like it was in 2014 it would be difficult for Scotland not to be a member. But if the UK is not a member, as now, it would be difficult for Scotland to be a member.

Like it or not we have been part of the UK for 300 years. The parts of the UK are closely aligned socially and economically, much more so that we are with the EU. It is little bother to any of us if we have to show our passports when going on holiday to Spain or change pounds into Euros, to have to do the same while travelling from Edinburgh to Newcastle would be intolerable. No one wants lorries travelling from Scotland to England to have to pass through customs or to switch currency if we buy something from Amazon.UK.

But we learned something much worse than this on Monday when Sturgeon presented her latest plan. Scotland on becoming independent would not immediately be able to apply for EU membership. It would be years if not decades before it could do so.

Sturgeon admitted that Scotland would need its own currency before it could apply for EU membership. I don’t think Scottish nationalists have quite grasped why or what this would involve.

The reason Scotland would need its own currency is that there are rules for new member states. They have to adopt the Copenhagen Criteria which involves the Euro convergence criteria and then the Exchange Rate Mechanism (ERM).

At this point Scottish nationalists point out correctly that there are lots of EU countries that still have their own currency. This is true. Some have opt outs. Some simply choose not to go to the next step of joining the Euro. The EU for political reasons allows them to do so. It is perfectly possible that Scotland too would be allowed to never actually join the Euro. But the Euro is a vital part of the EU’s plan for ever increasing integration and it is going to become ever harder for new member states to promise to join the Euro without meaning it.

The idea for instance that the UK could rejoin the EU without joining Schengen or the Euro and keep Thatcher’s rebate is to misunderstand how the EU negotiates.

But this in a way is beside the point. Whether you intend to join the Euro or not you still have to prepare your economy to be in a position to join the Euro before being able to join the EU. This is why the UK joined the ERM.  It is for this reason also that Scotland would need its own currency before even applying.

Well let’s say we have a referendum in 2023. The SNP wins. How long would it take for Scotland to become independent. In 2014 the SNP thought it would need a year and a half. But it took the UK nearly four years to leave the EU, so that might prove optimistic. But Scotland could not even begin the process of applying for EU membership until it became an independent sovereign state and at that point the EU would tell it, you need your own currency and to be ready to join the Euro. So how long would that take?

The SNP plans to use sterling unofficially after independence. This has nothing whatsoever to do with whether the pound is Scotland’s or whether Scotland is entitled to use it. Mali, Myanmar and Mongolia are entitled to use the pound if they wish to. It is a freely traded currency. But while the Bank of England can print pounds these countries cannot and nor could a Scottish central bank.

We don’t know how well sterlingisation would work. If the Bank of England and the former UK failed to cooperate it might work very badly indeed. If there were any sort of economic crisis Scotland might have to move towards its own currency very quickly indeed. No advanced economy has ever tried using a currency unofficially. But who knows it might work well for Scotland.

The SNP says it might use the pound unofficially for some years. But clearly moving towards our own currency would depend on economic conditions that cannot be predicted now. So how long before we can apply for EU membership? We’d be lucky to do so even ten years after a referendum and then we’d have to fulfil the criteria of EU membership. How long would that take? Another five years?

But this is the SNP’s problem. After independence it could choose two routes. It could choose to align as closely as possible with the former UK or it could choose to align as closely as possible with the EU. But it would begin life both outside of the UK’s internal market and outside of the EU’s Single Market. This would mean in theory that Scotland would face tariffs on both our trade with the former UK and the EU.

Depending on how negotiations went with the former UK it might be possible for Scotland to negotiate a very close relationship with the former UK. Using sterling would imply this. The former UK might treat Scotland similarly to how it treated the Irish Free State after independence. Irish pounds and sterling had a one to one exchange rate until 1978.

The SNP would doubtless welcome a similar relationship, open borders, mutual benefits, the right to live and work freely. Perhaps the former UK would too. But after a few years the SNP would face a choice. Do we give up our close relationship with the former UK in order to join the EU?

The benefit for Scotland of not being in the EU would be that, depending on negotiations it could maintain open borders and free trade with the UK. But as soon as Scotland applied for EU membership that close relationship would begin to end.

This was the dilemma Ireland faced when joining the EC. It joined with the UK in order to avoid a differing EC relationship damaging its close alignment with the UK.

So, Scotland after a few years would face the choice of going down the EU route or staying closely aligned with the former UK. But the EU route would potentially involve the following:

 

1 Setting up a Scottish currency.

2 Applying for EU membership.

3 Promising to join the Euro.

4 Fulfilling the Copenhagen Criteria.

5 Joining the ERM.

6 Joining Schengen.

7 Adopting the Euro.

8 Applying customs and excise at the border with England.

9 Introducing passport controls.

10 Giving up economic alignment with the former UK.

So how long would all that take? My guess is never. An independent Scotland would never join the EU, because public opinion would oppose the steps necessary to do so. The best option for an independent Scotland would be to remain closely aligned with the former UK. This is implied with using the pound unofficially. But if that is the best option, a still better one is to remain a part of the UK, where we have fiscal transfers and currency union.

But the logic of this is that Scotland would never join the EU because doing so would be politically, economically and socially damaging if not impossible.

I think the SNP is trying to kid disappointed Remainers into thinking that Scottish independence is the easiest route back into the EU. It isn’t. It’s far more likely that the UK as a whole would vote to rejoin the EU than that Scotland would join if the former UK did not.

The Conservative Party has just been taken over by Remainers. If Labour wins the next election there would be no opposition at all to the UK going as a penitent to the EU saying we are the prodigal son have us back. But I don’t think the UK would get a fatted calf rather it would get Schengen, open borders and the Euro.

It would be amusing indeed if the SNP voted for independence and found the former UK back in the EU while Scotland wasn’t.

 

 

Everyone must do what they are telt

 

The SNP’s latest document “A stronger economy with independence” masquerades as some sort of objective analysis put together by impartial observers. We know however that those civil servants who were paid to write it depend for their jobs on coming up with the right answers. Telling Sturgeon that we would be better off staying in the UK would be like Thomas More telling Henry the Eighth that he couldn’t have a divorce. Off with his head.

We start with how wonderful Scotland is in every respect and then move on to how awful the UK is every other respect. What’s odd about this is that the other parts of the UK subsidise Scotland and have done so for some time. If Scotland is so wonderful and the other parts of the UK are so awful, how can it be that they pay us by means of the Barnett formula more than they receive themselves?

At this point my Scottish nationalist friends tell me that we pay taxes and in fact we subsidise the English. But the SNP document admits that Scotland runs a deficit and would do when beginning independence. So how can we be subsidising anyone else? Of course, the UK also runs a deficit, but the UK finances this through borrowing. The UK may overall be making a loss, but part of the reason for this is that it subsidises Scotland.

The SNP does not borrow (though it could), does not make a profit and instead spends more than it raises in taxes in Scotland. If Scottish nationalists disagree with this, they ought to apply to Sturgeon to give up the Barnett formula and refuse all money from the Treasury from now on. If they did this, I promise that I would vote for independence.

I will skip briefly over the bits about currency except to reiterate that I don’t fancy using sterling unofficially without a lender of last resort. I don’t see how our banking sector could survive. I also don’t fancy everything I own being converted into Scottish pounds. Nor do I believe that an independent Scotland in the EU could long stay out of the Euro, not least because it would be its best currency option.

The SNP wants to have a New Scotland Fund after independence. The idea I think is to emulate Norway’s wealth fund. But while this might have worked if Scotland had become independent in the 1970s, it is hard to see how it is going to work now. Scotland is running a deficit. Even the SNP admits this. Well, any money it puts into the New Scotland Fund is going to have to come from cuts elsewhere in the budget or from borrowing. But cutting spending is called austerity and that is something Tories do, while borrowing to create a New Scotland Fund is like me borrowing from the bank only to put the money in the mattress. I can call my mattress a New Scotland Fund if I like, but I still will have to pay it back to the bank. It’s not my wealth. It’s the bank’s. It’s not a wealth fund. It’s a debt fund.

The SNP thinks that it will boost trade by joining the EU. But after nearly 40 years of UK membership of the EU Scotland traded vastly more with the other parts of the UK than with the EU. Why would this suddenly change if Scotland joined the EU?  

The problem the SNP has with EU membership is that it puts us in the wrong trading bloc. Scottish trade with the EU might increase if we joined, but at the cost of our trade with the former UK. But given that we trade vastly more within the UK than with the EU, our overall trade position is going to be worsened.

The SNP as usual has an exceedingly optimistic view of EU membership and Scotland’s relationship with the former UK. Trade with the former UK it thinks will be seamless, even though we know that trade between the EU and the UK has been difficult at times with bureaucracy, form filling and delays even between Britain and Northern Ireland (which is de facto in the EU’s Single Market). But none of this would apply to Scotland. Markies may not be able to sell sausages in Belfast, but no one would dare make a Scot fill in a form because we wear blue woad.

The SNP thinks that Scotland’s membership of the EU would be like Ireland’s. Scotland would both be part of the Common Travel Area and be given free movement across the EU. Scotland would be part of Schengen, but would be given an opt out from the border control aspects. So, there would be no need to show passports between England and Scotland and we would have exactly the same access to health care and benefits in the former UK as we do at present.

It may be that the SNP’s wish list is fulfilled, but it is worth pointing out that none of these things would be up to the SNP. The Common Travel Area was set up in the 1920s because of Irish independence and to avoid border controls between the Irish Free State and Northern Ireland. It exists now because of thirty years of terrorism and the hope that an open border helps us keep the peace.

The former UK Government might respond to Scottish independence in the same way. It might offer Scots reciprocal rights. But it would be under no obligation to do so. No other member of Schengen gets to have an open border between the EU and the non-EU. But again, Scotland is special.

One of the key aspects of SNP policy is that it wants to have much more liberal immigration policies in order to address depopulation in Scotland. But the Common Travel Area depends on its members having a similar immigration policy to the UK. The SNP wants to have open borders with the EU so that anyone from the EU can arrive in Scotland. This means rather than getting in a dinghy on the French coast it would be cheaper just to fly to Edinburgh and get the bus to London. What is to stop this if there are no passport controls? It’s not at all clear why a former UK Government would agree to this.

The SNP’s whole economic argument depends on it not being allocated a population share of the UK’s national debt. Instead, it offers an annual solidarity payment. The reason for this is that UK debt as a percentage of GDP is approximately 96.6%. It is difficult enough for the UK to maintain this level of debt as the recent crisis showed, but it would be completely untenable for a newly independent country to begin life with debt approaching 100% of GDP.

The solidarity payment offered by the SNP has of course not been negotiated let alone agreed. If Scotland were to avoid accepting its population share of national debt, then the former UK’s debt would increase as a percentage of GDP owing to the loss of Scotland. The former UK’s credit rating might also be downgraded as the break up of the UK might be seen as making lending to the former UK riskier.

The SNP wish list then amounts to saying we will not accept our share of the money you spent on Covid furlough, nor on capping our energy prices, nor indeed on decades of Barnett and everything else we have received, we will instead pay you a token solidarity payment and in response you will give us everything we want including open borders, seamless trade and you will continue to pay us benefits and healthcare so that if we happen to get drunk in the fountains on Trafalgar square and  trip up and hit our heads you will look after us for free. Really?

I have absolutely no idea what would happen if Scotland were to vote for independence. No one has tried to break up a first world country, like the UK, France, Japan or Germany. I think it would damage the former UK more than it guesses, but it would damage Scotland still more.

No one has tried to start a new country when approximately 50% are opposed to it being set up. How would the Pro UK 50% behave? Would we all just happily get on with being new Scots? I’d stay. My work is here, but I’m not sure how much I’d want to help. We just don’t know what would happen, because no country has become independent with such a small percentage wanting it to do so. Every other country I know of gained independence after an overwhelming majority wanted it. But in Scotland we need just 50% and one vote.

How much of the Scottish economy is intertwined with the other parts of the UK? We don’t know until we put an international border and see if it makes a difference.

The SNP thinks that it will get the best possible deal both from the former UK and the EU, but it fails to take into account that just as the EU chose to drive a hard bargain with the UK over Brexit, so the former UK might choose to drive a hard bargain with Scotland.  

The SNP presents the best-case scenario as inevitable even before it has begun negotiations. It is arguing that we would have exactly the same rights in the former UK as we do now, there would be open borders and no disadvantages despite us using the pound without permission and refusing to accept our share of mutually incurred debt. It really is as if the Scottish civil service is scared to tell Sturgeon the truth. Off with their heads.

Alas poor Liz

 

There were all sorts of reasons for the financial crisis in 2008, but Labour rightly got the blame. It got the blame even though Gordon Brown and Alistair Darling performed creditably and even though the crisis was a worldwide phenomenon. The public didn’t follow or indeed understand all the details, but Labour was in charge so Labour got the blame. So too now.

We are still living with the consequences of 2008. The crisis never really finished. Instead, debt increased, the housing market and stock market were pumped full of QE and ultra-low interest rates encouraged all sorts of bubbles as if we still believed in investing in tulips.

The Government got away with telling us all to stay inside for a year and more and paying people 80% of their wages to do nothing. If you couldn’t work you should have been paid unemployment benefit. The individuals who make up what we call the markets accepted lockdown because they too were scared to get Covid and because anyway they could work just as well from home as from the office. But all the while we were approaching the tipping point as if it were an iceberg slowly growing.

UK debt is too high. Inflation is too high, interest rates are too low. While we could in 2020 batten down the hatches only to tend the wheel wearing masks, the Government has decided that we can have another once in a lifetime crisis only a year or so later and we will all be bailed out again instead of paying the market rate for our heating. But there comes a point when you rely on bailing out too much when the water keeps rising and your ship sinks in the storm. This is why the markets are in chaos.

Just as taxes have become too complex, so too have markets. Pension funds searching for a way to make a profit with low interest rates have moved from the safety of gilts to all sorts of complex bets on what the future will bring. This is why the Bank of England had to intervene. It is today’s equivalent of subprime indeed today’s equivalent of tulips.

But people who work for banks or pension funds cannot continue to have a bet where if they make a profit they earn a personal fortune, but if they make a loss the tax payer bails them out. This was the problem in 2008. It is still the problem now.

Banks and pension funds that act recklessly must be allowed to fail. People who do so must be jailed and personally bankrupted. We cannot allow pension funds to risk the whole economy if they lose their bets on the future.

But it doesn’t matter who is at fault. Truss and the Conservative Party will get the blame and rightly so. There is disagreement among economists about the mini-budget. Some are supportive of what Truss was trying to do and the general principle of lowering taxes to stimulate growth is sound. But Britain is not making a profit. We run a deficit. We have an enormous amount of debt and those to whom we owe this debt are naturally worried about inflation.

For this reason, it is necessary that the Government do nothing to upset the bond markets. Whether it was right or wrong in principle the mini budget caused market chaos and therefore with hindsight was a mistake. Arguably Truss was unlucky, but Napoleon rightly pointed out that he needed lucky generals.

It is unimaginable now that the Conservatives will win the next election. It will be difficult indeed for people who believe in lower taxes, free markets and a smaller state to put forward that argument with a chance of winning for many years. Truss by failing has done great damage to her own argument.

Truss has lost all authority and it would be better for her personally and for the country if she went as soon as possible. But it doesn’t matter whether she does or doesn’t. It is already too late for the Conservatives.

Personally, I would rather a General Election now. The Conservative Party desperately needs a clear out. There are too many people who wish to stab each other in the front.  It is simply absurd that the response to Truss being elected was for some MPs to immediately plot to remove her.

The first thing to do is to change the rules about leadership. Find a method of electing a leader that MPs will accept. If that means only MPs vote, fair enough. Then make it much more difficult for a leader to be removed once elected. The continual threat of letters to the 1922 Committee has destroyed both May and Johnson. This is not a sensible way to govern.

The Conservative Party needs to decide what it believes. We have reached the point where many MPs neither want to lower public spending, nor lower taxes, nor do anything to make the country more efficient, nor do anything remotely unpopular. Their only solution is to increase debt. There needs to be a higher quality of MP.

I believe in giving the public a choice between socialism, social democracy and conservatism. When all the parties meet in the middle it is a betrayal of democracy because it doesn’t matter who wins.

The Conservative Party has become so reliant on solving every problem with higher public spending that there will be minimal difference economically if we have a Labour Government.

If we are to have a Labour Government and this is a certainty no matter what Truss does now, then I would far rather it had an absolute majority rather than depending on either the Lib Dems or worse the SNP. Let Labour take full credit or full blame for what happens next.

The task is to rescue both the economy and the country. Someone is going to have to get spending under control, turn deficit into surplus and gradually reduce the size of the debt. It’s hard to imagine Labour doing this, but the markets may give it no choice.

The prospect of a Labour Government may see some revival of its fortunes in Scotland and this would immensely help British democracy. We don’t know how Starmer will respond to Sturgeon, but we do know that it would be harder for her to win an independence referendum while there was a Labour Government.

The SNP argument is far too reliant on getting the “Tory scum out”. If Labour is in power that argument is as neutered as transwoman after surgery.

Conservative supporters are in an odd position especially in Scotland. Damage limitation for English Tories might be to limit the size of defeat at the next election. But Pro UK people here are going to have to reflect on what we can do to ensure an absolute Labour majority, because the alternative is Labour depending on SNP votes.

 

 

Sturgeon is part of the hate filled mob

 

In previous generations people like me wrote in obscurity. We wrote letters to friends and colleagues that were afterwards destroyed. We might have written pamphlets or contributed to small circulation political magazines. If we were very fortunate indeed, we might have been asked to write a column in a newspaper or found a publisher ready to back us. But even J. K. Rowling was rejected by any number of publishers and it was perfectly possible that like Emily Dickenson her talent went unrecognised. Talent isn’t enough. You also need to be lucky. Some mute inglorious Rowling here may rest.

Prior to the internet people like me would write a dissertation that two or three people read. After that we might publish journal articles and then after a few years of research a monograph. But many if not most journal articles are read by less than a hundred people. Monographs sell a hundred copies if you are lucky mainly to libraries and then gather dust. The internet changed everything. It is the equivalent of the invention of the printing press and will have just as large an impact.

But the internet too is not enough. I could write my articles every few days and put them on the internet, but almost no one would read them. It would be the equivalent of writing letters that never arrived. What gives me an audience is social media. Without Twitter and Facebook, I would have no readers.

But there is a downside especially on Twitter. The contract is this, you get to publicise your work, but the price is that people get to say to you things that they would never dream of saying to any stranger on the street.

Imagine walking home every day from work. Every now and again you come across an unsavoury character, but you can cross to the other side of the road or keep your head down. But imagine if there was a whole mob of such people all of whom wished to shout abuse at you and there was no alternative but to pass through the mob. This is what Twitter feels like sometimes.

Of course, there is no obligation to go on Twitter, but in that case there is no audience. It’s like being in a play where the price of being Hamlet is to have things thrown at you. There is no need to be Hamlet of course, but then you can hardly be an actor.

I have been doing what I do for a decade now. I write articles that I hope are based on reasoned argument. I do not personally insult anyone, though I do use forceful argument to point out the flaws in other people’s arguments. I don’t hold back, but rather say exactly what I think even if it is controversial. I believe there is no point writing otherwise.

I am happy for people to respond with reasoned argument, though I don’t promise to read everyone else’s opinion. I accept that I may be mistaken. I may be quite wrong. But I think it is worth testing arguments to destruction by saying things that might appear to be outrageous. It should be easy for you then to point out the flaws in my logic.

I disagree with the Left and Scottish nationalism, but do not hate people who vote Labour or the SNP nor the leading figures in these parties. I am a Conservative, but willing to criticise Conservatives when I think they are mistaken or wrong.

I try to remain polite at all times on social media. I rarely if ever comment on someone else’s post unless they comment on mine. I almost never initiate conversations. I do not swear and try to avoid personal attacks.

But lately my timeline has been filled with a never-ending succession of hate filled trolls desperate to say the worst possible things imaginable about me personally simply because I dare to write what I think.

When I first started on Twitter, I tried to read every comment. Later I only read my notifications. Now I only can read my own Tweets and some of the replies to them.

The response of the mob of course is that I deserve it. How dare you write an article that questions the need for food banks? How dare you object to Nicola Sturgeon saying she detests Tories? You are a Tory and you deserve to be detested.  

So, my journey home from work becomes not just about avoiding Mr Angry, or the loudly barking dog, but a whole mob of people who think its OK to shout and swear at a stranger, because the stranger deserves it.

This is the real-world consequence of Nicola Sturgeon perhaps genuinely detesting Tories. It encourages the mob and tells it that you can hate people who dare to disagree with Scottish nationalism or question left-wing orthodoxy.

I have weathered enough Twitter storms to know how to deal with them. You block indiscriminately and when you get tired of blocking you don’t bother reading the hatred. Soon enough the bullies get tired of their victim and move on to another one all the time thinking that bullying is virtuous and hatred moral.

I stand up to it by writing my next article and publishing it. These people want to shut me down. It’s in essence a denial of service attack. But they can’t. I kept writing in 2014 when they flung everything, they had at me. I keep writing now.

But Twitter storms do have real world consequences, if not for me, then for others. The downside of social media is what it can do to mental health. If a mob of neighbours in the street told someone that he was hated it would be devastating for the victim. But an online mob is larger than any mob in the street. Someone on Twitter makes a mistake. He says something he shouldn’t or uses the wrong word. Suddenly from nowhere hundreds or thousands tell him that he is hated. He tries to apologise or explain and he is told that he deserves it and don’t try to excuse your wickedness.

This can make people crack. This can cause a nervous breakdown. This can lead to suicide. Every member of the mob is responsible.

The hypocrisy of the SNP in particular is that it allows and encourages foul mouthed supporters to intimidate opponents not merely online but also in the street. They feel they are justified because Sturgeon has told them they are right to detest people like me and that I deserve it. Sturgeon in that sense is part of the mob.

What is the point of having SNP rules about behaviour and SNP policies on mental health and wellbeing if SNP supporters are allowed with impunity both online and off to say the most hateful things about those who disagree.

What is the point of having rules about misgendering if mobs of these people turn my first name into a swear word and call me, he rather than she? If you call Kaitlyn Jenner “Bruce” and “he” you are a transphobe. The logic is clear.

By all means disagree. Write an article pointing out where I am wrong. But unless I insult you personally why do you feel you have the right to insult a stranger personally for campaigning for what she believes? You are the equivalent of the mob that faced Atticus Finch as he guarded the jail holding an innocent black person. I’d rather be Mr Finch.

There is a reason the Pro UK argument is so opposed to a second independence referendum. It’s not because we would lose. We would have as good a chance to win as in 2014. It’s because none of us want to face the hate filled mob of Scottish nationalists again, which we expect would be worse than last time and still worse again if it was to lose twice.

The intellectual foundation for Scottish nationalism does not exist. No one in the SNP has made the case using reasoned argument, which is why it relies on detesting Tories. But what if detesting Tories instead of being an online game became an offline game? What if the Twitter mob became a real mob looking for the posh Tories and English accents that stopped them winning indyref a second time?

If you think someone with a Ph.D. from Cambridge is stupid by all means compare qualifications. If you think hate will win you more votes than last time by all means continue your attempt to intimidate. But do you know what? I think you lost last time because of the mob that tried to stop Jim Murphy speaking. I think you lost because we didn’t dare put up posters in case our windows got smashed. You lost because we are not scared in the ballot box and can put the cross where we please and you can’t intimidate us there no more than you can intimidate me here.

 

 

 

 

What Sturgeon didn't tell you about currency

With the bridge over the Kerch Straight having just been blown up and Russia threatening “judgement day”, it is hard to believe that the SNP is still considering an unofficial independence referendum in a little more than a year. I know let’s abolish the British Armed Forces and leave its nuclear deterrent homeless just when Mr Putin is threatening us with nuclear war. Sounds like a plan.

But even so it is necessary to counter SNP arguments and misconceptions because they form a key part of the debate in Scotland which determines how we vote. We have now reached perhaps the most important of those arguments and the one that destroyed the SNP’s chances in 2014. What currency would Scotland have after independence?

The SNP’s preferred option in 2014 was to retain sterling in a currency union with the former UK. But as with every one of the SNP’s plans for independence just because you ask for something doesn’t mean you get it. This is obviously the case when you depend on the agreement of someone else. The UK Government wasn’t interested in currency union and for a very good reason.

Euroland has currency union without political union, but it at least is theoretically moving towards political union. If Scotland is moving in the opposite direction, it makes no sense for it to seek currency union. It would make the Bank of England play the role of the European Central Bank to a foreign land Scotland, it would turn the pound into the equivalent of the Euro and would bring few benefits to the former UK but many liabilities.

Faced with refusal Alex Salmond said that Scotland would use the pound unofficially. This is known generally as dollarization or in this case sterlingisation.  Using another countries currency unofficially is the sort of thing that third world countries do when they face hyperinflation or other forms of economic chaos. There is a very good reason why no member of the G7 or even the G20, indeed no first world country uses someone else’s currency. It’s a sort of last resort, when a country is failing.

The main disadvantage of sterlingisation is that you cannot print money and you do not have a central bank that can act as a lender of last resort. In the recent crisis the Bank of England intervened because the gilt market was damaging pension funds. If Scottish pensions were being damaged Sturgeon might ask nicely for help, but the Bank of England would be under no obligation to do anything.

If a Scottish bank failed the Bank of England might be kind enough to help, it might even see it as in the interest of the former UK to prevent a Scottish bank failing, but again it would be under no obligation to do so. Scots with money in that bank might lose all of their money, unless the Scottish Government had enough to bail them out.

My immediate response to the prospect of Scottish independence would be to sell everything I own in Scotland, rent a small flat in England and move all my assets to an English bank. I would then rent a small flat in Aberdeen and continue working here. I would advise everyone with any assets to do something similar. But this would of course be a disaster for an independent Scotland. It would face capital flight before it even began.

The SNP has slightly changed its argument however. It now says that eventually Scotland would adopt its own currency, the Scottish pound. Why not argue that Scotland would do this immediately? The reason is that the SNP thinks keeping pound sterling is necessary to win independence. If you tell Scots that independence means giving up the pound, the majority will choose to keep the pound and stay in the UK. The SNP argument is we may eventually have a Scottish pound, but don’t worry about it we wouldn’t do that for years.

But the disadvantages of sterlingisation are such that the SNP might have to act quicker than it thinks. The first economic crisis faced by an intendent Scotland might see it have to set up a central bank and currency in order to print the money to pay the bills.

Using someone else’s currency has the disadvantage that you cannot create money, but rather have to buy it. While the Bank of England can add liquidity at will using quantitative easing, there would be no central bank in Scotland to do likewise. It is for this reason that Scotland would face a default risk, because it would not have its own currency that it could print. It is for this reason that sterlingisation might not last. It would also mean that Scottish borrowing costs, including mortgages would be much higher, because of the risk of default, that we do not face now.

There are huge benefits to having your own currency. This is why most countries have them. But in Scotland’s case there are also disadvantages. We are used to going to other parts of the UK spending pounds without having to change them. At this point it is worth pointing out to certain Scottish nationalists that currency and bank notes are not the same thing. You may or may not have to exchange Scottish bank notes for British ones, but you exchange them at 1:1 because they are the same currency. If we had a Scottish currency the rate of exchange would be determined by the currency markets.

At the moment most Scottish trade is with other parts of the UK. We buy things on Amazon we pay pounds we receive the goods the next day. But if Scotland had its own currency, it would be like buying from American Amazon or German Amazon. You have to exchange currency and you pay a fee to do so and you usually get a worse exchange rate than the market rate.

But look at your local Tesco. There are products made in Scotland, but huge numbers of products either come from other parts of the UK or from abroad. Scotland does not have a port at present that could handle trade from the rest of the world. So, after independence vast numbers of products would have to be transported from English ports and then on English roads and every time, we would pay these ports or lorries or buy these goods we would have to change currency.

Of course, we could build a port capable of handling all trade, but there would be a cost involved, there would also be a cost involved in ships having to sail further from mainland Europe and make a special journey just for us.

Whenever I want a good or a service now, I simply look on the internet, choose and get the same price as everyone else in the UK, but after independence and a change of currency I would have to recalculate the price. This is assuming that former UK goods or services would even available to me. After all I don’t buy French or German insurance or use an Italian internet provider. Former UK providers might decide it is too complex or unprofitable to sell to deal with cross border changes in laws and regulations just as some of them decided it wasn’t worth dealing with the Northern Ireland Protocol.

But this isn’t the end of the SNP’s journey. The first stage is for Scotland to use the pound unofficially. We would have no say over monetary policy such as interest rates. We would have no way of providing liquidity. These issues would be solved by having our own currency. But just as we were finally in charge of our own monetary policy and able to bail out our own banks, we would then have to promise to give it all up again as we would immediately be on a pathway to joining the Euro.

At this point SNP supporters point out the countries in the EU that don’t use the Euro. Some of these have opt outs which are not available to new member states, but others like Sweden just keep using their own currency regardless.

Now we don’t know how the EU would respond to Scotland. It would depend on whether Scotland left the UK with consent or not. If Scotland left after an unofficial referendum Spain might not recognise Scottish independence. Other EU member states would be nervous about setting a precedent that would encourage their own independence movements. On the other hand, the EU would be delighted to have revenge for Brexit.

But on balance Scotland is going to have to play by the rules if it wants to join the EU. It won’t be possible to promise and not mean it. It is also not going to be possible to apply to join the EU while still using the pound unofficially. It is a condition for EU membership that you fulfil certain economic conditions and are ready to take part in monetary union. This means you cannot join the EU unless you have your own currency and central bank. No one has.

Of course, the EU might change the rules for Scotland. We’re special and hate Tories and Brexiteers. We wave EU flags.

But this means anyone with assets in Scotland is facing two changes of currency, quite possibly in quick succession. Firstly, everything you own will be converted from pound sterling to Scottish pounds and then a little later into Euros.

The Euro has advantages and disadvantages. It doesn’t make sense to have a currency union without a political union, but in other respects people across the EU happily use the Euro and it has the advantage that they don’t face the costs of exchange rates when travelling or buying from other EU countries.

But I absolutely do not fancy changing everything I own from pounds sterling to pounds Scots and then to Euros. I have no idea whether what I ended up with would have the same buying power as it does now. No one does. It would depend on decisions made by the markets and the EU.

When a currency falls, we know that it can be more expensive to buy things on holiday. Well, what happens if I have a debt is in sterling such as a mortgage and the Scottish pound falls in relation to sterling? What happens if the Euro falls against sterling? Suddenly our whole financial future depends on the fluctuations of the currency markets and how these will determine what we buy and what we owe.    

The final thing that the SNP has not told you is that Scottish pound notes would immediately cease to be issued after independence. To continue printing them would be the equivalent of Panama trying to print US dollars. The word for this is fraud. Scottish bank notes depend on us using the same currency. They depend on us being part of the UK.

The best currency option for an independent Scotland is undoubtedly to initially have its own currency and then join the Euro. That is certainly what would happen quite quickly. But this option is much worse than continuing to use the pound as we do at present.

Not only would Scotland have to deal with the difficulties involved in setting up a new state we would also have to change currency twice while dealing with a cost of living crisis and a war in Eastern Europe.

To do all of this simply because you detest the Tories who gave you furlough and then provided you with a free vaccine and now cap the cost of your heating, is at best ungrateful at worse self-destructive in its folly.