The Independent View: Scotland, vote no and let’s all move towards a Federal UK

Brazil v Scotland 22As an outsider, analysis about September’s Scottish Independence Referendum is something of a minefield. There is space to constructively critique the SNP’s proposals, but needs to recognise that I don’t have a vote, and that Lord Robertson-style hyperbole about a Scottish “cataclysm” is not just offensive – and for unionists, counterproductive – it is inaccurate, too.

So let me begin by making clear that in my CentreForum paper analysing Scottish independence published today, I believe that Scotland is perfectly capable of becoming an independent country. But let me also be clear that as currently promoted, I think it independence would be worse for both Scotland and for the continuing UK than remaining in a reforming UK.

Why? Let’s look at independence first, and then at the alternative – a reforming, increasingly federal, UK.

The SNP published the “Scotland’s Future” White Paper last November, which purported to be the most detailed plan for an independent country ever prepared. Ignoring the hype, “Scotland’s Future” is more a series of aspirations than a detailed plan, and in the key areas of currency (and therefore monetary and fiscal policy), fiscal policy, national debt, banking and financial services regulation and EU membership, “Scotland’s Future” comes up short. What is remarkable is that “Scotland’s Future” is predicated on lots of other countries ignoring their own interests to help Scotland out. Not only is this unlikely, it is extremely reckless to build your strategy on the unproven good will of others.

Worse, the SNP have responded to changes in the landscape by asserting more loudly that they are right and that others are “bluffing”, “bullying” or simply out to do down Scotland. This is clearest in the response to the unprecedented joint position of George Osborne, Danny Alexander and Ed Balls in setting out why a currency union wasn’t in the interests of the continuing UK, and therefore wouldn’t happen. Instead of a considered response of Plan B that could be implemented by Scotland alone – and the costs and policy limitations that this would bring – Alex Salmond and Nicola Sturgeon continue to assert in the face of the evidence that the UK “will” accede to a currency union.

This approach is simplistic and dishonest. Perhaps more worryingly for an independent Scotland, it is demonstrates a lack of planning or coherent decision-making by the SNP. Worse, exactly the same cycle of “assertion-countervailing fact-repeated assertion” has been played out in the critical area of EU membership. This failure to provide a plan that can be implemented without favours from other states, and the SNP leadership’s refusal to address shortcomings in their planning – even when facts change – makes the already poor planning of “Scotland’s Future” undeliverable – and with it, the SNP’s proposals untenable. If implemented, the SNP’s vision by 2030 would see a Scotland that is older, poorer, but potentially less unequal, than today.

The same lack of costed policy proposals comes through in the wider pro-independence camp. You could be forgiven for thinking that Scotland is on the threshold of being a Scandinavian social democratic utopia with low UK taxes, and the holes filled with oil and renewable energy. Whilst this is an attractive picture, it simply can’t be delivered.

What is the alternative?

I believe that a No vote will be a vote against independence as cast by the SNP, rather than a vote for the status quo.

But the alternative is not the status quo. Formally, this is because the 2012 Scotland Act will come into force in April 2016 and will transfer additional – if relatively minor – powers, as well as forcing Holyrood to set a Scottish tax rate, rather than merely the tax varying powers in the 1997 devolution design. These powers are limited, and all three UK parties are committed to devolving more powers and revenue control in the event of a No vote.

We propose an all-party agreement to further devolution in the 2015 Queen’s Speech on the basis for Ming Campbell’s Campbell II report, which would make clear to Scottish voters what was on offer within a federalising UK. For Scottish federalists, this offers a great opportunity to test Westminster’s bona fides; after all, if further devolution didn’t happen, then Scotland – along with Wales and NI – would be free to choose independence anyway.

More devolution for Scotland is a partial step. Campbell II is spot on in recognising that in addition to increased devolution to Scotland, the West Lothian Question finally needs addressing in the form of a devolution settlement for England as well. It is worth remembering that this has had real impacts – Tony Blair forced Tuition Fees and NHS Foundation Trusts in England against a majority of England’s MPs.

This is a blueprint for a much more federal UK, with the federal government having powers over corporate taxation, national monetary policy, banking and currency supervision, defence and foreign affairs, national infrastructure and environment, but with all other powers – health, education, social care, local planning, arts – devolved. This provides the scale to share the risks at a UK level, and making government regionally responsible – as LibDems have always argued. Would it be messy at the edges? Probably, and it would likely get enmeshed with Lords reform, too.

Such a federal answer will probably fail to satisfy the more extreme partisans on either side. But federalism offers much in terms of a shared pooling of assets, talents and risks – the cocktail that has made the union so successful since 1707. If I had a vote, I’d vote No to independence, and Yes to those parties in 2015 which want to implement a federalised, devolved, UK.

The Independent View‘ is a slot on Lib Dem Voice which allows those from beyond the party to contribute to debates we believe are of interest to LDV’s readers. Please email [email protected] if you are interested in contributing.

* Toby Fenwick is a Research Associate of the British American Security Information Council (BASIC), has written extensively on the UK Trident programme, and served on the party’s last Trident Working Group. This article is written in a personal capacity.

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  • No mention of social security. Surely that wouldn’t be devolved? Is healthcare a policy that is devolved in most federal states like the US and Germany?

  • I’d have more confidence in this if the Lib-Dems hadn’t been pushing for federalism for a very long time without it getting a lot of traction.

    It’s been three years since the SNP won the election – if that wasn’t enough time for the Westminster government to come up with an alternative, federal view that would counterbalance Independence then I don’t have any faith that they are interested in producing one.

  • Matt (Bristol) 14th May '14 - 1:21pm

    I don’t mean to carp, but why is this under The Independent View and not Opinion? Toby is an LD member so it’s not an independent perspective, surely?

  • Robin Bennett 14th May '14 - 1:28pm

    He refers to the accusation of bluffing by Salmond in response to the tripartite advance denial of any prospect of currency union. But then an unnamed government minister told the Guardian on 28th March that “of course” there would be a currency union and Philip Hammond (Herald, 14 April) admitted that nothing would be ruled out in negotiations between Scotland and Westminster in the event of a YES vote. Moreover, according to a carefully argued paper by Professor Leslie Young, commissioned by Sir Tom Hunter, the Treasury paper on which the pronouncement by the three pro-union parties was allegedly based does not withstand scrutiny. There are academics and respected commentators who oppose a currency union, but any “analysis” from a “Forum” is suspect when its author decries a credible opposing view as “simplistic and dishonest”.
    Toby Fenwick’s paper also states that there should be an assumption that Scotland will spend at least 24 months “outside” (sic) the EU after independence. So, expulsion of 5 million citizens after 40 years’ membership. For “analysis” substitute”polemic”.

  • Alex Dingwall 14th May '14 - 1:42pm

    “after all, if further devolution didn’t happen, then Scotland – along with Wales and NI – would be free to choose independence anyway.”

    And that’s where the argument falls down. we have heard this type of appeal before. Vote No and we promise a better deal.

    And just as there was no agreement on Lords reform or PR so there is no agreement by the UK parties on what would be offered in the event of a No vote. In the case of Labour’s limited proposals there are more questions raised than answers given.The fact is that neither Labour nor the Conservatives are offering a Federal solution.

    As Canon Kenyan Wright, Chair of the Constitutional Convention, who’s proposals formed the basis for today’s Scottish Parliament has now said:

    “For many years I held out the naive ‘triumph of hope over experience’ that the UK Parliament might be ready to reform itself radically to recognise Scotland’s real autonomy, That door has been slammed shut.”

    “There is now only one way to finish that business – it must be Yes.”

  • @ Robin Bennett
    “So, expulsion of 5 million citizens after 40 years’ membership”

    Only if they vote for it, that is.

    That is the choice that will face Scots in September. They are voting on whether or not to stop being part of the UK, set up a new state and try to gain accession to the EU.

  • Toby Fenwick 14th May '14 - 2:18pm

    @Frank: I’m not a social security expert, so I’ve avoided commenting on it; others much closer to the subject are better placed to comment than me.

    @Andrew : British constitutional reform has always been in fits and starts, and it is disappointing though not unexpected that this is the position we find ourselves in. If there’s a No vote, the unbalanced nature of the original 1997 deal will need to be addressed, and the only sensible way to do this that would enjoy broad support across the UK is to move to a federal state, preferably with an English Parliament that would be able to consider regional devolution below it.

    @Robin: Rather than rely on Hammond – who has no control of economic policy – or the Guardian’s “unnamed minister” (possibly the same Hammond), pro-independence supporters would be better off showing where it is in the UK’s interests to have a currency union with independent Scotland, if the alternative is a currency peg. Now, Salmond & Co have preferred to rely on assertions that it will happen rather than explaining as I do in the paper why it is a dreadful deal for UK taxpayers, and why it would therefore be political suicide to try and enact it. If you can come up with a reason why a currency union would be in the UK’s interest, I’m sure we’d be all ears.

    On the question of the EU, I set out in the paper why the Article 48 route proposed by the SNP in the White Paper is a non-starter. Crucially, a key tenent of EU law is that you have to use the most appropriate element of EU law to do something, and it is hard to claim that there is a more appropriate route for a membership application than Art 49 of the Treaty which lays out membership criteria. This point has been consistently made by the Commission since 2004, and Viviane Reding repeated it as recently as 20 March (

    Finally as @RC has already pointed out, no one is expelling anyone from anything; Scotland enjoys EU membership through being part of the UK, and in voting to secede would be voting to leave the UK and therefore the EU.

    Again, you accuse me of polemic without demonstrating why I’m wrong; please do.

    @Alex: That’s fine; you’ll appreciate I have a different view. As I replied above to Andrew, this happens in fits and starts. Clearly some Scottish voters won’t trust Westminster and will opt for the flawed plans the SNP has put forward; others will give Westminster a chance to deliver on further devolution.

  • Caron Lindsay Caron Lindsay 14th May '14 - 3:06pm

    Matt, this is a Centre Forum paper so Toby is writing with his work hat on.

  • Robin Bennett 14th May '14 - 4:31pm

    I dislike long posts, but here goes in reply to your points, Toby.
    The Fiscal Commission Working Group, a panel of experts (including two Nobel prize-winning economists) established by the Scottish Government, concluded that, post independence, retention by Scotland of sterling would benefit the rest of the UK as Scotland would remain one of the largest trading partners of the UK economy. There would be particular advantages for the UK in areas such as energy and financial services. A currency union would provide a framework to manage the transition process. Scotland’s continued use of the pound would make a positive contribution to the Sterling Zone’s balance of payments. For example, Oil and Gas UK estimate that North Sea oil and gas exports, the vast majority of which originate from Scottish waters, boosted the UK’s balance of payments by £40 billion 2011-12. The Treasury have admitted that, if such a union could be agreed, there would be benefits for the rest of the UK from keeping transaction costs low.

    But my main point is that the currency would be a bargaining counter in negotiations.

    Scotland should have a seat on the Bank of England’s monetary policy committee. It may not be federalism, but as Lib Dems we should welcome a continued monetary union with all its “union” implications in terms of fiscal policy and interest rates.

    Lawyers spoke to a Holyrood committee in January about the legal aspects of Scotland’s membership of the EU. Sir David Edward, a judge in the European Court for 14 years, said membership of the European Union would require “relatively small” amendments to existing treaties. Sir David said: “I remember repeated occasions where politicians have asserted positions which the court has found to be wrong. There is a gap between the vote and independence, and in that period you have an obligation to negotiate a solution to the problem. That is ignored by Barroso, Van Rompuy and all those who talk about it. I start from the position that the treaties create rights for individuals which become part of their legal heritage and all this discussion about the rights of states ignores that fact that people here have acquired rights. My view is that the institutions of the EU and the member states have an obligation if there is a vote for independence to ensure that those acquired rights are not abridged or terminated and that imposes an obligation to negotiate before there is a separation and creation of a new state.” (Sir David will be voting No.)

    Aiden O’Neill QC added: “People in Scotland who are British citizens are European citizens and certain rights follow on from that. If Scotland as an independent entity were to leave the European Union, the European citizenship of the people would remain unless and until their British nationality were withdrawn from them. But what you would then have is an unstable situation of a new independent state outside the EU with none of the responsibilities but all the people within in having all the rights which would be implicit within the EU. Not only is there an obligation of good faith but common sense to try and resolve that instability of having five million people who are citizens but whose state has no status within the union. Something will be worked out – it always is.”

  • Toby Fenwick 14th May '14 - 4:54pm

    @Robin: Before I respond at length, can I just check that you’ve read my paper on these points please?

  • Denis Mollison 14th May '14 - 5:12pm

    Who chose the illustration for this piece? It’s not quite as bad as the aggressive adult with painted saltire over his face that the Telegraph keeps using, but it lowers my inclination to take this piece seriously.

  • In a EU context ‘federal’ is understood by many, especially Conservatives, as code for a more centralised administration (some I know react with near apoplexy to the very idea) which is perhaps not so surprising since those calling for federalism in Europe typically DO support ‘ever-closer union’ etc. leaving it to the likes of UKIP to suggest there should be any limits to EU powers.

    I simply don’t know how the confused understanding of ‘federal’ might play into any Scottish debate but it’s something to look out for. Don’t assume that voters are experts on constitutional matters – especially when some will be only too happy to muddy the water.

  • Well Toby how long have the Liberals and Lib Dems been promoting a federal UK. A century or more? Why do you think that those of us in Scotland should vote No on the basis of LibDem promises when your party is in electoral free fall and not much more than a semi-detached part of the Tory party? And we have had promises of jam tomorrow from Westminster unionists since the 1968 Perth Declaration. No I think we will rely on ourselves.

  • Oh by the way the choice of photo is patronising and insulting.

  • Toby Fenwick 14th May '14 - 7:30pm

    @GF: Interesting point – I was using the term federalism in its conventional political sense, meaning simply a state with two or more tiers of effective self government.

    @Hireton: The picture is nothing to do with me, and wouldn’t have been my choice – as per the cover of the report. Have you read the report? The point is that the choice to be made in September has to weigh a number of difficult issues, and the promises in the SNP’s White Paper as effectively undeliverable. For some, probably including you, the risk is worth it whether everyone is better off or not; others will take a different view, and that’s why this paper weighs up the SNP’s economic arguments. I found them wanting at an elementary level.

  • Little Jackie Paper 14th May '14 - 8:43pm

    Robin Bennett –

    Before I start. I’m English, I take the view that if the Scots wish to go their own way then good luck to them, if they vote to say then great. Knowing how this goes by and large anything broadly questioning of either side seems to result in offence-taking so I’ll start with this preface in the hope of slightly mitigating any potential kicking.

    I’d make two points. First, this European citizenship thing doesn’t sound quite right to me. Let me give you an example. My wife is from outside the UK, but she is a naturalised UK citizen. Despite the fact that she holds UK citizenship she can not bring her brother over to the UK for a visit under EU family reunion rules and so he needs a visa. My wife as a UK citizen has UK rights in the UK and NOT EU rights to (in this case) family reunion. Her Portuguese friend who does not have UK citizenship is in the UK as an EU citizen on the back of EU rights and therefore is able to access EU rights to, for example, family reunion.

    There may well be a moral obligation or not on the EU – I’m not a constitutional lawyer. But I surely that could only apply in situations where EU rights are invoked? Scottish people are not in the UK on the basis of invoking EU rights. I think this is what the QC you quote means by an unstable situation. EU rights only come into play where there is a need – ‘subsidiarity.’ Or at least that is my understanding from my own experience – if you have a different understanding I’d be interested.

    I understand that most other EU countries at some level operate on a similar basis though I do not know how an independent Scotland (were it to join the EU) would operate. I would also add that it is far from clear to me that the EU is a vote-winner in Scotland, but that perhaps is a can of worms best left aside.

    Second, I was unconvinced by this. ‘I start from the position that the treaties create rights for individuals which become part of their legal heritage and all this discussion about the rights of states ignores that fact that people here have acquired rights.’ Would that heritage extend to say continuation of a nuclear presence and NATO? Or is that certain treaties are there as heritage and some are things that can just be walked away from depending on popular sentiment? Not that there is anything wrong with popular sentiment of course – but I don’t think the heritage argument goes in both directions quite so easily.

    To be clear, I think that in the event of a YES vote, pragmatism will rule. Scotland will not follow the so-called Zero Option. The UK will seek stability (although currency substitution looks the most likely outcome in the short term). It is worth pointing out that Yugoslavia managed this process in the middle of a civil war so it is rather a poor show if the UK couldn’t get its collective act together.

  • Toby Fenwick 14th May '14 - 9:22pm

    @Robin: Forgive the length.

    The FCWG (including Nobel Laureates Mirlees and Stiglitz, neither of whose research was about currency unions) correctly concluded that a currency union was in Scotland’s interest. But to assert that it was optimal for the UK as well requires a clear understanding of what alternatives you’re choosing a currency union against; at the moment, it appears to be a new currency pegged to sterling informally or some form of sterlingization. Though these last two are institutionally different in Scotland, the effect for the UK is the same, so we can consider them together.

    The point is that under either a peg or sterlingization, all of the benefits to the UK would happen anyway, without the risks to the UK taxpayers of potentially bailing out Scotland. As a result – and especially after this afternoon’s session on the currency at Westminster, I don’t think that a currency union is up for negotiation.

    Whatever happens with a Scottish application to the EU will set a precedent that is being watched very carefully in Barcelona, Madrid and Brussels. It is as much to avoid setting a precedent that appears to ease Basque and Catalan routes to EU membership that Scotland should expect to vote to leave the Union and reapply under Article 49.

    Sir David did say that in January, but his longer opinion ( makes it clear that the obligation in his view is to conduct good faith negotiations – which can of course fail. Others, as I show in pages 18-21 of the report, disagree and think that the Art 48 route is a legal nonsense. More importantly, it’s also a political nonsense, as it is in no one’s interests to provide seamless transitions to EU membership for secessionist entities (and for some, notably Spain and Belgium, it is a major headache). It is doubly unattractive on terms as preferential as the UK currently enjoys. Naturally, Salmond & Co merely blithely assert that the EU will do what they tell it to – which isn’t exactly how the EU works.

    Which brings us to whether any rights going to be taken away from Scots? Well, Aiden O’Neill accepts that through dual nationality any Scot who wanted EU citizenship would be allowed to retain it through their UK nationality. Second, leaving the EU would have been the democratic choice of Scots in leaving the UK. Third, I’d expect Scotland to be fast-tracked through the negotiations as long as Scotland accepts that there will be no opt-outs other than from Schengen. This could get the 35 Chapters of Accession negotiations opened and closed in say 12 – 18 months, and 12 – 18 months for ratification (again, faster than was achieved for Croatia, the most recent joiner). This is the 24 – 36 months outside the EU in my paper, but probably as a member of the EEA which would solve most of the concerns of Sir David and Aiden O’Neill anyway.

  • Toby Fenwick 14th May '14 - 9:29pm

    @David Pollard: It certainly feels that way at time, especially on the net. But there’s clearly a lot of civic engagement going on on the ground in Scotland that can’t be as confrontational.

    @LJP: Confused about the position of your wife re: her brother, but immigration rules are a black box to me. On EU citizenship, Aiden O’Neill’s view isn’t the only one. It appears possible to leave the EU or its forebears and give up your EU rights, but the precedent is Algeria in 1962 (the coastal strip under French law was a Department of metropolitan France and not a colony). It’s not clear, but I think Aiden is making a mountain out of a molehill in that there are plenty of EU citizens living outside the EU (e.g., in the US or Australia) who’s rights as EU citizens aren’t abrogated. The point here is that Scots have a paradoxical safety net because of their potential for dual nationality.

  • An interesting article by an informed and knowledgeable commentator which explains why respected devo maxers such as Richard Holloway – denied an option to vote for that by the Lib Dems and the other Unionist parties – are inclinng to vote Yes . A direct contradiction of Mr Fenwick’s suggestion that they should vote No.

  • Paul Reynolds 16th May '14 - 7:08am

    Good technical discussion. Toby’s paper is a solid fact-based argument. Three points….
    1. The Spanish case mentioned in Toby’s comments is absolutely right. The Spanish are keen to try and make EU entry as difficult as possible if there is a YES vote. Moreover there are other countries too…France and Corsica. a divided Belgium, The Northern League issue in Italy, Croatia’s regions, etc
    2. The consequences of Scottish independence for the politics of the rest of UK should have more emphasis. ie The end of Labour government in the UK, support from the UK exiting the EU, problems if Scotland joins Schengen, and even a possible stronger role for UKIP. Labour will never have a majority in Westminster. It looks unlikely now but imagine a decade of Tory/UKIP coalition ! Right wing Tories might be quietly rubbing their hands with glee.
    3. Toby’s factual economic approach on the currency union is well set out. The politics of it is different. Politically its a 2-way bluff. Spoiling actions (or threat of) by London could be catastrophic for the SNP and it would be very messy. A Scottish economy in free fall would be damaging for the rest of the UK economically too. But this merry dance helps Salmond create an anti-London narrative. Making Salmond scurry around for answers might be a satisfying tactic but thereal interest of the UK is to win over the hearts and minds of the Scottish public

  • Bill le Breton 16th May '14 - 8:52am

    Did anyone here know that yesterday was the 100th anniversary of Ian Macperson moving a “Government of Scotland Bill” in the Commons. Macpherson was Liberal MP for Ross and Cromarty.

    The Bill sort to establish a single chamber of 140 representatives, granted female suffrage in the election and “embodied the unquenchable and indefinable spirit of nationalism and was a clear and definite expression of that sane and practical desire of Scotsmen for self- government.”

    Arthur James Balfour, in opposing the bill, suspected it would “set in motion a machine which constantly tends to diminish that unity [of the United Kingdom] still further.”

  • @Paul Reynolds

    The Spanish Govenment have not said what you attribute to them. And they have a strong interest in maintaining access to Scottish (and hence Norwegian waters through the reciprocal fishing agreement) .

    There have been very few elections where Scottish votes have determined the UK outdoor an then only marginally for a limited period.. Generally the UK get the government which England votes for.

    The analysis an discussion of these issues south of the border really needs to improve quickly.

  • When are the parties going to give English and Welsh MP’s to vote on their own policies, that do not involve Scotland and Northern Ireland?
    I agree with Scotland having more powers to determine their own policies, but they should not have a say in English and Welsh issues.
    When spoken about by the main Parties, they don’the seem concerned

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