A United Kingdom Divided: Scottish Independence & Its Repercussions

April 4, 2012United Kingdomby David Smith

A United Kingdom Divided: Scottish Independence & Its Repercussions

A Scottish vote in favour of independence in a referendum would end the country’s 307-year intermarriage with England. But it would also have huge economic, political and psychological repercussions for the whole of the UK.

Scotland has always been the most autonomous of the UK’s three Celtic nations – with its own legal and education systems. But despite a 305-year-old political relationship with the U.K., a trend towards a different vision of Scottish politics has accelerated in recent years.

Following a yes-vote in the referendum on devolution in 1998, the Parliament of Scotland was formed in 1999 with devolved powers. Since 1707, Scotland’s affairs had been run from Westminster; but the Scottish Parliament now had powers over crucial aspects of the local economy, including transport, tourism, education, the environment, the law, the fire service, the police and business development. This was a huge step towards independence – a path that could soon be taken following recent political calls.

Glasgow University’s Professor Murray Pittock, author of The Road to Independence?, said: 

“Scotland was already quite different to England, but since it was given a fully fledged parliamentary structure, the pace of divergence has increased.

“And that divergence will increase over time even if the Scots vote no in the 2014 referendum because opponents of independence will feel under considerable pressure to offer extra powers to the Scottish Parliament to head off a yes-vote.”

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This political empowerment has ran alongside psychological changes in the Scottish psyche. The growing belief that Scotland has the economic capacity to go it alone has been bolstered by the forceful arguments of Alex Salmond, the leader of the Scottish National Party and First Minister of Scotland.  

One of Salmond’s key arguments, which taps into Scottish resentment at being ruled from Westminster, is that the British Government has squandered the tax revenues from Scottish oil in the North Sea. Salmond, a trained economist, claims that an independent Scotland could raise £54 billion in oil revenues over the next five years. The oil money is a critical part of the debate about Scotland’s future because it would underwrite the country’s ability to pay off debt and rebuild the local economy.

Another seductive Salmond claim is that an independent Scotland would become the OECD’s sixth-wealthiest nation. The rest of the UK, he says, would lag behind in 15th place. He bases his calculations on the oil industry having an “asset base” of £1 trillion, including reserves, and Scotland’s huge offshore wind and tidal energy capacity, which he envisages creating 100 per cent of electricity by 2020.  The whisky industry, which is worth £4 billion a year, would also play a vital role.

Professor Pittock agrees that Scotland has many lucrative assets, but he says that independence would still bring enormous economic challenges.

“It would be a shock to the system as a lot of Scottish business is not set up for independence yet. For example, research and development is very low in Scotland and has been deteriorating as a percentage of the UK’s research for years.

“There’s also a lot of branch economy activity, such as service activity for multi-nationals. There are fewer and fewer large companies and there’s a lot of weak business formation, especially in central Scotland, although there’s also some strong growth on the East Coast.”

Salmond, of course, would argue that a free Scotland would be more capable of looking after its own affairs. In his vision, Norway would provide an economic model because the Scandinavian nation also has a small population of 5 million, but has used its oil revenues to build a national pension fund worth more than £360 billion.

The Case For Independence

Defence spending is another point of contention in Scotland. Nationalists oppose the presence of Trident nuclear weapons on the river Clyde and the wars in Iraq and Afghanistan are deeply unpopular. For Salmond’s opponents, the greater security of the UK’s armed forces is a strong reason to preserve the alliance.

Professor Malcolm Chalmers, the director of UK Defence Policy Studies at the Royal United Services Institute, has worked out a notional cost of what Scottish defence spending would be based on the defence spending in two Scandinavian countries of similar size – Denmark and Norway.

The Scandinavian countries spent 1.4 percent and 1.5 percent of its GDP on defence in 2010 respectively. If Scotland had spent 1.45 per cent, it would have had a 2010 defence budget of £1.7 billion. This is far less than the £3.3 billion which the SNP says Scottish taxpayers contribute to defence spending. 

The assertion that Scotland would benefit financially from independence also gains support from the research of Professor Hughes-Hallett of St. Andrews University, who has worked for the World Bank and the IMF. Hughes-Hallett estimated that an independent Scotland would produce a surplus of £219 million, or 0.3 per cent of GDP, compared with a UK deficit of 2.8 per cent.  

Professor Hallett’s figures are predicated on North Sea oil revenues being devolved to Scotland. Without the “black gold”, Scotland would have a 13.5 per cent deficit. 

England, of course, would be reluctant to part with the majority of oil revenue, which accounts for 1.5 percent of UK’s GDP and about 2 per cent of UK tax revenue. But the Geneva Agreement on natural resources under the sea determines that they are divided by median lines. Drawing a median line across the North Sea from the Scottish border gives 91 per cent of oil to Scotland.

“There is Scottish resentment that places like Alberta in Canada – although not a sovereign state – has its own oil fund,” said Professor Pittock.  “The resentment is tied up with anti-Thatcherite feeling.”

“There’s a perception that in the 1980s Mrs Thatcher spent the UK’s oil revenues paying large welfare bills and reducing the UK’s national debt. Scotland saw no benefits and a lot of Scots ask - where did all our money go?

The anti-Thatcherite feelings have never gone away. When she came into power in 1979, Mrs Thatcher thought her brand of conservatism would sit well with the stereotypically thrifty Scots. But the Conservatives left a trail of devastation in working-class Scottish communities.

In an interview with The Guardian newspaper, Scottish novelist Iain Banks explained how the neo-liberal Thatcherite politics of England caused him to renounce his “British” identity in favour of a Scottish one.

“Margaret Thatcher swung the Tory Party to the right. Out went one-nation Conservatism; in came deep cuts, privatisation, the glorification of greed and globalisation.

“The thing is, the Scots never fell for Thatcherism. We were always sceptical. When she announced that there was no such thing as society, most of us were, frankly, incredulous.”

Thatcherism, and the enthusiasm with which it was embraced by so many in England, made a lot of Scots begin to realise that we were, after all, meaningfully different en masse from the English; more communitarian, less convinced of the primacy of competition over co-operation. There was no one-nation,” he said.

Salmond’s SNP politics, to Banks, represented a more egalitarian vision for Scottish society.

“SNP policies were more progressive, more left-wing, fairer, in the end, compared to any other party with a realistic chance of achieving power. Labour stopped being Labour, so I became a pragmatic voter for the SNP.”

His views were echoed by the Scottish playwright David Greig in the same article:

“Britain has been torn up by successive Westminster governments that have pandered with increasing desperation to a middle England that seems determined to live in a low-tax, high-inequality, American-style future.

“I don’t want to live in America. I don’t want to live in Thatcherland... The Union is an unhappy marriage. I think it’s time we both sat down and said it out loud – it’s over.”

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