It’s the height of summer and most people are out of town, so a time for quiet reflection for those of us left around.
In my case, I started reflecting upon Scottish devolution.
The vote is not far away now – September 18th – and the arguments rage this way and that.
Could there really be a separation of the United Kingdom?
What will it mean?
- Will we be called the Divided Kingdom?
- Will we need border controls?
- Will wearing a kilt be a criminal offence in England? and
- Will the ghost of William Wallace return in the form of Mel Gibson in Braveheart – the sequel?
… along with many more questions of a similar ilk.
There are also more serious questions, particularly in finance.
Lloyds Banking Group is a Scottish Bank – the bank is registered in Edinburgh as is Royal Bank of Scotland – and would need to be registered as an English bank if there is a yes vote, as would RBS.
Scotland is also the center of our insurance industry, with many major insurance groups head officed north of the border.
The biggest of these is Standard Life who reinforced concerns about independence the other day. As they released their half year results, CEO David Nish stated that the insurer is reading and willing to move its headquarters to England if Scotland goes it alone.
In fact, in a new survey amongst financial professionals, only 1 in 10 think independence makes sense whilst 2 out of 3 cannot see why there would be a yes vote.
No wonder as much of the financial income in Scotland would move South if they voted 'yes' to independence.
8% of Scotland's GDP is generated by financial services, accounting for around GBP8 billion in the economy and employing over 200,000 people, according to statistics from Scottish Financial Enterprise.
Similarly, according to Marks Sattin, the number of new jobs in Scotland in financial services has increased by 23% since 2007, or the equivalent of 9,000 new employees.
All of this means that the arguments in favour of devolution are offset by the threat of major job losses and a restructuring of business from Scotland to England.
Another threat is that an independent Scotland would be unable to keep the pound.
In the first televised debate between Alex Salmond (Leader of the Scottish National Party) and Alastair Darling (former Chancellor and Labour Minister), this became a core issue, with the latter accusing the SNP of plans that were "stupidity on stilts" with no "Plan B" if they could not keep the pound.
The reason why an independent Scotland could not keep the UK, or possibly English, pound, is because they would be independent. The pound's credit rating and usage is based upon a share of the debt in the economy and Mr. Salmond believes that Scotland can keep the currency without sharing the national debts.
That kind of says why it will not happen, and is the official position of the UK Treasury who state that an independent Scotland would have to have their own currency for this reason.
All very interesting, but I am pleased to see that Mr. Salmond does now have a Plan B.
Plan B is for Biscuit.
And, for a more rational view of the whole situation, here's a report from the Economist in July:
Don’t leave us this way
Britain does not feel like a nation on the verge of cracking up. Many have clutched patriotic flags and wept this summer – but most of them were fans of the England football team, distressed by its rapid exit from the World Cup, not activists demonstrating for and against the break-up of their country. Yet a 307 -year-old union, which once ruled a third of humanity and still serves as a role-model to many, could be on the verge of dissolution, because the people of Scotland will vote on independence in a referendum on September 18th.
Opinion polls suggest the Scots will decide against leaving, but it is the nationalists who have fire in their bellies, and Alex Salmond, the leader of the Scottish National Party (SNP), is a strong finisher. Even a narrow victory for the status quo would be the biggest blow to the United Kingdom since 1922, when the Irish Free State was born. The campaign has been a bad-tempered one, marked by growing Scottish anger at English complacency and indifference while English resentment of Scottish whingeing and freeloading has risen: only a strong vote for the union will bury this issue.
If the Scots vote to leave, they should of course be allowed to, with Britain's blessing.
A desire for self-determination is a strong basis for a claim to nationhood, and there is no reason to think that an independent Scotland would be a disaster, any more than an independent Ireland has been.
But The Economist, itself a product of the Caledonian liberalism of Adam Smith and David Hume, hopes the Scots will decide to stay. That is partly because we believe that a break-up would benefit nobody: on most measures the certain costs for people on both sides of the border far outweigh the uncertain gains. But it is also because much would be lost. Despite the occasional appearance of muddle, there is a point to the union, and one about which liberals should feel passionate.
Red, white and rather blue
Strong arguments are needed to justify a step as big as breaking up a nation. Scottish nationalists argue that an independent Scotland would be more prosperous and more democratic.
On economics, the nationalists say that Scots will be £1,000 a year better-off per head if they go it alone. That number, however, is based on implausible assumptions about the oil price, Scotland's debt burden, demography and productivity. The British government's estimate that Scots would be £ 1,400 a year better off per head if they stay in is based on more realistic assumptions. Scotland's population is older and sicker than the British average, and productivity 11% lower than that of the rest of Britain. As a result, the state spends around £1,200 more per head on Scots than on the average Briton. Depending on what happens to the oil price, North Sea oil could more or less cover those costs in the short term, but the oil is running out.
It is, of course, possible that independence would cure Scotland's entitlement culture and revive its entrepreneurial side. If either of its two dominant parties-the SNP and Labour – were disciples of Adam Smith that would be plausible. But their statist philosophies are more likely to drive Edinburgh's fund managers, Aberdeen's oil-services engineers and other talented Scots south. Independence would also impose one-off costs: a new Scottish state would have to set up an army, a welfare system, a currency and much else
You stole my soul and that's a pain I can do without
The argument that an independent Scotland would be more democratic is a stronger one, for Scotland and England have grown apart. Two generations ago, there were nearly as many Conservative MPs as Labour ones in Scotland, but the Scots have not forgiven the Tories for the impact of Thatcherism on their heavily industrial economy. Nationalist protesters recently donned panda outfits to remind David Cameron, the Conservative prime minister, that there are more pandas in Edinburgh zoo (two) than there are Tory MPs in Scotland (one). Encouraged by devolution under Tony Blair and cash from Westminster, Scottish social policies have diverged from English ones. University education is free for Scottish students, but not English or Welsh ones; the state pays for a higher proportion of old people's care in Scotland than it does in England and Wales; Scotland has not followed England in freeing schools from bureaucratic constraints.
Yet healthy democracies are flexible enough to deal with regional differences, of which there are plenty within the rest of Britain. The north-east of England and Wales, which both vote Labour, also rail against the Westminster government, just as the Tory stockbroker belt does when Labour is in power. Some of the southern impositions that nationalists object to, such as a "bedroom tax" designed to nudge subsidised tenants out of unnecessarily large houses, are relatively trivial. Others, like Margaret Thatcher's poll tax, are historical.
Nor does Britain's political set-up deprive the Scots of power. The last two British prime ministers, Tony Blair and Gordon Brown, were born north of the border. Scotland has a disproportionately large number of MPs at Westminster. Edinburgh already has an independent legal system and its parliament has power over a wide range of policy areas, including health, education and housing. Its leaders have not exercised their right to vary income tax: that hardly suggests a Scottish administration straining at a leash held tight by Westminster.
A democratic, peaceful, well-governed nation state is a blessing which should not be casually thrown away. That is a strong negative case against change. But there is also a positive argument, to which the campaign against Scottish independence has struggled to give voice: the idea of union.
The United Kingdom embodies the belief that people with distinct histories and identities can live together, and that their diversity makes their culture, their economy and their polity stronger. Tellingly, most members of ethnic minorities describe themselves as British rather than English or Scottish; they instinctively recognise the capacious, liberal identity-one which rests not on narrow nationalism, but on an enlightened concept of nationhood-that the union offers. In a world plagued by ethnic hatred, cultural prejudice and religious violence, that venerable idea should count for more than the real but fleeting disappointments and sense of alienation that the Scots have experienced in recent decades.
If this ideal were undermined by Britain's dissolution, and the country's voice itself were weakened, the amour propre of Britons would not be the only victim. As a permanent member of the UN Security Council and a big noise in the IMF, the G7 and the European Union, Britain can make itself heard in support of values such as human rights, democracy, freedom of speech, the rule of law and clean government that are threatened by the rise of states and ideologies that do not share them. If Scotland were to push off, neither it nor residual Britain would have as much influence as they do today, and the world would be the poorer for it.
Although this newspaper believes that, for all these reasons, the union is worth preserving, we also think it needs changing. As a political expression of liberal values and attitudes, it would be more credible if it were not so centralised. The devolution of powers to Scotland has been a mild extortion racket; and elsewhere the flow has gone to Westminster rather than away from it. But if diverse peoples are to be bound together, they must be given plenty of slack. So instead of trying to buy Scottish votes with more cash, Mr Cameron should devolve far more power to all Britain's cities and regions.
States cannot easily split their way to happiness, and working out how to accommodate differences can improve them. It makes them more tolerant, pluralist and open, and teaches central governments how to relinquish power. When nations cannot bear to hold together, they must of course separate. But Britain has not reached that point. Scottish nationalists like to say, cheerfully, that their nation is capable of standing on its own. It certainly is. That doesn't mean it should.