So ‘devo max’ will not be an option in the referendum. But is this a defeat for Alex Salmond or part of his cunning plan?
Did David Cameron outmanoeuvre First Minister Alex Salmond over the independence referendum deal struck in this month’s Edinburgh Agreement, or was it the other way round?
Certainly, Cameron secured his key ‘red line’, which was that there should be only one straightforward question in the referendum. The UK PM rejected Salmond’s proposal of a space for a ‘devolution max’ option on the ballot paper. But the Scottish National Party has insisted that a single question was Salmond’s objective all along, that he fooled the UK into thinking he was giving ground by agreeing to it. Brilliant negotiating tactics, say his supporters; game set and match to the nats.
My view is that this outcome, while satisfactory to most nationalists – who were never very comfortable with the enhanced devolution (or devo max) option – is a setback for Salmond. It presents unionists with an opportunity to halt the march towards ever-greater home rule, or incremental federalism, that has been gaining momentum in Scotland over the past three decades.
The Scots would almost certainly have voted for devo max had they been presented with the option. But the various bodies loosely referred to as ‘civil society’ in Scotland failed to come up with an agreed formulation of this question, and consequently Salmond was unable to insist on one. The chance won’t come again for a generation.
No one should be in any doubt that, if the answer in autumn 2014 is ‘No’, as all the opinion polls suggest it will be, the UK government and Scottish opposition parties will hail it as a vindication of the constitutional status quo. We can largely forget the vague promises made by Cameron and unionist campaign leader Alistair Darling about Holyrood being granted greater economic powers if Scots vote to remain a part of the UK.
A review of powers will probably be launched the day after the referendum vote, but it will probably conclude that the new tax powers given by the recent Scotland Act to the Scottish Parliament represent the limit of autonomy possible in a unitary British state. It will be argued that the Scots have said, unequivocally, that they plan to remain in the UK, and thus in a fiscal union across the four nations.
A fiscal union with a common currency requires a central taxation authority and a common treasury – as eurozone members have seen – if it is to be stable. Consequently, while the Scottish Parliament can be given a tax base, like a local authority, it cannot have anything like full fiscal autonomy if we are to avoid the kind of sovereign debt problems that have wrought havoc in the European Union and in semi-autonomous regions such as Catalonia.
There might be some cosmetic reforms, of course, especially if the ‘Yes’ vote rises significantly above 40%. The UK government could, for example, allow Scotland to have formal representation on the Bank of England’s monetary policy committee, a move already proposed by the SNP. It makes sense for Scotland’s voice to be heard on the committee that determines interest rates. But if Scotland votes ‘No’, there will be no allocation of oil revenues to Holyrood – let alone corporation tax.
The SNP will use this to argue that Scots who want a better devolution should vote ‘Yes’ to achieve it. Anecdotally, a lot of non-nationalists are considering this. ‘I’m not a nationalist, but…’ is a phrase I often hear around Scotland now. But whether they take the final leap out of the UK is another matter altogether. They have 100 weeks to make up their minds.
This column was first published in the November issue of Public Finance magazine