Tag: Scotland

What next? Some back of the envelope thinking

It was nowhere near as close as many hoped or feared but 1.6m UK citizens still said they wanted out. The prime minister has reaffirmed his commitment to the vague devo-max promises made late in the day.  Fearing the rise of UKIP, his backbenchers insist that the ‘English question’ needs sorting too. Despite the uncertainties, constitutional change is coming.

Scotland will sort itself out I’m sure. The backlash would be too great if they did not get something acceptable to the Scottish government.  The Tory  backbenchers would no doubt like to see public spending in Scotland brought into line with England but the PM seems to have committed to the Barnett formula that allows higher Scottish spending, while oil revenues offer him a justification to defend that.

The problem with committing to Barnett is that it hurts Wales. Unlike Scotland, Wales gets more from the public purse than it pays in (maybe £12billion a year) but  if its block grant was funded on the same basis as Scotland it would get another £300m a year.  (I’m simplifying but that’s basically the case).

The UK government could of course just change the Barnett formula so Wales and Scotland were treated equitably. However, a greater ‘hand out’ to Wales will not go down well with the backbenchers or the English nationalist party that masquerades as UKIP. It might also mean less cash for Scotland. A future Labour UK government does appear to have promised some sort of Barnett reform  but the details are vague and, anyway, they’re not in power.

Cameron has to face up to solving the Barnett issue because without doing that he can’t deliver “English votes for English issues”. At the moment, the level of public spending in England helps determine the size of the Welsh and Scottish block grants. Thus any vote on, say, English education that involves a change to spending levels is not an England-only issue because it affects the Welsh and Scottish budgets.  Welsh and Scottish MPs will continue to be justified in voting on English issues for as long as Barnett continues.

Thus any constitutional reform of England has to first address how Wales and Scotland are funded.  But it is surely not impossible to come up with a new formula that calculates the Welsh and Scottish block grants based on an equitable assessment of their needs (i.e. the extent of deprivation there and the cost of delivering services).

Once you have a new formula there is nothing to stop a federal parliamentary system for the UK, the ‘home rule for all’ option. Here the Commons becomes the English Parliament and the parliaments of all four nations have fiscal and domestic responsibilities. The Lords, meanwhile, is replaced with a UK-wide new elected chamber that deals with defence and other UK-wide issues. England has a first minister. The UK has a prime minister. They might belong to different parties.

There might need to be some policy alignments between the nations or a retention of some UK-wide domestic issues.  For example, significantly different levels of unemployment benefit and state pensions could lead to some awkward population movements.  But you could leave welfare payments (except housing benefit which is ultimately a local issue) at a UK level.

Most importantly, a federal UK could only work if there was some form of wealth redistribution between the nations. This happens within the EU and would be the cost of retaining some form of political unity and collective safety. In essence what would happen is that Wales and Northern Ireland, using whatever replaced Barnett, would get a subsidy from England, plugging the hole in their finances. If they wanted to spend beyond that they would have to use their tax and borrowing powers.

UKIP would moan but surely would not be in an electoral position to do much about it now the England question is solved.  (The EU issue would still be there but I have enough faith in the English electorate to vote to stay in any European referendum .) Labour would lose some influence in England but not in the UK. They won’t like that but democracy means it is unfair for them to govern England unless they can get a majority there. The Tories would be happy because they  had saved the union, increased their influence in England and hurt UKIP.  National identity in the four nations would be recognized.

The biggest question mark would be whether the English electorate would accept the subsidy of Wales and Northern Ireland.  But that already exists and polls say they want to keep the union and believe in social justice. This is the cost.

I’m sure the devil is in the detail but I’ve put the same level of thought into this as the back of the envelope vows made by the UK parties just before the referendum.

A personal (and Welsh) view of the referendum

If Scotland votes Yes my wife would be entitled to a new passport. Although it’s two decades since she’s lived there, I suspect she’d take one and I would be married to a foreign citizen. A trip to see her family would still be a long way but would now involve crossing an international boundary.

In this small way my life would change but, less obviously and far more substantively, other things would happen too. The political system that governs my country and the resources at its disposal will change. In some indirect but important fashion this will influence my health care, my job, my commute and my kids’ education.

But I don’t know how things will change and whether they will for better or worse.  The UK economy might plummet at the hands of international monetary forces. But it probably won’t. Wales should get to renegotiate the Barnett formula that has underfunded its public services for more than three decades. But that will be the low on the priorities of a London government trying to figure out how to disentangle two nations that have been one state for more than 300 years.

Indeed, amidst the political fallout and bickering, it may be that Wales and its needs doesn’t get heard at all. It would be nice to think that the London government suddenly gave Wales and Northern Ireland more attention and more resources in order to keep us in the family but I suspect that won’t happen because too much of the English electorate doesn’t care about having us.

My gut instinct is that Scottish independence will leave Wales worse off but I don’t know that. Nor does anyone else and the certainty with which some Welsh nationalists are declaring a Yes vote will be good for us is no more than a hopeful guess.  It’s not that I fear the economy being damaged; it’s more I fear Welsh politicians spending the next two decades gazing at their constitutional navals rather than working at fixing the inequalities and poverty on their doorsteps.

That should leave me wanting a No vote but the speed with which the Westminster elite is starting to wake up to the consequences of its introspection and London-centricism is far too welcome to want it to go away. Indeed, it’s actually funny seeing panic setting in amongst politicians who have been too smug for their own and our good. A Yes vote would give them a kicking they would never be the same again after.

I suspect it’s such feelings that are driving the Scottish Yes vote forward. The arguments on the economics of it all are so complex and so uncertain that neither side can actually win that fight. As long as the No camp keep on patronising the Scots and insulting their sense of nationhood (“we’re too wee to stand alone…”) then people will keep switching to the Yes side. They know it’s an economic risk but there’s enough sense in the Yes arguments to make it worth taking, especially when it means sticking two fingers up to a political elite that hasn’t cared much for years what they think.

These are interesting times as the saying goes. They will become even more interesting if Scotland votes Yes. If they do, I hope it works out for them. I hope even more it works out for Wales. But I suspect what’s good for Scotland, won’t be good for us.