IF Scotland votes ‘Yes’, politicians in Scotland and the rest of the UK will need to move quickly in order to get negotiations under way and settle emotions among voters and business, writes Professor Charlie Jeffery.
If Scotland votes Yes next week we will have seen a remarkable turnaround in fortunes. Only in the final two weeks was there a sense - beyond the Scottish Government and the Yes campaign - that a Yes vote was a serious possibility. This raises question marks about how well prepared the UK Government would be for the loss of part of its territory. Little thinking appears to have been devoted to what might follow a Yes vote.
As well as being ill-prepared, there would also be recrimination. There would be voices in the now defunct Better Together campaign blaming one or other of its components for the defeat: Conservatives blaming Labour for not mobilising well or early enough to save the union; Labour blaming the Conservatives for being an electoral millstone in Scotland that undermined their message of solidarity and social justice across the UK. The Labour Party conference scheduled two days after the referendum (and the other main UK party conferences following over the next weekends) would give ample opportunity for insults to be cast around.
There would be recriminations within parties too. Scottish Labour might well feel the deep devolution-scepticism of the UK-level party damaged its prospects. But the main action would be in the Conservative Party. David Cameron would immediately become the ‘Prime Minister Who Broke the Union’. Already without deep support in the parliamentary party, there would be calls for him to resign.
He should certainly resist doing so, at least until the main outline of a post-Yes negotiation of the terms of Scottish independence was clear. The febrile atmosphere of a Conservative Party leadership election would be about the most unhelpful thing imaginable as a backdrop to such a high stakes negotiation.
Pressure for calm
For both sides, the emergent Scotland and the continuing UK (and it would be a continuing UK until the day Scottish independence were declared), there would be tremendous pressure to foster a sense of responsibility and calm.
Both David Cameron and Alex Salmond would need to set the tone in their respective concession and victory speeches on the morning of 19 September: gracious recognition of the will of the Scots on the one hand; sober reflection on the heavy responsibilities of victory and the need for a Scotland mobilising all its talents on the other. The other party leaders and other senior political figures would need to play the same tune.
All this would be taking place against the background of considerable market uncertainty. Both sides would want to limit this uncertainty by offering assurances of their own sense of responsibility. And on the UK side the Bank of England - where there has it seems been some serious contingency planning - would need to weigh in, offering guarantees to the financial system. Don’t be surprised if these were to extend beyond immediate reassurances to offer longer term assurances for the benefit both of the residual UK and an independent Scotland. The aim would be to maintain the stability of the residual UK economy - but because of its deep interdependencies with Scotland some of that stabilisation effort would likely be extended to Scotland.
Negotiations will need bipartisan approach
Whether that would extend to agreement to currency union is a moot point. The pro-UK parties have taken such a tough line on rejecting a formal currency union that it would be difficult for them to back down.
Mark Carney has also reiterated the Bank of England’s misgivings about currency union. But it might still be feasible to have an informal union (‘sterlingisation’) underpinned by some set of mutual reassurances, a kind of ‘sterlingisation-plus’, perhaps also including on the Scottish side agreement to assume some negotiated level of responsibility for repayment of UK public debt as accumulated at the point of independence.
Currency and debt would be some of the heartland negotiation issues. Others would be the timescale for removal of Trident from Scotland, the distribution of assets (oil and gas reserves in particular), the process and terms of membership of the EU and NATO and the disentangling of the UK’s policy infrastructure for tax and welfare.
These negotiations would likely be led by ministerial teams on either side, and would focus simultaneously on Scottish-rest UK issues and those with EU and international dimensions. They would quickly move beyond the rhetoric of campaigning to a hard-nosed assessment of the issues as of 19 September. The Scottish Government has said it would involve figures from other parties (and key figures on the no side like Alistair Carmichael and Johann Lamont have said they would answer such a call). A bipartisan approach would help limit partisan sniping on specific terms of what would be a complex overall package. It would also be symbolically important in giving the founding terms of a new Scotland a broad political base.
UK election could see unity government
Much has been said about the realism of the Scottish Government’s timetable for negotiation so as to be able to declare independence in March 2016. Indeed, a comprehensive settling of all issues associated with Scotland’s secession from the UK and accession to the international community would likely take a decade or more.
But expect key terms, especially in the field of monetary and fiscal policy, to be settled quickly, and other matters to be managed over a longer timescale, with agreed transition periods enabling discussion of detailed terms to be held over for later. There are two reasons for a swift process on the headline issues: market pressures, which will push the governments for as much certainty as they can muster as soon as possible; and the political pressure of the May 2015 UK election.
In order for the emerging terms of Scottish independence not to be drawn into partisan outbidding at the UK election it could make sense for the UK side also to approach the negotiations on a bipartisan basis, opening up some level of input for Labour as well as the current coalition partners. Perhaps we would even see a government of national unity as the necessary basis for renewing what on the UK side would be a smaller nation working out how to develop its new relationship with Scotland, but also with itself?
• Professor Charlie Jeffery is the director of the Future of the UK and Scotland research teams.
Professor Jeffery has co-edited the free e-booklet Scotland’s Decision, an impartial guide to the referendum