Bill Jamieson: Clear the fog around independence

What is the objective of independence? As David Cameron and Alex Salmond are set to sign an accord on the referendum at St Andrew’s House next week – a formal signing ceremony that the First Minister wishes to take place in front of the world’s press and television cameras – it may be useful for the SNP annual conference next week to clarify the benefits it believes will flow from a Scottish secession from the Union.

In few other countries has the aspiration for independence been so closely focused on the economic pros and cons of self-government. Many supporters may feel this is second-order detail. But there is a sizeable proportion of Scottish voters who are not yet decided and for whom economic considerations will be critical to their decision.

Argument has already been engaged on projections of North Sea oil revenues, public spending, borrowing and tax. Important as these are now set to become, debate here is in danger of missing a key pillar of the SNP case. This is that independence cannot be judged on the basis of linear statistical projections of income and expenditure alone. For independence will, of itself, help release our entrepreneurial energies: it will bring about a cultural change, releasing our animal spirits. It will, in short, be transformative of our economic performance.

To this can fairly be added two compelling prospects implicit in independence: that an independent Scotland would be a fairer society, more protective of social solidarity and welfare; and that independence will also be a magnet for talent – business, financial, administrative, professional and artistic – that has emigrated for want of senior opportunity.

These three elements, surely, are by themselves a powerful answer to the question “What is independence for?” But the closer we come to the referendum vote, the more pressing will be the hunger both for some evidence that these outcomes will indeed flow from constitutional change and that an independent Scotland will develop and empower the institutional arrangements that will be required.

Such is the lack of clarity on such critical questions, it would not be unfair to summarise the response of the political and business communities in the famous words of Donald Rumsfeld: “There are known knowns… there are known unknowns; that is to say there are things that we now know we don’t know. But there are also unknown unknowns – there are things we do not know we don’t know.” Can it be right that we are approaching the referendum in such a fog?

The argument for transformational benefit needs to rest on more than assertion. Is there a causal link between political independence and business formation and start-up? Has devolution enhanced entrepreneurialism so that a further progression would be merited? If so, is there research from economists or evidence that can be cited? Indeed, has such research been undertaken? It may seem cold-hearted to submit what we mean by fairness and social solidarity to similar inspection, or at least to express them in some quantifiable way. But how otherwise would we know whether in fact our system is as fair as we would wish, or indeed whether it is more fair than the rest of the UK, or less?

The independence cause may object that such benefits cannot be measured in the way described, but that the case for independence in any event is powerful enough on more concrete matters such as the institutional arrangements for fiscal and monetary policy. But here there is no more certainty.

The most pressing question I hear raised by the business and financial communities in Scotland is how an independent Scotland can share the central bank of another state but pursue a separate tax and borrowing policy without incurring the same risks that have traumatised the eurozone.

We cannot get to first base with such issues because there has been no detailed preparation made, nor has there been any significant discussion between the two governments on the practical arrangements, not least because the Westminster government and its civil service does not have a mandate to enter into discussions about sharing its country and central bank with another country; such matters requiring not only negotiation between the two governments but an agreement by the Westminster parliament to enter into them.

In the independence camp there is evident confidence that Scotland would continue to enjoy membership of the European Union and would not need to reapply. But there may be institutional requirements which EU treaties insist upon for membership. For example, EU treaties require member states to have institutions capable of participating in the European System of Central Banks and that the independence of such an institution must be enshrined in law. So how would Scotland qualify if it sought to present the Bank of England as its de facto central bank?

From competition policy through credible and transparent rules on fiscal policy, Scotland would need to develop its own institutions and rules of governance. It may be strongly argued that these are “second order” questions. But the fact is that there is a hard core of Scottish opinion that will require to know how an independent Scotland would, for example, handle the social security budget differently from the UK. It will need to know more about the institutional architecture of fiscal control – how North Sea oil revenues will be accounted for and how will our financial institutions be regulated – before they feel able to make an informed choice on referendum day.

These are huge issues which the civil service in St Andrew’s House is working on. But is it working to such resolution, or working to facilitate a Yes vote in the referendum? The two are by no means the same.

There can never, of course, be perfect certainty or perfect knowledge when contemplating constitutional change of this magnitude. But many would wish to invoke the dictum of David Hume: “A wise man proportions his belief to the evidence.” How appropriate that the David Hume Institute will be holding a debate on just these issues next month. I suspect it will be packed to the rafters.

If ever there was a case for Scotland to be guided by an independent Institute for Fiscal Studies, it is surely most powerful now, to inform the debate ahead of the referendum and not afterwards. We need to be able to see through some of the fog. A long runway for independence take-off can never be long enough if the passengers are being asked to fly blind.