Bill Jamieson: The message... it’s grim up North

Our neighbours in the English regions have most to lose, whether Scots vote Yes or No to independence, writes Bill Jamieson

Few discussions on the independence referendum proceed far without a reference to Pandora’s Box. Its opening may seem innocuous, but turns out to have profound and far reaching consequences.

In Greek mythology it was never a box but a large jar which could be used for burying a human body. When Pandora opened it, not all the contents escaped. What remained at the bottom was Elpis, the Spirit of Hope.

A Pandora’s Box arrived in Edinburgh this week. Out of it climbed leading council figures from the north-east of England.

What brought them to Scotland? After meeting with them for two hours I could not say I detected much Elpis at the bottom of the jar. Indeed, the pervasive impression was one of evanescence, of a people entrapped in the Forgotten North. Above them is a stirring Scotland, a magnet of national and global attention. Beneath them is a south east of England that seems to care little or nothing for their fate.

Business and political communities in the north of England have grown increasingly concerned that they will be the biggest losers in the great game of constitutional change. They fear greater powers will give Scotland a competitive advantage over the northern economy. In particular they worry about the consequences for their economies of moves by a fiscally autonomous Scotland to cut taxes and draw business and investment.

It is the Forgotten North that can lay powerful claim to at least equal advantages. As a recent IPPR North paper points out, compared to Scotland the north-east has a higher unemployment rate and more economically inactive people. The unemployment rate among 16-24 year-olds is notably higher. Public spending per head is lower. And while Scottish Gross Value Added matches almost exactly the UK average, by contrast all three northern regions have GVA rates below the Scottish and UK average level – and the gap between them has grown over time.

Little wonder it is to Scotland that the north of England looks, with apprehension certainly, but also with envy. Scots who grumble at the shortcomings of our institutions would be heartened by an hour in this company. Scottish institutions and government are admired for what they have achieved and how successful we have been relative to the north of England in the reach and effectiveness of our civic institutions, the openness and responsiveness of government, the agencies to help the economy and the success in attracting overseas investment - in cases such as Gamesa which chose Leith over Hartlepool, and Amazon, where we plucked investment at the last minute from North Tyneside. Scotland proved capable of assembling an offer and in the most professional manner that south of the Border could not match.

Now why should the north of England matter to us? It is on the other side of the fence. It is part of an England whose affairs are for its inhabitants to order and their destiny for them to determine. Well might they envy Scotland’s government and institutions. But did not the north-east have opportunities to enhance their regional voice and representation – a regional assembly and elected mayors - and in both cases reject them?

There are two reasons why the Forgotten North matters for us. The first is that, with a population of 14.8 million, it is an important part of the UK market for Scottish goods and services, the rest of the UK representing by far our biggest export market. It is also a critical area for Scottish banks and life assurance companies. Blight across the border is not at all in our interest.

And the second is that the mood in the Forgotten North is changing fast. It will not settle for the status of loser. And because of this it will be a potent voice in any negotiations over a Scottish settlement in the wake of the independence vote. It will certainly be critical in the terms and conditions of Scotland’s membership of the sterling currency and participation in the affairs of the Bank of England (if, for example, there is to be Scottish representation on the interest rate-setting MPC, why not the North with a population almost three times as large?)

But even more critical for the North will be the constitutional determination were Scotland to vote No and remain inside the union. For it is here that the analogy of Pandora’s Jar is truly salient. It is inconceivable that Scotland will settle back to status quo ante after the depth and intensity of the debate now underway.

David Cameron has stated that the referendum need not be the end of the road and that he is “open to looking at how the devolved settlement can be improved further”. Scotland has been adept at turning such small unpromising openings into larger ones.

The post referendum vacuum is likely to be filled quickly by pressure for devo -more, or devo-extra or devo-plus. And as such a settlement will of necessity involve negotiations with the rest of the UK, the Forgotten North will have fair claim to be heard.

Institutional equity will be the cry. And this demand will extend to other areas, too. If, for example, Scotland wins the freedom to determine our own airport passenger duty, how in equity could this latitude not be extended to Newcastle Airport, which has already raised the standard for equal power?

In all this, it would be wrong to conclude that the interests of Scotland and the Forgotten North are irreconcilably opposed. Take, for example, the proposed High Speed Rail link: the North East feels as aggrieved as the Scots those current plans envisage an extension only as far as Manchester and Leeds. The case in terms of economic benefit to areas outside the south-east is surely as applicable to Newcastle as it is to Glasgow and Edinburgh.

My own conviction has been that, while the devo-max option was blindly dropped from next year’s referendum, it is devo-max or a variant of it that will be the destination whichever way we vote. The IPPR paper mounts strong arguments that this outcome may in fact effectively endow Scotland with at least as great if not greater fiscal freedom than independence, given the constraints on a sharp cut in Corporation Tax.

It is a No vote that will open up Pandora’s Jar for the whole of the UK, and in that event, the Forgotten North as well as Scotland has a great opportunity. Both would have the opportunity to make common cause in addressing the deep economic imbalances that afflict the UK and which are widely admitted to be in need of reform.

Strong alliance would help both and boost hope for change. The poet Robert Frost wrote memorably that “good fences make good neighbours”. In this instance, we need to value more than we do the need for good neighbours.