Jim Gallagher: Staying in union can enable change

JIM Gallagher argues that by preserving key features of economic integration and social solidarity, there is plenty of scope for change for Scotland within the UK

A woman runs with a Saltire outside the Scottish Parliament. Picture: TSPL
A woman runs with a Saltire outside the Scottish Parliament. Picture: TSPL

The past couple of weeks have seen different politicians making a case for the Union. We have heard a lot of the economic argument. Britain, from 1707 though to today, has had free trade and a single currency. An open domestic market works for jobs and growth, and people have an almost instinctive understanding that keeping the pound is in Scotland’s interests. The UK long ago swallowed the medicine that the eurozone struggles with today: monetary union means fiscal union, too – a common system of tax and public spending.

The argument from social solidarity runs exactly parallel. A fiscal union means taxes are paid by the people and places that can afford them. The money goes into a common pot and pays for pensions, benefits and public services for people who need them, wherever they are. Need, not nationality, decides where spending goes. Sharing goes alongside belonging.

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To understand what this says about a union is, look at the big contrast between the UK and the European Union. The UK has deep economic integration; the EU single market is incomplete. UK tax and spending is integrated, so pensions are the same and public services comparable wherever you go; not so between the north and south of the EU. EU bail-outs and structural funds are grudging and limited, but taxpayers in rich parts of Britain take for granted that they support benefits in poorer regions. This is because the eurozone struggles to become an effective political union. I have argued in two recent articles in these pages that economic and social union in Britain is a product of a long-standing political union.

Political union is, of course, precisely what Scottish independence would end, and much of the argument in the referendum campaign has been about the nationalist assertion that economic and social union could survive such a split. The lesson from Europe today is that it would not.

The more constructive argument is precisely what is political union, as Scotland has experienced it, and how might it change?

You have heard the caricature version of political union often enough and you will soon be sick hearing it. Two quite different sets of people to trot out the ideas of Westminster rule and London domination. Obviously, nationalists need to paint the Anglo-Scottish Union as negatively possible. But, over the years, they have been helped by a nearly extinct set of English constitutional writers. These were so in thrall to the idea of parliamentary sovereignty, they forgot that a union state has a well-defined territorial dimension. Those dinosaurs have pretty much vanished, but nationalism still sings its song.

Reality is more complex, more interesting –and has more scope to develop.

The 1707 Union was a negotiated deal. The two nations had just fought themselves to a standstill, mainly over the right sort of church. Scotland was broke, after the Darien venture. England was bigger, richer and more powerful, but the Scottish negotiators still had leverage.

What swung the swing voters of the day (the glamorously named Squadrone Volante) was a deal that, instead of just letting England assimilate Scotland, preserved the institutions that really mattered to Scots at the time. When the Church dominated everyday life, the Union preserved the radically different Kirk, and did not impose England’s state religion. When the civil power of the state was mostly about lawyers and courts, Scotland’s distinctive legal system was entrenched, as it remains to this day.

That’s set the course for the Anglo-Scottish Union ever since. Over the years, there have been plenty of English voices ignoring or wanting to overturn that. But Scotland never did become North Britain. One of the ironies of today’s debate is that it suits nationalists to claim that it did.

As the state developed in the 19th and 20th centuries, Scottish state institutions grew with it. Powerbrokers around the Court of Session could run an 18th century Scotland. But the 19th century state needed a plethora of Scottish boards, commissions and departments, such as the Scotch Education Department, which took over the parish and burgh schools.

By the late 20th century, the Scottish Office ran most of the public services in the country, and Scottish secretaries of state such as Tom Johnson, Willie Ross or George Younger, were great powers in the land – in London as well as Edinburgh.

But in the long run, administration, however effective, had to give way to democracy – and late-20th century politics eventually produced a Scottish Parliament. That politics involved Margaret Thatcher and more than a little panic about nationalism. But the parliament is equally well seen as the inevitable consequence, in a democratic age, of distinct Scottish public policy, administration and institutions.

There is more continuity in this story than is often realised; political union has always meant keeping Scotland’s own institutions. Nowadays, they are elected.

This Union will develop more. So long as we preserve its key features of economic integration and social solidarity, there is plenty of scope for change. The most obvious changes are already underway. It does not make sense for the Scottish Parliament to spend vast sums of public money, but raise very little. From 2016, it will be responsible for raising about one-third of its budget, under the Calman proposals. Labour and Liberal Democrats have suggested more.

But a fair criticism of the UK is that it’s a piecemeal union – one set of arrangements for Scotland, one for Wales, a different set again in Northern Ireland, and nothing very much for England, with Westminster sailing along as if nothing very much had changed, even though it passed the laws to found three new legislatures.

In my view, now is the time for a better articulation of the UK as a union state. All the components are there, but their implications need to be better understood.

First of all, the Union has to retain the combination of economic integration and social solidarity that creates both the domestic market and a well-functioning social market. Subject to that, it should be home rule all round and, as in federal countries worldwide, national parliaments should be funded by a mixture of a share of UK taxes, which give effect to social solidarity, and their own tax resources.

Raising devolved taxes gives autonomy – to make their own decisions – and accountability to their electorates. The right mixture depends on the circumstances of each nation. In Scotland’s case, it should be possible to move roughly as far as a 50/50 split. The technicalities of tax devolution put limits on this, but the important principle is that excessive fiscal autonomy is inconsistent with effective social solidarity. Northern Ireland and Wales have weaker economies and tax bases, and more social solidarity, so their scope for devolved taxes is less.

Of course, there’s more to political union than devolution, and more to devolution than funding. Parliament at Westminster matters hugely. It defines Scotland’s place in the world, but also Britain’s territorial constitution. And if home rule is good for Scotland, Wales and Northern Ireland, what to do about England? How to make such a lopsided union work and how to define and entrench its territorial constitution, when Westminster is both England’s parliament and the Union’s, is another story again. Watch this space.

• Jim Gallagher was director-general for devolution in the UK government, senior adviser to the prime minister on devolution strategy (2007-10) and secretary of the Calman Commission