Peter Jones: Either way, UK will turn in on itself

David Cameron has already promised a referendum on the EU, just part of the unwinding constitutional jigsaw. Picture: Getty

Regardless of who wins the 7 May general election, one result looks pretty clear – Britain is in for a period of prolonged introspection and internal change during which political leaders will have next to no time for engagement with foreign affairs. Viewed from abroad, 2015 looks like being the point in history when Britain stopped even trying to be a world leader.

This question is dominating thoughts about the election in foreign capitals. A recent article in the Washington Post reviewing the election campaign neatly summed up the evidence for such a claim: “Although it is not unusual for British elections to focus tightly on domestic issues such as health care and taxes, this vote comes against the backdrop of an unusually large and ever-growing tally of crises for Europe: a broken refugee system, the Russian dismemberment of Ukraine, a possible default on Greek debt and a tide of European fighters enlisting with the Islamic State. None have received more than a passing mention on the campaign trail.

“The only two international issues that occasionally break through are both being pushed by the political fringe, and are both aimed at reducing Britain’s global role, not expanding it: the far-right UK Independence Party wants to slash immigration by getting out of the EU, and the leftist Scottish National Party is seeking to scrap Britain’s nuclear-armed submarines.”

The analysis is fairly striking, not least because a few moments’ thought brings two other realisations into view. The first is that Britain’s disengagement from world affairs has already been signalled by, for example, the Commons vote against any military action in Syria, and Britain’s absence from negotiations with Vladimir Putin over Ukraine.

The second is that the most pressing and difficult issue Downing Street’s next incumbent will have to grapple with is the nature of the British state itself. The fact is that this election will conclusively prove that the fabled unwritten constitution is broken. Make do and mend will not do; a comprehensive well-designed solution is needed if it is not to finally fall apart.

Barring some unforeseeable upheaval, the SNP seems destined to be the third-largest party in the next House of Commons, commanding a comfortable majority of Scotland’s 59 Westminster seats and, if not a majority of the votes cast, such a dominant lead over other parties for it to be unquestionably the voice of Scotland at Westminster.

Since the SNP’s manifesto is for more constitutional change that goes well beyond the Smith Commission – particularly the full fiscal responsibility of controlling nearly all taxes and welfare spending – then that is what any prime minister will have to countenance.

It doesn’t much matter that all independent analysis agrees that this will make Scotland poorer; if that is what Scots want, that is what they should get. And as that analysis also shows, because the greater austerity Scots will have to endure means slightly less austerity for the rest of Britain, it will be awfully tempting for any prime minister to give it to us.

But, because of the implications this has for management of the UK national debt – the need to assure investors that Scots will continue servicing their share and will also pay for the extra Scottish sovereign debt that will have to be raised on top to fill Scotland’s dreadful deficit – that is also of acute interest to the people of England, Wales and Northern Ireland.

Their interest is two-fold: one that they do not become exposed to the possibility of having to bear the expense of bailing out a Scotland that gets its economics badly wrong and two, that they too should have similar control over their own affairs.

The manifestos of the main parties show little recognition of the complexity and difficulty of this matter and, save for the partial exception of the LibDems, no idea of the kind of solution that is required.

Present constitutional proposals – a referendum in Wales on getting the partial income tax power shortly coming into force for Scotland, the devolution of corporation tax rate-setting powers to Northern Ireland, and an ill-defined promise of an English income tax – are not just an incoherent mess, but a dangerous one. They don’t mend anything; they create festering sores.

Solutions which do provide a durable settlement are possible. One example is provided by Canada, where a mixture of fully devolved taxes at the provincial level and shared taxes at the federal level do not just give adequate economic management power to the provinces and federation, but they have also proved robust enough to deal with Quebec separatism.

Getting to that kind of solution, however, will absorb so much British political leadership attention as a goal quite unprecedented in our political history, that it will threaten to exclude all else. That, of course, cannot be the case, not least because the other pressing issue which also raises questions about the nature of the British state is that of our relationship with Europe.

As we know, if David Cameron returns to Downing Street, there will be a renegotiation of Britain’s terms of EU membership and then an in-or-out referendum. Ed Miliband says that if he is prime minister, that won’t happen. I don’t think he could sustain that position – there is so much disquiet in the English electorate about the EU that the question will not go away until it is settled one way or the other.

These two matters – the UK’s constitution and the relationship with Europe – mean that the present election uncertainty is going to endure. This will have bad implications for the economy as investors – whether they are purchasers of sterling, foreign companies looking to buy assets, or domestic firms thinking about expansion – don’t like uncertainty.

And as to Britain’s future, the rest of the world can only watch and wonder. Dean Acheson, a US statesman, remarked of Britain in the 1960s that it had lost an empire and was yet to find a role. Defining that role and finding a constitution to fit it, I would suggest, is now an urgent task, otherwise the prospect is of a long, slow, and painful disintegration.