May 10, 2011

Horse 1188 - The Push for Scottish Independence

http://www.guardian.co.uk/politics/2011/may/08/scotland-independence-vote-financial-autonomy
Alex Salmond is prepared to compromise on the Scottish independence referendum by including an extra question on giving Holyrood much greater financial freedom while remaining part of the UK.
The Scottish first minister said on Sunday he would talk to other parties about offering the voters a second choice known as "fiscal autonomy" within the UK, rather than a straight yes or no vote on Scotland moving to complete independence.

I was directed to this article in The Grauniad (sic), and was asked what Horse's opinion on Scottish Independance is. There are lots of lots of issues bound up with this; so I'll try to unpack them all, but my general overview is that if it is the will of the people to dissolve the United Kingdom, then I see no reason why legally they should not be allowed to.

A Brief History:
Scotland and England being two separate and very distinct countries have occupied the island of Great Britain (which is also the largest island within the British Isles) nominally from about the Dark Ages onwards.
The two nations often fought nasty wars against each other before begrudingly they were united via a personal "Union of the Crowns" under James VI of Scotland who became James I of England. They were formally united by act of law with the Acts of Union 1707.

Technically the current Crown as a legal entity and currently vested in the person of Queen Elizabeth II, is firstly a Scottish and secondly an English legal fiction.
To repeal the relevant acts of Union which I think would at least include the 1707 and 1800 Acts, would render Scotland to that of a seperate realm equal to that in status of other nations within the broader context of the Commonwealth like Canada, Australia and New Zealand.
The Crown would still be the legal entity but instead of shared union between Scotland and England, Scotland would become the Kingdom of Scotland within it's own right; more often styled as simply Scotland or perhaps the Dominion of Scotland.

First Reason for Scottish Independence - Money:
There are of course the usual patriotic reasons for Scotland to declare itself as Independent, what with Scotland having it's own national identity etcetera, etcetera, etcetera, and whilst those reasons are all good and proper, it strikes me that there is a far more consequential reason at play here - Whitehall.

The British Government which is based in London, has in the past made the claim that because of higher unemployment rates in Scotland, that Whitehall effectively "subsidses" the people of Scotland. London is of course one of the great trading captials of the world and it does have a tendancy to suck in investment from the rest of the UK generally, but it also happens to suck in an awful lot of taxation.



The Scottish National Party although formed in 1934, really came to prominence in the 1974 General Election with its "It's Scotland's Oil" campaign. Following the 1973 Oil Crisis, the claim was made that had had Scotland been an economic entity it its own right, then it should have been entitled to the increased royalties from the sale of North Sea Oil.

http://www.legislation.gov.uk/uksi/1999/1126/contents/made

If you read through the particulars of the "The Scottish Adjacent Waters Boundaries Order 1999" and "The English Adjacent Waters Boundaries Order 1999", then technically 95% of all so-called "British" oil reserves fall within Scottish Waters.
Assuming Scotland was to become independent, then there'd probably be a set of international rulings; probably at the International Court of Justice in The Hague and it would confirm existing legal boundaries.
Scotland would then be legitimately entitled to the royalties from the sale of oil, which even in 1974 was seen as dangerous.


http://news.bbc.co.uk/2/hi/uk_news/scotland/4303750.stm
Professor McCrone argued that the economy of an independent Scotland, properly managed, would "tend to be in chronic surplus to a quite embarrassing degree".
"Its currency would become the hardest in Europe, with the exception perhaps of the Norwegian kroner," he wrote.

I imagine that all of the royalties from oil revenue going to Holyrood rather than Whitehall would be rather embarassing. I suppose that Whitehall could take solace in the fact that it wouldn't be "subsidsing" the people of Scotland any more.
And with potentially such a strong currency north of the border with the Scottish Pound, would those investment funds that would have settled in the City of London then find abode in the financial district of Edinburgh? The potential for Scotland to gain is quite considerable and perhaps it should have the British Parliament feeling nervous.



Second Reason for Scottish Independence - Money:

Perhaps the push for Britain to join the common currency has faded now, but not long after the creation of the hard currency in 2002, there were suggestions that the UK was going to adopt the Euro and abandon the Pound Sterling. This however would have had other implications.

There used to be a requirement in the UK in order to prevent a "run" on the banks, that the banks were to hold on reserve a certain percentage of customer's funds either stored as cash, or on deposit with the Bank of England. This was known as the Cash Reserve Ratio and was as high as 20% during the late 1960s, though it was progressively lowered to about 3% by the late 1990s before becoming entirely voluntary.
Scottish Banks because they operated under a slightly different set of regulations within Scots law, meant that instead of holding currency either stored on-site or with the Bank of England, could hold it as phyisical currency in the hands of the public.
If you move north of the border and into Scotland, you'll find banknotes issued and printed by the Bank of Scotland, Royal Bank of Scotland and Clydesdale Bank. There also used to be banknotes issued by British Linen Bank and Union Bank of Scotland.


http://news.bbc.co.uk/2/hi/uk_news/scotland/656600.stm
Scotland's three banks will be banned from issuing their own notes if the UK joins the single currency, according to a European Central Bank committee.
The Frankfurt-based bank believes that notes issued by Scottish commercial banks are not legal tender and that their continued use would be illegal under European law.

If the UK was to adopt the Euro and abandon the Pound Sterling, then because the European Central Bank refused to allow any other entity other that national central banks to issue currency, then the Scottish banks would have been forced to not only stop issuing currency, but also to buy back the currency in the hands of the public.
Potentially this would have caused massive runs on the banking system in Scotland but not because of a loss of confidence as is usually the case but by operation of the law itself.

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I really don't think that the reasons for the SNP's push for Scottish Independance are mainly to do with a sense of nationalism. Scots generally have a reputation for being practical people who have invented all sorts of things and found great engineering solutions but they also have a reputation for being fiercely tight with money.
Over the past 10 years we've seen Britain go off to war in the Middle East, accusations of grift and rorts in Whitehall (including using public money to build Duck Houses and moats), and perhaps most frightening for the people of Scotland, the "Global Financial Crisis" of 2008-2010 and the Blue Monday Crash of 2009 when the RBS annouced the biggest corporate losses in British history resulting in the share price falling by 67% in a day.

If Scotland's destiny is to be continued to be tied to the UK, then so be it. If Scotland wishes to again stand as a separate nation, then it's probably got more to do with a sense of financial independence from London more than anything else. And instead of it being as the result of a struggle under an oppressive regieme, it will have been the the result of a 30-80 year slow rumble.

At very least it would give Neil Oliver of "A History of Scotland" and "Coast" fame, the chance to make another documentary series.  However this time around, he could walk around inside parliament buildings and grand banking halls instead of windswept moors and hillsides...

... I feel ever so sorry for him sometimes. I hope that he gets to go inside and have a nice warm cup of cocoa by the fire.

1 comment:

Howie said...

Scots get pissed off that new laws are often trialled in Scotland before being rolled out across the UK if in fact they do get rolled out after the trial.. Scotland is England's guinea pig