Economics of Independence ScotRef

If federalism is the answer you have asked the wrong question

SINCE the Brexit vote, several Unionist politicians have been scrambling around for a solution to the UK’s constitutional crisis, many are pinning their hopes on federalism. The problem is that they are asking how do we solve the constitutional crisis caused by Brexit when they should be asking how dow we solve the economic crisis that Brexit vote has already caused and that is likely to deepen longer term.

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Better Together claimed the safest way to secure Scotland’s EU membership was to vote NO to independence

Ruth Davidson is bluffing it out, pretending nothing has changed since 2014, but she was the cheerleader for the “No vote means stay in EU and Yes vote means leave EU” message which (to use her favourite word) was disingenuous to say the least. There is a hard truth that Davidson and other proponents of Union at any cost, must face. Alex Salmond once famously claimed that Scotland was not oppressed by the Union, but that’s now going to be almost impossible to argue as Scotland dragged out of the EU against its will amounts to economic oppression on a grand scale.  The Union has for several generations left Scotland economically disadvantaged, a half-nation with a democratic deficit, poor self-esteem, an under-performing economy and society when we looked at all comparable international benchmarks, but now there is a clear and present danger to our prosperity, a sudden rather than evolving grievance against Westminster failure as a political system.

Even if the UK does a trade deal maintaining access to the EU single market, no deal that can be done will be more advantageous to Scotland than membership of the EU. Scotland does better out of EU membership than the UK as a whole. It is not just that £7bn or so of our GDP is related to single market access, but also that we only pay an 8.4 per cent population share of the UK’s EU membership fee but receive 17.4 per cent of the EU grants received by the UK. Any deal to access the single market comes at a price (Norway pays 96 per cent of the UK membership fee on a per head basis) ipso facto without EU grants Scotland would do better in the EU.

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Theresa May meeting with the FM on Scotland’s temporary veto on triggering article 50

Others such as Henry McLeish have always hovered around the F-word, but Murdo Fraser and Kezia Dugdale have become fully fledged converts to federalism in the last few weeks, partly to justify past allegiance to a political system that has self-destructed. Those in Labour who campaigned for a No vote have painted themselves into the corner on the constitution. They may need a month or two of holding out hope for a federal solution to allow Scotland to stay part of the UK and part of the EU, but it will never happen. Nicola Sturgeon wants the UK Government to allow her to ask the question but either the new PM will say no to Scotland approaching the EU (most likely) or the EU will confirm that only independence will maintain Scotland’s EU membership.

Federalism will never make the ballot paper, whereas, Scottish independence is a matter for the people of Scotland. Federalism impacts all in the UK and would have to be voted on by a full UK referendum. Given the fact that one of the justifications for a Brexit was that the EU was becoming too federal it would beggar belief that they would vote to be part of what would be an unstable, untested and unworkable federal union of nations where they were not in control. Federalism is a nice idea, and it works well with states and regional assemblies; there is no fully federal union of “nations” with different tax regimes, industrial and fiscal policies to use as a case study, whereas, we know exactly how well independence has worked for several smaller and highly successful EU nations.

Federalism has never been subject to full-on political and media scrutiny as it’s never been on the ballot paper. If it were, support for it would plummet, as it offers none of the benefits of independence, nor indeed the perceived benefits of centralised Governance. This is why Westminster fought to keep it off the 2014 ballot paper, they knew that it would take votes from No and when its support collapsed that Federalism supporters would, having accepted change, move en masse to Yes. That was also why Alex Salmond wanted a third option on the ballot in the first place.

Federalism is a temporary distraction: once it’s off the table the question will once again be Yes or No to independence. Although the question remains the same, the game has changed completely and independence supporters need to welcome former No supporters with open arms. We must not place barriers to conversion in their way, we must not try to make them admit they were wrong. This is a different situation altogether: if it wasn’t then there would be no prospect of a second indyref. The circumstances have changed so dramatically that 2014 No voters can now vote Yes and claim to have been right both times. It matters not one iota if we think they were wrong last time – they don’t need to hear it. If you know someone converting to Yes, my advice is just give them a big smile, an even bigger welcome and a huge pile of leaflets to deliver.

The Smith Commission has turned out to be watered down fudge

The Smith Commission has turned out to be a watered down constitutional fudge, far from federalism

The United Kingdom that Scotland voted to stay part of in 2014 has become another country. It has begun to project a xenophobic image of itself to the world that is both alien and singularly unattractive to many in Scotland who voted No last time. The social values and international outlook of Scottish voters are now much more in tune with Europe than with the majority in England and Wales who voted for Brexit. Following the 2014 No vote BfS supported Federalism/Devo max and the Business for Scotland submission to the Smith Commission called for the promises made by former UK prime minister Gordon Brown that Scotland would be as close as possible to a federal state within one or two years and Danny Alexander, then Liberal Democrat Chief Secretary to the Treasury, who spoke of “effective Home Rule” to be cast in stone.

That was Federalism’s chance but no one supported it and the Smith Commission produced a watered down constitutional fudge that was the worst of both worlds. For Scottish Unionist politicians to say “Hey, let’s actually now deliver on the Vow”, when they have no power to do so and when others in Westminster are suggesting tearing up the current agreement on powers and scrapping the Barnett Formula, is a lowbrow distraction. Scotland independent from the UK political union but in a trading union with the EU and in one with our friends and neighbours in the rest of the UK will have all the economic tools and advantages enjoyed by the wealthier, more productive, happier, fairer and healthier independent nations across Europe. Scottish independence within the EU is now the safest and smartest option.


You might also like The Brexit black comedy and Scotland’s golden opportunity | Potential Brexit bonanza for independent Scotland within the EU


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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.


    • 79 was a referendum on Home rule or devolution so it was devolution ref 1 and 97 was devolution ref 2. 2014 was Independence ref 1 and (likely May 2018) will be Independence ref 2.

  • but what of Free Movement of people ? Scotland in the EU and open to EU migrants – would this not require England to implement a ‘hard border’ to control migration of said EU migrants from Scotland to England ? This question will be raised and the hard -border argument used relentlessly by Project Fear II imo so we need a clear response as to why such a border would not be required.

    • You have to wait and see what deal the UK does with the EU – I believe it will involve free movement and so no border as per Norway / Sweden. issues such as this are the reason that the FM is waiting to see what happens before calling to indyref2. She wants it all to be clear and so don’t expect a referendum to be called till such issues are sorted and support for indy has been sustained at over 55% for a longer period. If article 50 isn’t enacted till Jan 2017 then May 2018 starts to look more likely as the referendum date.

  • Scottish independence within the EU seems to Nicolas first option but independence within EFTA is a good plan B.

    With a Scottish currency and no UK debt!

  • Well said and well written, I agree with all points but would like to know this, does Scotland contribute more to westminster than we get back?

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