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The seduction of independence
The diverse cultures of the British Isles are both a glory and a symptom of the failure of the English state to assimilate them into one harmonious whole. They thus left open the question, for a minority of Britons, would they feel or do better casting off altogether the shackles of British rule? A hundred years ago the answer given by two-thirds of the Irish was yes. What now of some 9 million Northern Irish, Welsh and Scots, with the example of Ireland before their eyes?
There is no inherent problem in small-state independence. The world is awash with countries of 5 to 10 million people, which is why every report on Scottish independence cites variously Denmark, Finland, Iceland, Slovenia or New Zealand. Scotland’s population of 5.5 million is larger than eight existing members of the EU. In 2018 Scotland’s sustainable growth commission argued that the benign ‘big-country model of economic growth’ was simply untrue. The reason was that big countries ‘always tend to hold back their smaller regions’. To the economist John Kay, ‘there are few economies of scale in statehood … Size is as much a disadvantage as an advantage when carrying on the principal functions of government.’ As for spreading public contentment, no big country has ever appeared in lists of the top ten happiest states. The median size for the ten happiest is 5 million.
A new Ireland
The least controversial and most straightforward candidate for independence from the UK is Northern Ireland, the objective being to proceed to reunion with the south. The island’s 1921 partition of one-third of its population was intended to be temporary. As we have seen, the parties to the 1998 Good Friday Agreement on Northern Ireland’s constitution accepted that the south had no claim to the north beyond the terms of northern consent. The possibility of that consent remains on the table. The province today is certainly more peaceful than during the troubles. Extremist sentiment is in decline and street violence has largely abated. But this has not ended underlying tensions.
One outcome of Brexit, which the Northern Irish voted against, was not predicted. A series of polls indicated a firm shift in opinion on reunion. Those in favour surged from 22 per cent pre-Brexit to 47 per cent in 2021. Irrespective of this balance, a full half of those questioned also anticipated reunion within ten years. A new factor was also present. Census returns showed the Catholic population was now approaching a majority over the Protestants. The province’s child population was 51 per cent Catholic with only 33 per cent registered as Protestant. The student population was already evenly divided. The historic Protestant fears were being realised.
In 2020 the Sinn Féin leader in the north, Mary Lou McDonald, declared herself delighted that Brexit, ‘the lowest common denominator of English nationalism’, appeared to have evaporated the north’s unionist majority. The issue was not Brexit as such but Johnson’s insistence on a ‘hard Brexit’, withdrawing the north from a commercial union with the south, palpably against the interests of either. Public opinion, said MacDonald, would soon trigger a positive referendum.
An additional factor in a change of attitude among northern Protestants was the progress made to modernise the south, including a diminution of the Catholic character of its state. By 2016 only three-quarters of the south’s population identified as Catholic. In matters of social policy, such as marriage, abortion and sexual relations, the south has become if anything more liberal than the north. It is hard to imagine the north electing a gay prime minister of Indian descent, as the south did in Leo Varadkar in 2017.
The fusing of the crippled Northern Irish economy with that of the south under reunion would undoubtedly be painful. There would need to be a settlement with Britain to cover the transition, notably over pensions and health care. Another issue would be how fast the economic environment of the south could be extended northwards. Whether a new united Ireland might form closer ties with Britain, perhaps under some refashioning of Britain’s relationship with the EU, is as yet an unanswered question.
A federalist dawn
If Northern Irish independence poses problems, they are at least soluble. In the case of the rest of the United Kingdom, the concept of independence is different. When devolution was introduced in 1999 Blair stated that it was a necessary alternative to separatism. As we have since seen, there are many shades to devolution. English governments throughout history have had recourse to devolved institutions to appease or ward off Welsh, Scottish and Irish rebellions. A federal Wales was proposed under the Treaty of Montgomery (1267) and a federal Ireland under the Treaty of Limerick (1691). Scottish and Irish parliaments with varying degrees of autonomy existed down to the Acts of Union of 1707 and 1801. Even Joseph Chamberlain, in opposing Gladstone’s home rule for Ireland, toyed with the modest federalism of an ill-defined ‘home rule all round’. Northern Ireland has had a federal assembly since 1921.
British governments have long been averse to the word ‘federal’, as if it implied some loss of virility to the central state. Federalism is strictly the subdivision of authority within a sovereign state, especially a state composed of regions, provinces or nations with strong and articulate identities. It brought together the once diverse states of the USA and has bonded them in one union ever since. It enabled bilingual Canada and Belgium to remain as sovereign unions. It was introduced as a bulwark against the re-emergence of a powerful state in postwar Germany. It holds Spain in delicate thrall.
Federalism is the pressure valve of union. It allows tension to escape when unification has failed, when subnational sentiments boil to the surface. Nationalism itself, as Neal Ascherson writes in his Stone Voices, is strictly ‘inaccessible to politics … Love of one’s country has been held to be a private and intimate area rather than a public one.’ Only when some superior power deeply offends that love – as was long the case in Ireland – does nationalism turn political. Then all hell can break loose.
In Britain’s case federalism has bred hypocrisy. At the end of the twentieth century, the most ardent opponents of devolution within the UK were most strident in demanding it within the EU. When EU functions and powers were repatriated to London after Brexit, these same champions of subordinate control point-blank refused to devolve it downwards to the three other nations. EU regional grants had previously gone direct to the devolved governments. Under Brexit’s Internal Market Act their UK Treasury replacements were kept firmly in the grip of Whitehall. Johnson even remarked that devolution had been ‘a disaster’. All power does not necessarily corrupt, but it does necessarily centralise.
At the time of Britain’s 1997 devolution debate, the Institute for Public Policy Research (IPPR) in London studied federalisms across Europe. The examples were diverse. In Spain and Italy different local histories gave rise to different patterns of devolution. Catalonia, Galicia and Euskadi (Basque) were ‘high autonomy’ regions, Castile, Aragon and Madrid ‘low autonomy’. Italy likewise boasted ‘special regions’ for Sicily, Sardinia and Valle d’Aosta and ‘ordinary’ ones for Piedmont and Lombardy. France, long the most centralised of European states, became less so in 1982 under reforms initiated by interior minister Gaston Defferre, with the famed préfets stripped of authority and Corsica rendered virtually independent. Germany’s post-war Länder were represented in a central upper house, a Bundesrat, with centre/local disputes decided not by central government but by a constitutional court.
Until 1999 Britain was the only member of the European Union without any internal devolution, other than to Northern Ireland. As the Conservative theorist Michael Oakeshott pointed out, all other European states ‘began as mixed and miscellaneous collections of human beings precariously held together’. But they were ‘disturbed by what they had swallowed’ and found federalism an essential aid to digestion. It never occurred to the English that they too might be such a ‘miscellaneous collection precariously held together’.
By the simple technique of writing histories of the British Isles in their own image, the English contrived to rest content in their unwritten constitution, in its morass of ‘basic’ statutes, precedents and common law. They assumed they need have no truck with federalism, except in the constitutional anomaly of Northern Ireland. Yet fifteen years after the 1999 assemblies were in place, a survey by Oxford’s Nuffield College still indicated deeper dissatisfaction with devolution in Scotland and Wales than anywhere else in Europe. Catalonia and Brittany were in third and fourth place.
The devolved assemblies had undoubtedly been welcomed by Scotland and Wales, but now they wanted more. Within two decades further powers were being devolved even to once hesitant Wales. Following the 2008 Calman Commission on Scottish Devolution, a Scotland Act was passed granting Edinburgh greater discretion over income tax and borrowing. By now these governments were responsible for health, education, housing, transport, planning, agriculture, industry, employment and culture. By far the biggest of these was health, consuming a half of all public spending. Scotland’s Parliament also controlled policing and justice. Almost casually the United Kingdom had moved into the mainstream of European federalism.
The great fiscal stumbling block
At a certain point in every federalist debate talk turns to money. In none of Europe’s federal systems studied by the IPPR was central control over national revenues, public spending and borrowing surrendered by the central authority. Also under central control were national borders, customs and tariffs, law and order, citizenship and migration. Even local budgets, where they were devolved, were often subject to equalisation formulas to prevent one region benefiting by impoverishing or unfairly competing with another.
In Britain the central government remains absolutely sovereign in the overall disbursement of revenues at its disposal. Funding from the British Treasury to the devolved governments is determined by the ‘Barnett formula subvention’, introduced in 1979 by the then Labour chief secretary to the Treasury, Joel Barnett, initially as a temporary solution. Throughout a quarter century of negotiations on devolution, the concept was unchallenged. Based as it essentially was on local ‘need’, these governments were found hopelessly in deficit, enjoying discretion only on switching resources between budgets. The Barnett subvention to Scotland currently covers 85 per cent of its annual budget.
As noted earlier, before Scotland’s independence referendum in 2014, Cameron had offered to the SNP’s Salmond the option of a ‘second question’. As described at the time, it was for so-called ‘devo-max’ or ‘full fiscal autonomy’ (FFA). According to the Nuffield team, it would have seen Scotland collecting all its taxes and determining all its spending, paying a percentage to London for such ‘shared responsibilities’ as defence, pensions and social welfare. This came close to the definitional limits of federalism. Polls at the time suggested that FFA, insofar as the Scots understood it, would have secured 53 per cent of the votes in favour. Salmond rejected it. A calculation by the Institute for Fiscal Studies indicated that it would have left Scotland’s budget with a £7 billion gap, requiring huge increases in local taxation.
The 1999 devolution settlement drove public spending in Scotland and Wales – as already in Northern Ireland – ever deeper into dependency on London. By 2019 Scots were individually benefiting from the British Exchequer by £2,543 net of what they were paying in taxes, and the Welsh by £4,412. The equivalent figure for England was £91. These were massive cross-subsidies, the golden shackles of union with England. They suggested that, at best, devo-max was a vision well over the horizon. The path to small-country independence would be a long and hard one. But it would have to start somewhere. That somewhere would need to be to lower the deficit and increase Scottish and Welsh fiscal responsibility.
At present, independence declarations tend to read like student manifestos. They conclude their list of demands with an assumption that somehow ‘big daddy will meet the bill’, the daddy usually meaning some taxpayer over the horizon. Yet as a Scottish report in 2006 on devolution, the Steel Commission, put it bluntly: ‘No self-respecting Parliament should exist permanently on a grant from another Parliament.’ We might recall the American newspaper said to have carried the motto. ‘As independent as resources permit’. This is why any plausible programme for pushing the devolved governments towards greater autonomy cannot dodge the fiscal question. It is central to any democratic economy.
A new Scotland
At first sight, the case for Scotland to follow Ireland into the promised land of full independence looks strong. Any Scots can look at the experience of Dublin from the 1920s to the 1990s and ask why should they not pursue the same narrative of the Brexiters to ‘take back control’. A self-governing Scotland should eventually be in the same economic league as Ireland, Denmark and a dozen other states of 5 million or so people. The country has a strong labour base, outstanding universities and mature corporations in manufacturing and financial services. Its tourism assets are superb. It has lucrative if waning oil and gas resources. There are problems aplenty, not least Scotland’s dire narcotics fatality rate and a penal system light years behind that of most European states. But as a self-governing state, Scotland should at least be better prepared than was Ireland in 1921.
Yet the challenge is awesome. Scottish nationalism has at its beck and call a veritable college of cardinals, from Tom Nairn and Tom Devine to Neal Ascherson, Ben Jackson, John Lloyd, Colin Kidd and many others. In most there is an eerie absence of economic realism, as there is in the speeches of Scotland’s leaders, Salmond and now Sturgeon. Studies of the Scottish economy suggest it has the biggest budget deficit of any developed country in the western world, at 22 per cent of GDP. There is no way such an economy would be admitted to the EU, even with Sturgeon pleading with Brussels ‘to leave a light on for Scotland’. One estimate holds that it would take ten to twenty years to bring Scotland’s fiscal performance into the necessary balance. This is an economy that was once ahead of Denmark’s, which in 2019 had a budget surplus of 4 per cent. That is the true measure of economic subordination to London.
This is one reason why half of all resident Scots are still hesitant about full independence. Scotland is not Ireland. The SNP officially wishes to retain the Queen as head of state. Most Scots seem comfortable with dual nationality and would, I am sure, regard themselves as part of Britain’s cultural outreach abroad. The real issue is how to move from the present devolution to devo-max and the wilder shores of so-called ‘indy-lite’. It is how to liberate a country from having its domestic policy and much of its national sovereignty at the mercy of distant politicians for whom its people have not voted in two decades. The issue is, in a nutshell, how to get Scottish rulers and voters ready to make the decisions necessary to achieve a balanced budget.
The lesson from Europe is that all forms of federalism are fluid. Few end in full independence. Examples of the full partition of established nations are rare. Only Czechoslovakia and Yugoslavia come to mind in modern Europe. But in an age of heightened local identity, constitutions should always be in flux – as indeed is that of the EU itself. For Edinburgh to be regularly renegotiating its relationship with London, as it is now, should be politically creative.
Only ‘hard unionists’ want to see Scotland forever bound to England’s fiscal purse-strings. The answer has to be in further liberating Scotland to progress towards self-sufficiency. As we have seen, that can only be through reducing the scale of the Barnett formula and developing new sources of revenue for the Scottish Exchequer. As for the eventual destination – independence or not – that would remain, as it should, an open question. Paying for everything from pensions and debt to defence and foreign affairs would be for negotiation. A Scotland freed of budgetary subservience to England could have a relationship with London that acknowledged a shared historical framework, cultural, intellectual and commercial. The Scots and the English would remain in essence one people. There would be no need for full independence.
A new Wales
Full separation from England – borders, currency, citizenship and all – is not a sensible future for Wales. Most of the country’s population is in regular and commutable contact with three of England’s major conurbations, Merseyside, the Midlands and Bristol. It is geographically and historically tied to England and that bond has never in modern times constituted a serious problem. While I can understand the background in historical grievance, there is a tediousness to Wales’s defensive rhetoric towards the English, evocative of R. S. Thomas’s ‘worrying the carcase of an old song’. I wonder whether any Welsh politician has ever thought to say thank you to England for the scale of the Barnett subsidy. Anyway, if Wales is ever to detach itself from economic reliance on England, it will need England’s help. It should do everything to welcome its immigrants.
That said, there is no denying Wales’s enthusiasm for further devolution. In 2011 a Welsh referendum agreed to the Senedd receiving new tax-raising powers, passed by a majority of 63 per cent to 37 per cent. This was despite the much-publicised poor performance of the devolved Cardiff administration compared with the rest of the United Kingdom, notably in the core services of health and schooling.
The referendum was followed by two reports in 2019–20 on Wales’s economic state of health. One from Cardiff University, on ‘Wales’s Fiscal Future’, pointed out that Wales was now the poorest region of Britain, with a public-sector deficit of 18 per cent of its domestic product. The population was ageing, youth and graduate emigration was persistent and the number of income-taxed workers was actually declining, especially in the more lucrative higher bands. A quarter of the Welsh economy was dependent on the public sector – including a third of the Glamorgan workforce – against 17 per cent in England. National statistics had Welsh in-work labour productivity at the lowest in Britain, at just 60 per cent of London’s. The report concluded that there was therefore ‘no expectation of delivering prosperity to the people of Wales’ independent of the British Treasury. Simply, the Cardiff authors doubted whether ‘a relative improvement in Wales’s economic performance is possible let alone likely’.
A separate Independence Commission was set up in 2019 by Plaid Cymru under its new leader, Adam Price, an economist. It was remarkably frank and hardly more cheering. It boldly addressed the challenges that would face an independent Wales and admitted to ‘chronic structural weaknesses’. It suggested that these were due to a British economy ‘overwhelmingly shaped in the interests of the City of London’. As things stood, it had services the quality of those in Ireland but with revenues that would support only those of Portugal. Wales had for twenty years of devolution enjoyed unprecedented control over much of its economy, yet it ‘had hardly made a good fist of it’.
The report indicated that the chief need of an independent economy would be to find new sources of innovation and enterprise and to show ‘immigration friendliness’, notably to potential high taxpayers. It must somehow keep its graduates and boost its skills. It also discussed possible new sources of revenue, including an ever elusive land-value tax, road tolls, tourist taxes and energy levies. A similar Holtham Commission in 2009 had gone so far as to suggest a separate Welsh level of corporation tax. (This would be anathema to London but was a key to southern Ireland’s renaissance.)
Like similar reports on Scotland, the commission cited parallels with Ireland, Denmark and New Zealand. Like them it was at a loss as to how much ‘cold turkey’ it would take to get Wales off British subsidy, ‘to do the trick’ of converting Wales to the much-vaunted ‘small country spiral’. The report bravely suggested at one point that it might benefit from a ‘breakthrough’ jolt with ‘wide-ranging changes to both taxation and spending from day one’. Ultimately it could only pose the old question, ‘If Ireland had not decided one hundred years ago to break with Britain, would it now be among the richest parts of these Isles, up there with London and the south-east?’ Ireland was an intangible dream to independence enthusiasts – a Land of Oz but one whose yellow brick road was always paved with English gold.
The only constructive way for Wales to go down that road must be, as with Scotland, to win more fiscal discretion for the Welsh government, and to accompany that discretion with phased reductions in the Barnett subvention. This phasing lies at the heart of a tolerably constructive future relationship between Cardiff, Edinburgh and London. It should be termed the ‘federal bargain’. There is simply no other roadmap to degrees of self-rule.
Fashioning a radical future
At no point in this debate did it seem to occur to the three devolved governments to work together on a joint federalist programme. During the pandemic, as during Brexit, outsiders might have expected the three to have liaised over relations with England. How might they handle any divergence in the scientific consensus? How might they learn from different forms of lockdown? I was told that Scotland’s Sturgeon, Northern Ireland’s Foster and Wales’s Drakeford barely ever exchanged a word, let alone an attempt to co-ordinate policy.
The only movement of any sort down this road had previously come from Wales. In 2014 its then first minister, Carwyn Jones, proposed a four-nation constitutional convention specifically to discuss federalism. This progressed nowhere. Scotland’s government was interested only in independence, while Northern Ireland had its own problems. In 2021 Jones’s successor, Mark Drakeford, repeated the call. He dismissed talk of independence as ‘a slogan not a solution’ and repeated Jones’s argument that existing forms of devolution, however extensive, were not ‘proper federalism’. To him the word implied ‘a constitution in which power is not devolved to regions by a still all-powerful central legislature, but rather a system in which power is shared out by a constitution over which no single institution has unilateral control’. It should have been music to Scotland’s ears. Still it did not progress.
Such a constitution – it has been termed ‘radical federalism’ – is admittedly hard to imagine in a British context, given the sovereignty embedded in Westminster’s unwritten custom and practice. From Burke to Bagehot to Dicey, this sovereignty is rooted in longevity, as it is in the English public’s contentment with it. For 85 per cent of British subjects, that constitution is unlikely to budge.
The only new element in the debate is that fact that British politics is passing through a period of uncertainty. The American Edelman Trust Barometer of OECD countries puts the British public’s trust in its political institutions at a remarkable twenty-seventh out of twenty-eight, above only Putin’s Russia. An extraordinary 90 per cent of British adults say they distrust politicians, an all-time low and clearly reflected in the Brexit vote. To this public opinion, the UK’s ‘soft’ federalism appears to have no answer.
A movement in favour of radical federalism emerged within the Labour Party in the 2010s. It recognised Jones’s argument that the periodical granting of powers by Westminster to devolved assemblies does not amount to constitutional partnership. The radicals stipulated one monarchy, one citizenship, one currency, one welfare regime, one defence force and hopefully joint membership of Europe’s collective economic area. Apart from that, it proposed home rule for all. But the radicals still found it hard to decide how far to go, such as on the precise functions of the national assemblies and the fundamental question of the allocation of collective resources.
Devolution needs constant discussion. It requires the agency of a standing commission, gauging progress towards self-sufficiency and advising on appropriate tiers of accountability. At the very least there needs to be a decision on the composition and powers of a new ‘English’ House of Commons and of a new upper chamber, the latter perhaps the formal embodiment of the kingdom’s unity. There is no way such basic constitutional issues can be dodged. Most other countries in Europe have been over this ground for decades, even centuries. There is no panacea. There are ongoing conflicts, of Catalonia with Spain and of Flanders with Brussels. Federalism is a process, seldom a destination. The tendency of every modern state is to centralise power. The purpose of federalism is to discipline that tendency, bluntly, to resist it.
All the models discussed above portray a British Isles that uncannily reflects the same division with which this book opened, between Britain’s eastern half and its west. That division may or may not be embedded in the prehistoric origins of the British people. It has been the cause of many conflicts and much misery and it lives on in the parties to the federal debate, again mostly of the east and the west. But there is no reason why such a division should be seen as such. There is no reason why the Welsh and the Scots should view the English with such frequent disfavour. There is every reason for a so-called ‘united’ kingdom to be refashioned as a stable, contented and prosperous economy, one that can disperse its wealth more fairly round its shores than it has over the past half century.
I do not believe that the reunion of Ireland and the loss of Scotland would be catastrophic to England. The reunion of Ireland would be a historic redemption. The loss of Wales is barely conceivable. The departure of Scotland would be desperately sad, if only because it would mean that London had failed to restore Scotland’s former economic health sufficiently to make devo-max work. Besides, a new nation of ‘England and Wales’ would have a strange hollowness to it.
The brute reality is that these substantive European countries, long subordinate to England, have grown relatively and inexcusably poor. Their revived prosperity is crucial to their self-respect and to the wider economy of an England currently having to spend ever more on subsidising them. I believe the diverse peoples of the British Isles have no real wish to see their collective identity disintegrate, just as I believe they will one day wish to forge a new, closer relationship with the rest of Europe. But the solution lies with England. England, as always, holds the power and must take the initiative.