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Momentous: Scottish Referendum will have far reaching ramifications

Momentous: Scottish Referendum will have far reaching ramifications

🕔15.Sep 2014

In the first part of our feature on this week’s Scottish referendum, chief blogger Paul Dale looks at the complex consequences that will flow from the simple question being posed to Scots on Thursday. 

Should Scotland be an independent country?

It’s a simple question that deserves a straight-forward yes or no answer.

And in the early hours of Friday September 19th we will know whether the Scottish people have voted to break their ties with Great Britain and go it alone as a separate nation state.

A month or so ago it seemed unlikely that Scottish First Minister Alex Salmond would get his wish for independence, with pollsters reporting a significant lead for the ‘no’ side.

But that changed following the final televised debate between Mr Salmond and former Labour Chancellor Alistair Darling, who is leading the no campaign.

Mr Salmond trounced Mr Darling, and the polls began to edge towards favouring independence, prompting newspaper headlines such as ‘seven days to save the Union’ and the disclosure that the Queen was, apparently, worrying about being Scotland’s last monarch and let slip that she hoped people would “think very carefully” before voting in the referendum.

If there is one profession with every reason to welcome the ‘Scottish Question’, it must be the opinion pollsters who are going head to head in a fight to the wire. Some put the yes side ahead while others put the no side in the lead. All seem to be agreed that it could be too close to call.

Panic is what Westminster does best. And panic we certainly got, with the extraordinary sight of the three party leaders, Cameron, Clegg and Miliband, embarking on a last minute tour of Scotland to promote a “better together” campaign.

Mr Cameron shed a tear and urged Scots not to vote yes in an effort to give the “effing Tories a kicking”. Labour, desperately, brought back John Prescott to campaign for a yes vote. He managed not to hit anyone.

Given all of the heat around this issue it is perhaps unsurprising that Scotland’s business community is divided over the issue, although as the referendum day draws nearer some of the country’s largest banks are making plans in the event of a yes vote.

Edinburgh-based insurer Standard Life, which employs 5,000 people in Scotland, has set up companies in England to ensure that non-Scottish based customers continue to make and receive payments in sterling and be protected by UK regulations. The Royal Bank of Scotland is considering moving its headquarters to London in the event of a yes vote. Lloyds Bank confirmed similar plans.

Bookies William Hill has taken a record £800,000 political bet on a ‘no’ vote, but remains neutral on independence. However, outgoing chief executive Ralph Topping has backed the ‘yes’ side.

Regardless of opinion polls, Betfair.com is certain that independence will be rejected and puts the chances of a ‘no’ vote at 72 per cent.

A suggestion that big companies would simply quit an independent Scotland is firmly rejected by drinks giant Diageo and the supermarket chains Morrisons and Waitrose. Next chief executive Lord Wolfson said independence wouldn’t make any difference to his company.

The world’s biggest investment fund manager Blackrock warned that Mr Salmond’s plan for a currency union was unworkable and would potentially bring risks to both countries. Investment bank Goldman Sachs said it was “difficult to see the rest of the UK agreeing to provide a monetary and financial backstop to Scotland”.

This is momentous stuff. The prospect of Scottish independence is easily the most significant constitutional event to hit these shores for 300 years – as far reaching as the 1911 Parliament Act that asserted the supremacy of the House of Commons over the Lords – and will have ramifications that are only now beginning to be understood.

Regardless of the result, whether it is for or against, something of a domino effect will be set in motion with entirely unpredictable results.

If the Scots vote no, the UK government will breathe a sigh of relief and move quickly to offer ‘Devo Max’, the handing down of yet more devolved powers to the Scottish parliament. The three main parties have accepted a timetable drawn up by former Labour leader Gordon Brown pledging immediate devolution of powers relating to income tax and housing benefit if Scotland rejects independence.

Such an outcome would of course give Mr Salmond a chance to save face by claiming that he had achieved most of what he wanted even without independence.

Devo Max would certainly prompt demands for devolution from English regions, particularly the North-east and North-west who will be gazing enviously at neighbouring Scotland with its additional powers of self-determination and freedom from Whitehall’s spending shackles.

It is, though, the prospect of a ‘yes’ vote that raises numerous questions about what might happen.

Quite apart from the short term chaos triggered by a stock market crash, a flight of capital from Scotland (markets hate uncertainty) and a plummeting pound, discussions will have to start promptly about the future of British armed forces in a foreign country, in particular the Trident nuclear submarine fleet at Faslane, as well as the arrangements for patrolling the new border between Scotland and the UK.

It seems that civil servants do not have contingency plans in the event of a yes vote. Sir Jeremy Heywood, the cabinet secretary, told a Commons committee that the prime minister had specifically vetoed the drawing up of any such plans.

Nevertheless, in practical terms measures to shore up sterling following a vote for independence will be a necessity while arguments over the Scottish currency and whether an independent country can keep the pound, or join the EU and adopt the euro, are likely to be messy and protracted whatever Mr Salmond may have claimed to the contrary.

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