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8 August 2014

Scotland the Brave?

Tag(s): Politics & Economics, History
Last week the 1st of August marked the 300th anniversary of the death of Queen Anne. I saw little to mark this but there should have been something as her reign was distinguished. Through the victories of John Churchill, whom she created Duke of Marlborough, England enjoyed great military success on the continent of Europe. None of her children survived the age of eleven but she secured the Protestant succession through the House of Hanover. But her most momentous achievement was the Act of Union. Like all her Stuart forbears back to her great-grandfather James VI she was both monarch of England and Scotland but she succeeded in uniting the two countries into one Kingdom as it still is today but perhaps for not much longer.

Mary, Queen of Scots, had first proposed union. Then when her son James inherited the English crown in his first address to the English Parliament he also proposed union. He thought it a done deal but the English Parliament wanted to preserve their liberties and not face the kind of absolute monarchy that James enjoyed in Scotland. Later the English Parliament chopped off the head of James’s son Charles and then Oliver Cromwell occupied Scotland and started to create a ‘Godly Britannic‘ Union between the former Kingdoms. In 1651 Parliament sent commissioners to Scotland to secure support for Union which was assented to by the Commissioners in Scotland. In 1654 Cromwell declared himself Lord Protector of England, Scotland and Ireland and enacted ‘one Commonwealth under one Government’. Free trade was brought about amongst the new Commonwealth but little economic benefit was derived from this as Cromwell also raised taxes to pay for his New Model Army.

The republican union was dissolved automatically with the restoration of King Charles II and a petition by the Scottish commissioners expelled from the Parliament for a continuance of the union was unsuccessful. Charles then himself tried to revive it but negotiations between the two sets of Commissioners were unfruitful. After the ‘Glorious Revolution’ of 1688 King William III was keen to revive the union principally out of fear of leaving Scotland open to invasion by France but did not succeed.

Around this time Scotland set out to become a world trading nation and set up its first colony called “Caledonia” on the Isthmus of Panama on the Gulf of Darién. From the beginning the project was handicapped by poor planning and provision, weak leadership, lack of demand for its goods, appalling epidemics of disease and shortage of food.  It fell after only two years to a siege by Spanish forces.

The Darien company was backed by up to half of all the money circulating in Scotland and so many of the population from nobles to tradesmen went bankrupt.  At the time the rest of the Scottish economy was very weak, beset by poor harvests leading to famine, little export trade and an over-reliance on its much greater and richer neighbour England. All of this led to  renewed calls for union with England. The English Treasury helped to stabilise the Scottish currency by fixing the Scottish pound as equivalent to an English shilling. Then with the encouragement of Queen Anne the parliaments of both nations agreed to participate in fresh negotiations for a union treaty in 1705. 31 commissioners were appointed by each side to conduct negotiations, but then as now, the parties were divided on the issue. The Tories were not in favour of union and only one was represented among the commissioners.  Bribery was undoubtedly used and although there were no opinion polls in those days it is thought that as many as three quarters of the Scottish people were against union despite their economic difficulties. In the end the Act was passed in both Parliaments and the Treaty of Union signed in 1707. Under Article 15 of the Act the English Treasury granted £398,085 10s to Scotland to offset liability towards the English national debt, but in fact much of this went to compensate investors in the Darien scheme. I assume Alex Salmond has factored into his plans the need to repay this sum with interest which we could probably calculate as many billions today.

The union between Scotland and England has been among the most successful of its kind in history. The historian Simon Schama said “What began as a hostile merger, would end in a full partnership in the most powerful going concern in the world….it was one of the most astonishing transformations in European history.” Both nations have benefitted. Scots have been conspicuous contributors to the success of their joint venture as soldiers, bankers, inventors, and of course, politicians. At the height of the Empire a remarkably high proportion of colonial governors were Scotsmen. From the beginning there was discontent about being ruled from London but I don’t know that this is very different in Scotland from the other remote regions such as Cornwall, Wales, Northern Ireland and the North of England.

While it took repeated efforts over more than a century to create the Union it seems it could be destroyed in much shorter time. The so-called Nationalists would no doubt argue that they have been agitating for this for decades but I cannot understand how we have reached the point where a couple of millions living in one part of Great Britain can call an end to it while the other fifty millions or more have no say. The trouble seems to have started, as with so much, under Tony Blair’s premiership as he ran fast and loose with the Constitution. As a lawyer he knew its fragility. It is not written down in one document which is both its strength and its weakness. Few nations that do write their constitution down are able to leave it alone for very long before they have to amend it or rewrite it all together. Edinburgh-born Blair quickly wrecked the House of Lords and without much obvious thought devolved several powers to new parliaments in Scotland and Wales. The Midlothian question, i.e. why should a Scottish MP vote on English matters, was never satisfactorily answered. The Scots Nationalists played a clever political game and finally gained an overall majority in the Parliament. Then they persuaded a weak David Cameron to give them a referendum.

A referendum is a dangerous thing. It depends how you put the question. On this occasion the people of Scotland will be asked “Should Scotland be an independent country?” Thus if you want independence you say Yes and if you want the United Kingdom of Great Britain and Northern Ireland to remain as it is you say No. the first is a positive answer and the second is negative. 4.1 million people over the age of 16 and living in Scotland are entitled to vote on this. Say 67% vote and 51% of those vote Yes then just 1.4 million people will have decided to end the United Kingdom.[i] The Tories will find it much easier to win General Elections in the rest of the UK in the future but no Tory Prime Minister would have wanted this to happen on his watch.

The separatists have fought an imaginative campaign which could have been scripted by Lewis Carroll. They say wonderful things. Here are a few:
  • “An independent Scotland would still have the Queen.” Fair enough. The Queen is the Head of State in several countries in the Commonwealth.
  • “An independent Scotland would still have the pound sterling”. All the Westminster parties have said no to this. An independent Scotland could use the pound just as Montenegro uses the Euro or Panama uses the US dollar but it would have no say in how it was managed. It would therefore have no monetary policy and as the rest of the UK economy expanded faster, which it would, then Scotland would find it much as Greece has in the Eurozone.
  • “An independent Scotland would stay as a member state in the European Union”. Not true. As a newly independent country it would have to apply for membership which usually takes several years. Once admitted it would have to sign up to all the conditions under the Treaty of Lisbon and would have none of the opt outs enjoyed by the UK. Crucially this includes a commitment to join the Euro!
  • “An independent Scotland would stay as a member of NATO but would not allow nuclear weapons to stay within its borders”!
  • “An independent Scotland would retain the BBC.” How does that work? The BBC operates under a charter issued by Parliament. It enforces the collection of its license fee by the criminal law of the UK passed by Act of Parliament. Parliament would have no right to do this in a foreign country. The Scottish parliament would have no right to do this over a British institution.
  • “It’s Scotland’s oil”. No it’s not. It’s the United Kingdom’s oil. If some of it becomes Scotland’s oil then Scotland will have the cost of decommissioning it.
This week marked a landmark in the referendum issue as the leaders of both sides of the argument debated head-to-head on Scottish TV. Rob Woodward, CEO of STV, sent me a link so I could watch this online. Unfortunately I could not make it work so only saw highlights on Rest Of UK TV. Apparently the majority of Scottish viewers thought Alistair Darling won the debate. Let’s hope that this continues and the Better Together campaign wins.  If not Britain will be poorer and I fear for Scotland’s future. Just imagine if it had won its independence ten years ago and then had to face the catastrophic collapse of Royal Bank of Scotland and HBOS, both based in Edinburgh. It would have found itself in a far worse situation than Iceland or Ireland when their major banks had crashed. The ratio of those bank balances to domestic GDP was about a factor of five. In the case of Scotland it would have been a factor of twelve, clearly impossible to manage. Scotland may be brave enough to declare itself independent, but I think as Shakespeare put it “Discretion is the better part of valour.”

[i] A reasonable assumption as only 63% voted in the 1979 referendum on devolution. Although a majority voted in favour it was not passed as 40% of the electorate had to have voted in favour and only 32% did. No such condition applies this time, though it’s not clear how independence will actually be granted.
Copyright David C Pearson 2014 All rights reserved

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