Scotland’s independence referendum is a complex decision for Scots; but if they do vote yes, the whole of the UK will face still more complex decisions over how to divvie up the country’s assets and liabilities. Agreeing the fate of the Faslane Trident base and highly-integrated organisations such as the armed forces and diplomatic service will be difficult; finding common ground on sterling and the national debt looks close to impossible.
The three main UK-wide parties have all said they won’t share the pound; and given the lessons of the euro crisis, this must be right. Squeezing different economies into a single currency without creating political union creates a frail and unstable structure. Bond markets know this, and would price a shared sterling accordingly; and if a union brought together an austere Westminster and a higher-spending Scottish government, the rump UK would be subsidising the interest rates and underwriting the debts of an ostensibly-independent Scotland.
The SNP argues that Westminster’s politicians are simply trying to scare voters, but there’s a way to make clear that the decision is final: the coalition could find parliamentary time (one asset currently in generous supply) to pass a law guaranteeing voters in England, Wales and Northern Ireland a referendum on any decision to share a currency. The political obstacle created by such a law should pretty much guarantee that the currencies will remain separate, just as the coalition’s 2011 European Union Act – which promises a referendum on any transfers of power to the EU – presents a highly effective barrier to future administrations. Such a law would also level the democratic playing field; for if the Scots are entitled to a vote on independence, the rest of the UK must be owed a say on such a substantial point of continuing interdependence.
Assuming the UK government sticks to its guns on currency union, the SNP may be tempted to walk away from the national debt. Whilst this would be a better result for the rump UK than a shared pound – the known costs of a bigger debt would scare bond markets less than the unknown risks of a currency union – it’s easy to see how the negotiations could get bad-tempered, and the outcome leave both sides feeling aggrieved. The two states’ new relationship could well have an inauspicious beginning, with one side feeling robbed of a currency it helped create and the other lumbered with debts it didn’t rack up.
Coming to agreement would be trickier still if the general election results in a narrow Labour majority or a Lib-Lab coalition – for Labour has 41 Scottish MPs, and such a government would fall as soon as independence removed them from the Commons.
For Westminster civil servants, there’s one further complexity here. As Jeremy Heywood explains, ministers have barred officials from doing any contingency planning – for either a yes or a no vote. Ministers apparently fear that widespread preparations for an SNP victory would suggest the coalition anticipates losing the poll, bolstering the nationalist vote.
Despite the governnment’s stance, the departments are no doubt quietly assessing their positions; and ministers have probably authorised some discrete planning. But without a substantial, cross-departmental effort to examine all the options and their consequences, Whitehall would be at a disadvantage against a Scottish government that’s spent years pondering its negotiating strategy. The bar on contingency planning may be clever politics, but it is bad government.
If the Scots Nats do win, says Heywood, Whitehall will have “whatever time is needed”. But the SNP will have a tight schedule – they want to celebrate independence day on 24 March 2016 – and a democratic mandate, making it difficult for the coalition to stall for time.
A yes vote, then, would precipitate negotiations in which very difficult and painful decisions must be made; passions run high on both sides; one side is – at least officially – totally unprepared; and there is great time pressure. The looming general election would add uncertainty, and might create a parlous Labour administration faced with negotiating itself out of existence. All in all, this is a recipe for poor decisions.
What’s more, these are decisions made still more weighty by their finality. Most bad laws can be unpicked, but the structures and settlements forged in these negotiations would be enshrined in the laws of two countries. There would be little prospect of rethinking them soon: any new negotiations would have to wait until the scars of battle had healed.
As Heywood explains, “the government is confident it’s going to win the argument”. But if Scots defy the pollsters and vote for independence, the UK civil service will face a daunting prospect. Whatever your views on the cultural, emotional, democratic and historical arguments around independence, the practical difficulties of making it work would be immense. That unenviable task would fall to civil servants and the government of the day. And at that point, the plan to not have a plan might not look like such clever politics after all.
Matt Ross is editor of Civil Service World.