Why Cameron's Scotland plan has rattled the SNP

The PM has called Salmond's bluff by demanding an independence referendum sooner rather than later.

Ever since the Scottish National Party's remarkable victory last May, Westminster has been in a state of shock, unsure how to proceed. But now, finally, David Cameron, determined not be remembered as the man who lost the Union, has resolved on a course of action. He will allow the SNP to stage its own binding referendum on independence on the condition that it is held in the next 18 months (any referendum after this date will be advisory, as it would always would have been) and that it offers a straight yes/no question on Scottish secession.

Cameron's move upsets Salmond's plans in several respects. The First Minister has long intended to hold a referendum in the second half of the Scottish parliament, perhaps in 2014 on the 700th anniversary of the Battle of Bannockburn, when he believes that discontent with the Tory-led government will be at its height. In addition, he planned for the ballot paper to feature two questions, one on independence and one on full fiscal autonomy or "devolution max". Aware that there may not be a majority for the former, the SNP leader is eyeing the consolation prize of "devo max", a stepping stone to full independence. But Cameron is determined to deny Salmond these two advantages. To add authority to his stance, he will publish a consultation paper later this week revealing legal advice that the referendum will only be binding if both parliaments agree to its timing and wording.

There is, of course, a risk that all this could backfire. Cameron's intervention could be seen as an attempt by the Tories - not a popular breed in Scotland - to hijack a referendum that the SNP has an electoral mandate to hold. It was an argument made at length by Nicola Sturgeon, Salmond's deputy, on the Today programme this morning. But, as she conceded, there is a potential contradiction in the SNP's stance. It maintains both that Cameron has no right to dictate the terms of the referendum and that his move will backfire. But if Cameron's move will backfire why is the Scottish government so opposed to it? The answer, as Sturgeon will not say, is that the SNP is not convinced there will be a majority for independence in the next 18 months (or ever) and, consequently, is determined to reserve the option of devolution max. Yes, some Scottish voters will resent Cameron's intervention but others will ask, "why doesn't Salmond want an early referendum? What's the big feartie afraid of?"

Set against this must be the disorganisation of the pro-Union side (who will lead the No campaign?) but Cameron has called Salmond's bluff and the initiative, for the first time in months, is with him.

George Eaton is political editor of the New Statesman.

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How the Conservatives lost the argument over austerity

After repeatedly missing their deficit targets, the Tories can no longer present spending cuts as essential.

“The age of irresponsibility is giving way to the age of austerity,” declared David Cameron at the Conservatives' 2009 spring conference. Fear of spending cuts helped deny his party a majority a year later, but by 2015 the Tories claimed vindication. By framing austerity as unavoidable, they had trapped Labour in a political no man's land. Though voters did not relish cuts, polling consistently showed that they regarded them as necessary.

But only two years later, it is the Conservatives who appear trapped. An austerity-weary electorate has deprived them of their majority and the argument for fiscal restraint is growing weaker by the day. If cuts are the supposed rule, then the £1bn gifted to the Democratic Unionist Party is the most glaring exception. Michael Fallon, the Defence Secretary, sought to justify this largesse as "investment" into "the infrastructure of Northern Ireland" from "which everybody will benefit" – a classic Keynesian argument. But this did not, he hastened to add, mean the end of austerity: "Austerity is never over until we clear the deficit."

Britain's deficit (which peaked at £153bn in 2009-10) was the original and pre-eminent justification for cuts. Unless borrowing was largely eliminated by 2015, George Osborne warned, Britain's public finances would become unsustainable. But as time has passed, this argument has become progressively weaker. The UK has cumulatively borrowed £200bn more than promised by Osborne, yet apocalypse has been averted. With its low borrowing costs, an independent currency and a lender of last resort (the Bank of England), the UK is able to tolerate consistent deficits (borrowing stood at £46.6bn in 2016-17).

In defiance of all this, Osborne vowed to achieve a budget surplus by 2019-20 (a goal achieved by the UK in just 12 years since 1948). The Tories made the target in the knowledge that promised tax cuts and spending increases would make it almost impossible to attain – but it was a political weapon with which to wound Labour.

Brexit, however, forced the Conservatives to disarm. Mindful of the economic instability to come, Philip Hammond postponed the surplus target to 2025 (15 years after Osborne's original goal). Britain's past and future borrowing levels mean the deficit has lost its political potency.

In these circumstances, it is unsurprising that voters are increasingly inclined to look for full-scale alternatives. Labour has remade itself as an unambiguously anti-austerity party and Britain's public realm is frayed from seven years of cuts: overburdened schools and hospitals, dilapidated infrastructure, potholed roads, uncollected bins.

Through a shift in rhetoric, Theresa May acknowledged voters' weariness with austerity but her policies did not match. Though the pace of cuts was slowed, signature measures such as the public sector pay cap and the freeze in working-age benefits endured. May's cold insistence to an underpaid nurse that there was no "magic money tree" exemplified the Tories' predicament.

In his recent Mansion House speech, Philip Hammond conceded that voters were impatient "after seven years of hard slog” but vowed to "make anew the case" for austerity. But other Tories believe they need to stop fighting a losing battle. The Conservatives' historic strength has been their adaptability. Depending on circumstance, they have been Europhile and Eurosceptic, statist and laissez-faire, isolationist and interventionist. If the Tories are to retain power, yet another metamorphosis may be needed: from austerity to stimulus.

George Eaton is political editor of the New Statesman.

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