What would an independent Scotland look like?

I want to imagine that independence could be a success - but grubby, difficult questions about money, jobs and services are not going away.

I want to imagine a world where Scottish Independence is not the disaster some think it will be. I want to imagine a world where it is a success.

Imagine that Scotland enters a phase of unprecedented economic growth, spurred on by the oil revenues that have been diverted from it for all these years. Coupled with the lowest corporation taxes in Europe, the Scottish economy is thrumming along with luxurious healthcare, free education up to and beyond graduate level, a supportive welfare state and pensions that are the envy of the world. Tax revenues from oil and corporation tax help the budget deficit stay in check. Even though there is a heavy dependency on the oil price, the markets give Scotland the benefit of the doubt – the sovereign credit rating of Scottish government debt is higher than the UK and their government bond yields trade well below that of the UK gilt market.

Meanwhile, in England and the rest of the United Kingdom, the government badly miscalculated the benefits Scotland brought to the Union. Bereft of trade and oil revenues the provision of local and national services has gone into a rapid generational decline. Taxes are high for individuals and businesses in a vain attempt to balance the budget, which is continuing to rise to record levels, while the cuts to government spending only serve to exaggerate the decline.

People and businesses have been voting with their feet for some time now. Migration from the once prosperous South of England is increasing at an alarming rate; both businesses and the most talented people are leaving in their droves, sending English property prices, which peaked just before the referendum in 2014 into a long-term secular decline. Meanwhile, Scottish property prices continue to make new highs each month. This is causing problems not least of which is the increase in inequality of wealth distribution in Scotland as house building can’t keep pace with the growing population.

The Scottish government is struggling to control the effects of house price appreciation because it has retained the pound and tied itself to UK interest rates. Much as Hong Kong experienced when tied to the US dollar and it had US interest rates and Chinese growth rates, Scotland now has a high growth rate and generationally low interest rates. Inflation differentials are rising between Scotland and the UK; inflationary Scotland habitually has a cost of living much higher than the deflationary UK. Broad money supply is growing at an uncontrollable rate. There are concerns over Scotland’s financial institutions. There are dark mutterings about the “Darian Scheme” – the financial disaster that drove Scotland into the arms of the English in 1707.

At the same time South of England immigration is having a profound impact on the political landscape; the history of Scottish voting patterns since the Second World War shows that Scotland hasn’t always been a centre-left country as some assume. There was a time when it was split 50/50 between Labour and the Conservatives (see graph). The latent conservatism of Scotland has now been unleashed mainly because it is dissociated from English conservatism but also because the new immigrants have a tendency not to vote for Labour or Scottish Nationalists. Scotland has become Conservative while the UK, because of its problems, now habitually votes Labour, a reversal of the pre-referendum status quo.

Scotland had been exporting some 30,000 people annually until the late 1980s. However, this tailed off and as the referendum approached Scotland had already become a net importer of people. Official estimates of population growth had already expected the Scottish population to rise above 6m in the years following the referendum. But global recognition that “Scotland has done something right” has led to an influx of Scottish talent that left the country in the thirty years prior to the referendum. First and second generation Scots have returned and converted their nationality from Australian, Canadian, New Zealand and US back into Scottish passport holders, further pressurising housing shortages and claims on the state. Scotland population swells from 5.3m in to nearly 8m in just fifteen years...

It’s quite good fun to do this; to go into a world of utopian Scotland and a dystopian UK, and one could go on for some considerable time. We haven’t even imagined a Scottish financial system (would it cheapen the argument to be the first to call for the Scottish stock market index to be called the SNP500 or their government bonds Scottish Guilts?) But what does emerge is that if you think independence can be seen merely as an exercise in democratic extension, that it isn’t about grubby things like money and jobs and services, then you should think again. A fully independent Scotland will have profound effects on the very nature of Scotland for generations to come, not all of which were obvious at first sight or, ultimately, a price worth paying.

The headquarters of the Yes campaign in Glasgow. Photograph: Getty Images.

Head of Fixed Income and Macro, Old Mutual Global Investors

Getty Images.
Show Hide image

Live blog: Jeremy Corbyn hit by shadow cabinet revolt

Shadow health secretary Heidi Alexander and Gloria De Piero resign following the sacking of Hilary Benn. 

11:21 Shadow Scotland secretary Ian Murray (see 09:11) and shadow transport secretary Lillian Greenwood are expected to be the next to resign. 

11:11 Shadow minister for young people Gloria De Piero has become the latest to resign. It's worth noting that De Piero is a close ally of Tom Watson (she's married to his aide James Robinson). Many will see this as a sign that the coup has the tacit approval of Watson (who is currently en route from Glastonbury). 

De Piero wrote in her resignation letter to Corbyn: "I have always enjoyed a warm personal relationship with you and I want to thank you for the opportunity to serve in your shadow cabinet. I accepted that invitation because I thought it was right to support you in your attempt to achieve the Labour victory the country so badly needs.

"I do not believe you can deliver that victory at a general election, which may take place in a matter of months. I have been contacted by many of my members this weekend and It is clear that a good number of them share that view and have lost faith in your leadership.”

10:58 Shadow defence secretary Emily Thornberry has backed Corbyn, telling Michael Crick that "of course" she has confidence in his leadership. She is the fourth shadow cabinet minister to back Corbyn (along with McDonnell, Abbott and Trickett). 

10:52 Our Staggers editor Julia Rampen has written up Benn and McDonnell's TV appearances. 

"Two different visions for the Labour Party's future clashed today on primetime TV. Hours after being sacked from the shadow cabinet, Corbyn critic Hilary Benn was on the Andrew Marr Show ruling himself out of a leadership challenge. However, he issued a not-so-coded cry for revolt as he urged others to "do the right thing" for the party. Moments later, shadowhancellor John McDonnell sought to quell rumours of a coup by telling Andrew Neil Jeremy was "not going anywhere". He reminded any shadow ministers watching of the grassroots support Labour has enjoyed under Corbyn and the public petition urging them to back their leader."

10:46 Asked to comment, Tony Blair told the BBC: "I think this is for the PLP. I don't think it's right for me or helpful to intervene." 

10:38 On the leadership, it's worth noting that while Corbyn would need 50 MP/MEP nominations to make the ballot (were he not on automatically), an alternative left-wing candidate would only need 37 (15 per cent of the total). 

10:27 Jon Trickett, one of just three shadow cabinet Corbynites, has tweeted: "200,000 people already signed the petition in solidarity with the leadership. I stand with our party membership." 

10:14 McDonnell has told the BBC's Andrew Neil: "I will never stand for the leadership of the Labour Party". He confirmed that this would remain the case if Corbyn resigned. McDonnell, who stood unsuccessfully for the Labour leadership in 2007 and 2010 (failing to make the ballot), added that if Corbyn was forced to fitght another election he would "chair his campaign".  

10:12 Tom Watson is returning from Glastonbury to London. He's been spotted at Castle Cary train station. 

10:07 A spokesman for John McDonnell has told me that it's "not true" that Seema Malhotra, the shadow chief secretary to the Treasury, is canvassing MPs on his behalf. Labour figures have long believed that the shadow chancellor and former Labour leadership contender has ambitions to succeed Corbyn. 

09:51 Appearing on the Marr Show, Hilary Benn has just announced that he will not stand for the Labour leadership. "I am not going to be a candidate for leader of the Labour Party." Tom Watson, Angela Eagle and Dan Jarvis are those most commonly cited by Corbyn's opponents as alternative leaders. 

09:46 Should Corbyn refuse to resign, Labour MPs are considering electing an independent PLP leader, an option first floated by Joe Haines, Harold Wilson's former press secretary, in the New Statesman. He argued that as the representatives of the party's 9.35 million voters, their mandate trumped Corbyn's.

09:38 Here's Stephen on the issue of whether Corbyn could form a shadow cabinet after the revolt. "A lot of chatter about whether Corbyn could replace 10 of his shadow cabinet. He couldn't, but a real question of whether he'd need to. Could get by with a frontbench of 18 to 20. There's no particular need to man-mark the government - Corbyn has already created a series of jobs without shadows, like Gloria De Piero's shadow minister for young people and voter registration. That might, in many ways, be more stable." 

09:32 Despite the revolt, there is no sign of Corbyn backing down. A spokesman said: "There will be no resignation from the elected leader of the party with a strong mandate".

09:11 Shadow Scotland secretary Ian Murray is one of those expected to resign. As Labour's only Scottish MP, the post would have to be filled by an MP south of the border or a peer. 

09:01 Diane Abbott, Corbyn's long-standing ally, has been promised the post of shadow foreign secretary, a Labour source has told me. 

The shadow international developmnent secretary is one of just three Corbyn supporters in the shadow cabinet (along with John McDonnell and Jon Trickett). Though 36 MPs nominated him for the leadership, only 14 current members went on to vote for him. It is this that explains why Corbyn is fighting the rebellion. He never had his MPs' support to begin with and is confident he retains the support of party activists (as all polls have suggested). 

But the weakness of his standing among the PLP means some hope he could yet be kept off the ballot in any new contest. Under Labour's rules, 50 MP/MEP nominations (20 per cent of the total) are required. 

08:52 Welsh First Minister Carwyn Jones has joined the revolt, telling BBC Radio Wales that events make it "very difficult" for Corbyn to lead Labour into the next election. 

08:50 Tom Watson, a pivotal figure who Labour MPs have long believed could determine the success of any coup attempt is currently at Glastonbury. 

08:26 Following Hilary Benn's 1am sacking, Jeremy Corbyn will face shadow cabinet resignations this morning. Shadow health secretary Heidi Alexander has become the first to depart.

The New Statesman will cover all the latest developments here. John McDonnell, Corbyn's closest ally, is appearing on The Andrew Marr Show at 9:45.

"This is the trigger. Jeremy's called our bluff," a shadow cabinet minister told me. He added that he expected to joined by a "significant number" of colleagues. The BBC's Laura Kuenssberg has reported that half of the 30 will resign this morning. 

Corbyn is set to face a vote of no confidence from Labour MPs on Tuesday followed by a leadership challenge. But his allies say he will not resign and are confident that he will make the ballot either automatically (as legal advice has suggested) or by winning the requisite 50 MP/MEP nominations. 

George Eaton is political editor of the New Statesman.