Scotland: Time to say goodbye?

Allan Little introduces our special report on Scotland with a look back at history, empire and Thatc

I once attended a service at St Andrew's Scots Memorial Church just outside the old city walls in Jerusalem. The sermon was given by a Palestinian Christian who'd been ordained in the Presbyterian tradition. Even now when I think of it, years later, it astonishes me. Its subject was St Andrew himself and why both the Scots and the Palestinians felt such an affinity with him. Andrew was the brother of Peter, the minister reminded us, and there were no doubts about the apostolic pecking order: Peter was the senior partner. Peter fished by net, winning whole shoals of humanity into the early Church; Andrew was a line fisherman, content to save souls one by one. Andrew, he said (I'm not making this up), was like the Scots, content to live in the shadow of a more significant partner, the Patron Saint of Second-Best.

Jerusalem is a long way to go for a lecture on your nation's inadequacies. But the preacher had a point. Scots of my age remember the failed devolution referendum of 1979: I was 19, voting for the first time. The next day the Herald newspaper ran a cartoon of the lion of Scotland, no longer rampant but cringing in a corner, above a caption that read: "I'm feart."

Are we still feart? I don't think Scotland is any more nationalistic than it was in the Seventies; it is certainly far less inward-looking than it was. It is not the rise of a new, self-confident Scottish identity that is the threat to the Union. It is the steady decline, in Scotland, of a convincing Britishness; a slow falling away of a consensus on what being British really means.

"It's ridiculous," an English colleague said the other day, on his return from a trip to Scotland. "The SNP don't even want real independence! They want to keep the pound! They want to keep the Queen!" True. They want an independent Scotland to stick with sterling until the country is ready to join the eurozone. They also want Scotland to be a constitutional monarchy. The SNP is a different beast from the one that Alex Salmond was expelled from in the early Eighties.

I grew up in Galloway, the remote south-west corner that juts into the Irish Sea. Surrounded by water and separated from the rest of the country by a stretch of unfarmable rocky moorland, it felt like an island. Galloway was Covenanting country. As children, we were taken to see the tomb of the 17th-century martyrs Margaret McLachlan and Margaret Wilson. They were sentenced to death by drowning for refusing to renounce their Presbyterian faith, at a time when the king was trying to impose, from London, a detested High Church Episcopalianism. They were tied to stakes on the sands of the Solway Firth, where the tide comes in at the speed of a galloping horse. McLachlan, who was in her sixties, was placed further out so that Wilson, a teenager, would have to watch her being overwhelmed by the sea, to encourage her to recant. Both women drowned - martyrs, we were taught, against the imposition of alien philosophies from down south.

In 1974, Galloway returned a Scottish Nationalist MP to Westminster. I remember the shock. Every public space was plastered with the slogan: "It's Scotland's Oil." My parents, who'd lived in England and liked it, hated the xenophobic tone. We never cheered for England's opponents in football. When my father went to work in England in the Sixties he found it more diverse and tolerant, certainly more confident and meritocratic than the society he'd grown up in. I would experience the same thing 25 years later when I moved to England.

Wounded disbelief

The SNP in the Seventies seemed to me blinded by a romantic delusion: backward-looking, heritage-based, fixated on an unpleasantly ethnic sense of what Scotland was. It was as hostile to the European Community as it was to the British Union. This really was a separatist party in the full-blooded sense of the term. Years later, Salmond and the other "modernisers" finally got control of the SNP and turned it into a more modern, European social-democratic party, purging it of the anti-English sentiment that so many Scots detested and feared. Salmond is a hard man to like, but he redefined Scottish nationalism. My colleague Andrew Marr calls it "internationalist nationalism". When "Independence in Europe" became the party's prevailing appeal, it seemed, suddenly, hardly "separatist" at all. This is a very odd kind of nationalist party. The independence it wants doesn't really amount to "separation" at all, at least not in the Seventies sense. That, to those who love the Union, makes it all the more dangerous.

It is not only Scotland that has changed, but Britain. In the Eighties, I often found an unpleasant pattern emerging when I argued about Scotland with English friends. A typical reaction came in two phases. The first was wounded disbelief: how could you treat us this way after all we've done for you? That would be followed by a petulant defiance: go then - we don't care (subtext: you'll soon come crying back). Now, English friends no longer seem hurt; they're more likely to be bored or irritated by the endless indecision. In the Eighties, too, Scots complained of the "democratic deficit". Opinion polls showed that the English sympathised with this, and support for Scottish devolution was sometimes higher in England than it was in Scotland. The English could see no harm in it if that was what the Scots wanted.

But they see harm in it now. Dilettante fellow Scots beware: one of the stereotypes of the English character is that they really do care about fair play. And there is a growing sense that the current settlement is not fair. It's not just the West Lothian question. Why, when the UK Treasury pays the bill north as well as south of the border, should nurses in Scotland get their pay rise immediately while their counterparts in England and Wales have to wait till November? Whatever the rights and wrongs, a sense of unfairness is taking hold in England. It seems that the risk for the Union has shifted: the Scots may not be any more ready to vote for independence, but if they're not careful they might be "pit oot". Increasingly, the rest of the UK wants us to put up or shut up.

A trip the other day to my local independent bookshop in south London was revealing. The bookseller is a cultivated man. I told him I was making a radio programme about 1707. "1707?" he said. "War with France?" The Union, I said. Treaty of Union. "Sorry, still not with you." It has genuinely surprised me how little hold this date has on the popular consciousness in England. Is there another country in Europe whose people don't know the date when their state was created? If dates were celebrities in Scotland, this one would be top of the bill, a bigger star by far than 1066. By the end of primary school, we had learned that it was the year our country had decided to abolish itself.

My wife and I have a home in a part of Edinburgh where the Union is celebrated in the elegant architectural proportions of the Enlightenment. Every street is a hymn to the twin virtues of liberty and commerce that the Union bestowed on Scotland: Rose and Thistle Streets symbolically adjacent; George Street intersecting with Hanover and Frederick, in celebration of the dynasty whose future the Union was designed to secure (although there is a seditious nod at Scotland's dark past, too: Great Stuart Street lurks just down the hill). There was even an early plan to lay out the streets of Edinburgh New Town in the shape of the Union Flag (it was abandoned because it made some of the drawing rooms in the centre blocks triangular). It is 18th-century Edinburgh's magnificent gesture of gratitude.

And Scotland had a lot to be grateful for. When England and Scotland ceased to exist and became Great Britain on 1 May 1707, the Scots gained access to what was becoming the world's greatest trading empire. Glasgow grew rich on tob acco and sugar. Industry would soon follow trade in the crashing turmoil of the Clyde shipyards and steel mills. Within a generation, Scots knew that they had traded sovereignty for something much more valuable: prosperity.

Pride of empire

When I was a child, our family home was a solid brick-built Edwardian house that had a name, rather than a street number. It was called Rhodesia. The house next door was Transvaal. They'd been built by a man who had come home after a life lived in the service of empire. We learned to identify parts of the world where we had cousins we never expected to meet: Pietermaritzburg, Nova Scotia, Dunedin, Melbourne. My mother, whose maiden name is Clive, told us we were descended from Robert Clive of India. Thus was our country, Scotland, even our tiny remote corner of it, plugged into the entire world through the blessing of the British empire, which we Scots almost alone had built, not through our money (we'd had none of that), but through our genius and good Protestant discipline.

Except it wasn't. Empire was long gone by the time I was a child. The Commonwealth was what people meant when they said Empire, but even this was losing its potency. Britain had thrown its lot in with the Europeans under Edward Heath. Generation by generation during the 20th century, the Union was valued for something different. For my grandparents, it was the empire. For my parents' generation, it was the war against the Nazis.

My generation were children of a different, but equally coherent, Britain: the postwar welfare state and the NHS. The British state promised to look after you from cradle to grave. The strategic industries belonged to the British nation: the National Coal Board, British Steel, British Rail. The Post Office installed your phone. The British state sent you the gas you cooked with and the electricity that lit your home. And Scottish Nationalists wanted to disentangle all that!

It was in the Eighties that things started to get sticky, because someone did disentangle all that. Margaret Thatcher swept away the postwar consensus. She transformed the economic topography. The market is now open and global. The company that lights my home isn't even British. In rolling back the frontiers of the state, the Thatcher revolution had an unintended consequence: it also rolled back the frontiers of British sentiment in Scotland.

But Scotland never had an indigenous That cherite revolution. For a decade, England voted enthusiastically for the change that she offered; Scotland resisted it. Until the mid-Seventies, there was little difference between the ways people voted north and south of the border. After that, voting behaviour started to diverge until, by the Nine ties, the divergence was extreme. That was highly corrosive for the Union. Its place in the popular imagination shifted. It was no longer a beneficial partnership, but an in strument of English control, a means by which England imposed on Scotland changes that had been rejected at the ballot box.

Elephant in the room

It is time to acknowledge the elephant in the room. Scotland spends £11bn more a year in public money than it contributes in taxation. The unionist parties argue that that means an independent Scotland would have a huge hole in its budget. Although some high-profile entrepreneurs support independence, business leaders for the most part fear that an independent Scotland would have to raise taxes, causing a flight of industry and capital. The SNP says this £11bn figure doesn't include oil revenues (which the UK Treasury does not count in Scotland's total fiscal contribution) and argues that in the short term the North Sea would fill the hole. In the long term, the party also says, Scotland would have control of its own destiny and would be able to implement growth-promoting policies that aren't currently available to the devolved Scottish Executive.

More and more, this argument is taking place in a European, not a British, context. I went to Finland last year to make a film. The similarities were compelling: it is a nation of about four million people on the geographical periphery of Europe; it has a larger, more powerful neighbour with whom it was once joined in a union. But it doesn't have an £11bn hole in its budget. Unlike Scotland, Finland can pay its own bills. How?

In 1991, when the Soviet Union collapsed, the Finnish economy went into free fall, shrinking at a rate of 10 per cent a month. Finland's new government took drastic action to restructure the economy. Classically, things got worse before they got better. In little more than a decade, Finland found itself near the top of world league tables. Would this have been possible if it had not had control of its economic policy? A businessman who runs one of the world's biggest internet security firms told me: "When I started in the late Eighties, Nokia was still making rubber boots. Our economy was based on wood pulp. We rent ed a small office in New York so we could claim that as our head office, even though our workforce was in Helsinki. We thought no one would take a Finnish high-tech company seriously."

Of the 27 EU states, about half (including Finland) have populations smaller than Scotland's. So, if Finland can pay its own bills and if Ireland can pay its own bills, why can't we? The danger for the Union is this: if its defence rests on a fear of losing an £11bn subsidy, then it has turned Scotland into something anachronistic in a Europe that aspires to be the most competitive economic space in the world - one big national dependency culture. Perhaps the Palestinian preacher was right. The danger is the poverty of aspiration that lies at the heart of this argument.

Years spent reporting the war in the former Yugoslavia have left me with a distrust of national sentiment. I have seen its dark power. And there is nothing like a bit of distance to dull the senses. "Look I am looking at my sweet/Country enough to break my heart," wrote the Scots poet W S Graham. Fine - but he lived in Cornwall. I am emphatically a Scotsman, but I fear I am too sceptical to be seduced by poetical pat riotism. For those who want the Union to survive, there is a real long-term danger. If Britain is reduced to not much more than a community of sentiment and a big subsidy flowing south to north each year, it could wither on the vine. For most of its 300 years, until recently, it has meant something more inspiring than that.

Allan Little is the BBC's foreign affairs correspondent. "1707: the birth of Britain" will be broadcast on Radio 4 and Radio Scotland on Sunday 1 April at 5pm