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22 December 2011

Who will lead the campaign to save the Union?

Gus O'Donnell is right to warn that the future of the UK is an "enormous challenge".

By George Eaton

In a valedictory article for today’s Telegraph, Gus O’Donnell, the outgoing head of the civil service, warns that the question of “whether to keep our kingdom united” will be an “enormous challenge”. It may seem like an obvious statement but it is also a necessary one. Far too few in Westminster have considered what an independent Scotland would mean for England.

We all know who will lead the Yes campaign – Alex Salmond – but who will lead the No campaign? Not David Cameron, whose party holds just one seat in Scotland (the country has more giant pandas than Tory MPs). Canny as ever, Salmond will wait until the Tories are at their most unpopular before calling a referendum.

One option floated by some in Labour is for Gordon Brown, who retains immense respect in Scotland, to return to lead the charge against independence. Only the former prime minister, they say, would have the gravitas required to take on Salmond. But this discussion is taking place in far too narrow a circle. The threat of Scottish independence, which would deprive Labour of 42 of its 258 Westminster seats in a single stroke, should be near the top of Ed Miliband’s in-tray.

At the very least, it is likely that Scotland will win full fiscal autonomy within the next five years. As Salmond has said, the referendum ballot paper will contain two questions: the first on full independence and the second on “devolution max” or fiscal autonomy. While the Scottish public remains divided over independence, there has long been a majority in favour of devo max.

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Scotland would win complete control over spending, borrowing and taxation, leaving Westminster in charge of only foreign affairs and defence – a degree of autonomy comparable to that enjoyed in Spain by the Basque Country and Catalonia. The economic relationship between England and Scotland would be profoundly altered. What, for instance, would be the consequences for English business of Scotland adopting an ultra-low rate of corporation tax? If judged successful, would fiscal autonomy be extended to England and Wales?

O’Donnell’s article is a salutary reminder that these discussions need to be had now.

Update: Salmond has responded to O’Donnell’s comments:

I have always regarded Sir Gus O’Donnell as a model civil servant, who has been extremely fair in recognising and respecting the democratic mandate of the Scottish Government.

Sir Gus is right to recognise the importance of the constitutional issue, and the SNP Government are up for the challenge