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27 November 2013

Scottish independence: Alex Salmond is torn between romance and pragmatism

To win, the "No" campaign must make a positive case for the Union, rather than merely a negative case against independence.

By New Statesman

Alex Salmond’s pitch for Scottish independence could be distilled as: “Everything will change but nothing will change.” In a recent campaign speech, the First Minister recalled the words of Jawaharlal Nehru, the first prime minister of an independent India, as midnight approached on 14 August 1947: “A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance.” But when not moved to rhapsody, Mr Salmond reassures voters that this new nation will look much like the old. It will retain the Queen as its head of state, the pound as its currency and membership of the EU and Nato. The First Minister is torn between presenting independence as a momentous national awakening and as a mere constitutional rebranding.

This contradiction was in evidence again at the launch of the Scottish government’s white paper on independence on 26 November. The SNP promised a significant expansion of free childcare if voters choose to go it alone, yet this matter has long been devolved to Holyrood. When challenged on this, Deputy First Minister Nicola Sturgeon’s dogmatic response was that her party was not prepared to introduce the policy now since the increased tax receipts from parents returning to work would “flow straight to the UK Treasury”.

Should Scotland vote to secede next year, it will need this revenue and more if it is to meet Mr Salmond’s ambitions. The First Minister’s refusal to confront the fiscal challenges that his country would face after independence was the greatest omission at the launch. He promised higher welfare spending, a 3 per cent cut in corporation tax (to be followed by deeper reductions) and a 50 per cent cut in air passenger duty without coming close to explaining how any of this would be paid for.

Were Scotland’s fiscal position comparable to that of the rest of the UK, this would be dubious enough but it is not. Because of the country’s lower birth rate and lower immigration rate, it automatically incurs a larger gap between spending and revenue. As the non-aligned Institute for Fiscal Studies has shown, even in the most optimistic scenario, Scotland would need to raise taxes or cut spending by an additional £2bn (such as through a 6p rise in the basic rate of income tax or an increase in VAT to 25 per cent) to achieve a sustainable debt level. Should oil revenues prove less buoyant and borrowing less cheap than Mr Salmond anticipates, this figure could rise to £9.4bn. His assumption that the rest of the UK would willingly allow Scotland to participate in a currency union (Wales has already pledged to veto the move) is similarly based on wishful thinking.

While dismantling Mr Salmond’s economic assumptions – an odd mix of neoliberalism and high welfare spending – the No campaign must avoid an arid, technocratic appeal that wins heads but not hearts. The SNP’s greatest advantage remains the emotional resonance of the case for independence.

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For this reason, it is incumbent on the No campaign to make a positive case for the Union, rather than merely a negative case against independence. This must include an account of how the current settlement could be reformed to reflect the clear and consistent desire for greater autonomy among the Scottish people. In England, too, there is increasing resentment with the status quo and the inequalities created by devolution.

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The appeal of independence is not hard to discern. Scotland has long suffered from policies imposed on it by Westminster governments that it did not elect and could not remove. An independent Scotland would not have introduced the callous bedroom tax or reduced the top rate of income tax at a time of austerity. Yet the solution lies not in independence but in a reconfigured, more federal Union in which Scotland forges its own path while avoiding the risks that a full separation would entail. By failing to answer so many of the questions before him, Mr Salmond has shown both why the multinational, multi-ethnic United Kingdom should endure and why it is likely to do so.