Scotland referendum 2014: the impact of independence on the UK

The articles that follow explore possible issues raised for the UK should Scotland vote Yes in the forthcoming referendum and become independent. This is not to say that a No vote would be without implications. The Secretary of State for Scotland, Alistair Carmichael, has announced that in the event of a No vote, he would convene a cross-party conference to devise a package of new devolved powers. Former Prime Minister Gordon Brown has said that he will seek to broker cross-party agreement on such powers before the referendum.

The possibility of independence is well covered from the Scottish point of view: to an extent, projections of the consequences for Scotland are at the heart of the choice Scottish voters will make. It is not the purpose of this collection of articles to enter that debate. Instead, we discuss possible impacts on the state comprising England, Wales and Northern Ireland.

These articles were written by researchers in the House of Commons Library and the House of Lords Library. They cover possible impacts on the UK economy, its place in the world, the Trident nuclear missile system, and on the two Houses of Parliament. In his article on currency, Dominic Webb explores the implications for the UK of different choices for a Scottish currency, while Melanie Gower traces the knock-on effects of potential nationality and border policies. Articles on major national institutions such as the BBC and the NHS by Philip Ward and Tom Powell address elements of the so-called “social union”, while pensions, covered by Djuna Thurley, and energy, by Ed White and Elena Ares, are some of the more complex issues which would place emphasis on the quality of cooperation between the two Governments.

If Scotland votes “Yes”

The UK and Scottish Governments committed themselves in the Edinburgh Agreement, the political framework for the referendum, to “continue to work together constructively in the light of the outcome, whatever it is, in the best interests of the people of Scotland and of the rest of the United Kingdom.”

It is noteworthy that the UK Government did not commit itself to legislate for independence in the event of a Yes vote: referendums in the UK are not binding on the Government. Most commentators have equated a Yes vote, regardless of turnout or the size of majority, with independence. We have adopted that assumption for our articles.

The parliamentary process would involve a period of scrutiny of the Government's position in the negotiations. The UK Government would be under no legal obligation to agree to independence, still less to agree on particular terms: the concept of “best interests” is not defined, and is likely to be contested. While it is highly unlikely that a UK Government would ignore the result of the referendum if it is clear-cut, timings and terms would be part of the negotiation.

Negotiations

The Scottish Government wants to achieve independence in March 2016. The UK Government has not given a date. Both sides agree that a negotiation process would be needed, and the UK Government argues that this would be complex and perhaps lengthy.

Issues to discuss would include:

• Division of debts, liabilities, assets, responsibilities
• New relationships and cooperation agreements where joint action is chosen or necessary
• Transitional arrangements, especially in respect of nationality and residence

Some issues might be difficult to settle as a result of political arguments. For instance, dividing the national debt. Would this be done on a per capita basis, or adjusted to take account of economic factors? If the latter, would a relatively poorer region account for more debt (having presumably benefited from greater public spending) or less (on the basis of ability to pay)? Would this be offset against assets, and if so, how, or would the two be treated separately and potentially settled at different times? Matt Keep discusses debt further in his article on tax and spending.

There are practical questions too. How would negotiators treat assets such as the roads and railways? They were paid for over time, with different tax yields coming from Scotland and the rest of the UK, and their value to the local or national economy has varied. Even insofar as UK tax (including that raised in Scotland) will have funded Scottish roads, their maintenance will have absorbed Scottish local government money, and roads in the rest of the UK will have been built in part with Scottish tax. Although there is a case for treating infrastructure as a fixed part of the nation itself, it is conceivable that taxpayers in the south-east of England will be passing a substantial historical investment to Scotland, for which they might seek something in return.

Some assets might be very difficult to divide at all. Intelligence is an obvious example. UK intelligence draws on information from friendly states: will they be comfortable with such information being shared with a third party, such as a newly independent Scotland?

There would also be implications for the machinery of UK Government. The Scotland Office might close, with business taken over by the FCO, although it might be attractive to retain the Scotland Office for an interim period in view of the large amount of work to be done drafting bilateral treaties.

There are around 45,000 civil servants in Scotland split across Departments and activities. For example, 17,000 work for the Scottish Government and associated public bodies, while 12,000 work for the Department for Work and Pensions, 9,000 for HM Revenue and Customs and 4,000 for the Ministry of Defence.

In the event of independence civil service functions for each Government would have to be reviewed, as would the position of UK civil servants based in Scotland, some of whom might want to transfer to the Scottish civil service; others might seek relocation in the new UK.

It has not been decided exactly what would have to be negotiated before independence could occur. Would the negotiations have to cover all divisions of benefit, liability and responsibility, and all aspects of the future relationship? Or could agreement on a sub-set of core issues provide a basis for independence, with other matters sorted out later, perhaps through a process and according to principles agreed in the initial talks?

The Scottish Government favours early independence. Would the UK Government see an overriding benefit in delay if there were a clearly expressed desire in part of the population to secede? While each side would have interests to protect and promote, they would also have a common interest in concluding the process in a timescale that did not become an issue in itself.

The Scotland (Independence) Act 20XX

Assuming that agreement on the terms could be reached, UK legislation would be needed to create independence. As a minimum, this would probably cover a repeal of those parts of the Acts of Union 1707 which joined England and Scotland, repeal of the Scotland Acts 1998 and 2012, the date at which Scottish constituencies would cease to be represented at Westminster, any transitional arrangements, and amendments to a vast array of other legislation mentioning Scotland.

The latter might include a catch-all provision that, for future purposes, any reference to Scotland in legislation is to be disregarded, and any reference to the UK is to be read as excluding Scotland. However, it is very unlikely that this would cover all the impacts that Scottish independence would have on UK law. In many instances, it will not be enough simply to write out Scotland – for instance, if a body is set up with representatives from different regions and the numbers are fixed in statute, then the loss of Scottish representatives would require either an increase in others, or a reduction in the total. In addition, it would be necessary to include Scotland in legislation that applies to foreign or Commonwealth states. Some aspects of the future relationship between the two new states would also need legislation, such as diplomatic privileges, double taxation and extradition.

It is possible that more than one statute would be needed, in order to fast-track the main “independence Act” provisions, and tidy up the others later. Alternatively, a single Scotland (Independence) Bill could be introduced with lengthy schedules listing consequential repeals and amendments.

It would be interesting to see how independence would be couched in statute: there would be a legal need to avoid doubt, but a political desire to avoid making Scotland's future independence in any way conditional on a (repealable) statute of the UK Parliament.

A whole new country?

The UK Government is keen to argue that the new UK would be the successor state, unproblematically assuming the rights and responsibilities of the existing United Kingdom. This is explored further in Vaughne Miller's article below on the UK's relationship with the EU and other international organisations.

Back to the future

Parts of the Acts of Union are still in force. As well as creating a new state, they provided for succession to the Crown, replaced two predecessor parliaments, entrenched two separate established Churches, dealt with various aspects of the law, and involved a transfer of money from England to Scotland. Since that time, a significant amount of law, infrastructure and institutional fabric has been created in common.

Unpicking these relationships and legacies would be a wide-ranging process, balancing self-interest, the will of the voters, international obligations, and practicalities.

The articles that follow are intended to help MPs and their staff to familiarise themselves with some of the issues on which they will need to legislate, to represent their constituents, and to scrutinise the Government.