Scotland referendum 2014: the impact of independence on the UK

Introduction to the associated pages that explore the potential impact on the UK of a Yes vote in the Scottish independence referendum.

Part of a collection of articles produced by the House of Commons Library which explore the potential impact of a Yes vote on the UK, aiming to inform the debate from an impartial viewpoint.

Referendum date is 18 September 2014

Question is “Should Scotland be an independent country?”

The Scottish Government’s blueprint for independence is the White Paper Scotland’s Future: your guide to an independent Scotland. The UK Government has produced a series of Scotland Analysis papers

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 House of Commons Library does not take any view on the outcome of the referendum, and none should be inferred. These articles are intended to inform Members of the UK Parliament about issues that might arise in the future, should Scotland vote Yes and become independent.

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.

The House of Commons Library has produced a set of webpages that draw together official documents on independence. There is also a bibliography covering other sources, such as academics, think tanks and blogs. The Scottish Parliament Information Centre, SPICe, has its own referendum webpages collating relevant material. The two campaign groups, setting out the arguments for and against independence, are Yes Scotland and Better Together.

The legal process by which the referendum is being held is covered in a Library blog and in Standard Note 6604, Scottish referendum – the campaign rules.

Timeline of key dates

Timeline of key events

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.

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.

Big issues include the future of a UK successor state dominated by England but without much of its existing energy resources, the impact on UK-wide political parties if there are no more Scottish constituencies at Westminster, the division of national assets, debts and other liabilities, the location of nuclear weapons, and the nature of the border. The length of the negotiations will be of interest, as will the identity of the parties involved in them. There would be a different dynamic in a process involving the current governments in Edinburgh and London, compared with, say, a Labour administration in both capitals.

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.

One argument is that there could be a need for a second referendum, either in Scotland or the UK, to approve the terms agreed in the course of negotiations.

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.

The name of the new state for England, Wales and Northern Ireland would need to be determined. The Union with Scotland Act 1706 provided that the kingdoms of Scotland and England ‘ever after be united into one kingdom by the name of Great Britain.’ The Union with Ireland created the entity the United Kingdom of Great Britain and Ireland (after 1922 Northern Ireland).

Irish Free State (Consequential Provisions) Act 1922

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.

We refer below to the potential state comprising England, Wales and Northern Ireland as “the UK”, which seems the most likely choice. The term “rest of the UK” is reserved for those parts of the current United Kingdom which are not Scotland. In the future we are exploring below, these would not be the “rest” of anything, they would be a whole country, and Scotland would not be a part of that country.

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.

When Scotland joined England in 1707 it was promised £398,000, known as “the Equivalent”, as compensation for the contribution its future taxes would make to paying England’s national debt. One author argues that the money did not work through the system until at least the mid-19th century, creating one of several tendrils reaching through history into the state we take for granted today.

“The Equivalent”, J Pittendrigh, in P Scott, The Union of 1707, 2006, p76

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.

 

Article's author

  • Paul Bowers
  • House of Commons Library

Page published: 12 June 2014

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This article was written in advance of the referendum, looking at the possibility of a Yes vote.

It provides useful context but some details may be overtaken by potential developments following the vote. It is retained for historical interest.