A divorce could be very costly if Alex Salmond runs off with Scotland
How will we carve up assets like the Bank of England, the BBC, the DVLA and the premium bond HQ?
Tuesday 29 April 2014
What number plate will Alex Salmond have on his official limo if he becomes the first prime minister of an independent Scotland? “SCOT 1”? “BRAVEHEART”? “FREE AT LAST”?
A trivial question, of course, but one that highlights some of the less grand but nonetheless financially troublesome issues that will need to be sorted out when the “yes” vote comes in, as it may well. Or, preferably, before it does.
You see, any special reg number Mr Salmond might want on his motor would need to be issued by some comparatively lowly officials at the DVLA, Swansea – an institution that will stay in what, for the sake of brevity, I shall term “Rotuk”... “the Rest Of The UK”. Nicola Sturgeon, the deputy first minister of Scotland, sees it like this: “The thing about independence is that it gives you the ability to do these things differently if you want to. But it also gives you the ability, in discussion with others, to share your sovereignty. And I think the DVLA is one of those things we would sit down and have a grown-up discussion with the UK government and decide that’s something we should do”.
To take another fairly random example, if you’ll pardon the pun, there would have to be a similar negotiation about Ernie, the premium bond computer and associated team in Blackpool. Conversely, the Rotuk government would need to make a decision about the National Savings and Investments (NS&I) agency, which is in Glasgow. The temptation to relocate those jobs to an area of high unemployment in Rotuk – the Welsh valleys, say, or the West Midlands or north-east England – would be intense.
Now, we all know two things about divorces. First, that they always start with a wish to have a “grown-up discussion” and for the parties to remain the “best of friends” in Mr Salmond’s favoured expression, but it doesn’t always turn out that way. Second, divorces are costly.
So I suspect it will be with Scotland. What happens if Scotland and Rotuk can’t agree on the charges for the use of DVLA? Do the Scots then hold the NS&I offices hostage? And Rotuk retaliates by cutting off pensions payments out of the DWP in Newcastle? Or, an admittedly less potent threat, ends the flow of data from the Office for National Statistics in Newport? Or locks up the Scottish stuff in the National Archives at Kew? If Rotuk want to let the Scots have all the MoD bases, including Faslane, what do they get in return? Who will the human resources, the “legacy” soldiers, sailors and air force, obey – the Rotuk MoD or the Scottish government?
It might all get a bit Ukrainian, if you see what I mean, and the people of Scotland, and Rotuk, need to know what bills and hassle they are letting themselves in for if, say, millions of new Scottish driving licences and car registration plates (including for SCOT 1) need to be issued.
The only realistic way to do it is by a formal allocation of the value of assets and the cost of running them, Domesday-style. Special treatment would have to be afforded to the BBC and the Bank of England, but it would also extend all the way across to our overseas embassies. Separate representation for Scotland in major capitals such as Paris, Washington, Berlin and so on may be assumed. But if, say, the Scots want to share the Rotuk High Commission in Malawi or Barbados or Bangladesh, then there would have to be a fee for the consular services the FCO would provide for Scots abroad. And so on.
Some arms of the state, such as the Food Safety Agency, have already been carved up post-devolution and legal institutions have always been separate. The allocation of the national debt, on a ratio of about 9 to 1 reflecting the relative populations of Scotland and Rotuk, seems a fair apportionment, and a simple way of dealing with that problem. More tricky would be the ability of the Scottish government to stand by its banks in the event of future financial trouble. If they want the Bank of England and Rotuk taxpayer to have a role in that, as lenders of last resort to RBS (assuming it gets privatised) and HBOS, then some sort of “insurance premium” would seem a fair way to deal with the risks inherent in that.
Finally, the same approach of detailed financial calculus could be applied to the central question of Scotland using sterling. This is also a shared asset, and harder to value than real estate, but some appropriate charge for its use may be imputed (in addition to the banking system “insurance premium”). In return, the Scots could then have representation on its governing body, and help set interest rates.
The alternative is the “Irish” option, after their bloody war of independence almost a century ago, which is just a crude territorial split. Just as the Irish painted the pillar boxes green, the Scots might paint theirs blue, and keep everything north of the border, and lose everything south of it. That might work with Scotland’s schools, universities and hospitals, but would otherwise leave both sides’ “shared” assets in chaos. How we avoid that, and the risk and costs of things going wrong as well as right, is surely a factor in how people in Scotland vote. This has not been paid anything like sufficient attention. Ask anyone who’s been through a divorce.
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