The long game

The Scottish government published its white paper on proposals for a referendum on Scottish independence yesterday. Since its publication, most of the political commentariat appear to think that Alex Salmond is on the run, with the recent Labour by-election win in Glasgow (albeit in one of their safest seats in the UK), and with polls showing a small decrease in the amount of enthusiasm in Scotland for independence.

I think this is a misjudgement. Alex Salmond is in this for the long game, and it is significant that the white paper yesterday proposed that only three of the four main options available for the future should be put to the Scottish electorate in a referendum. These three options are:

• no change
• "devolution max" within the UK (what the white paper refers to as "Full Devolution")
• independence from the UK

Alex Salmond is clever as well as charismatic, and he has sensed as well as anyone else that people in Scotland have an inchoate wish for "something more" but do not appear to have the stomach for independence. Whilst the white paper is opaque in many of its parts (and a remarkable proportion of it is taken up by pictures of Scottish ministers and happy smiling faces), it is significant that the fourth main option, namely implementation of proposals similar to those of the Calman Commission, does not feature for inclusion in the referendum: the white paper considers these to fall short of what Scotland needs. His short to medium term objective appears to be that the wish in Scotland for "something more" will turn into a majority at a referendum for "devolution max", which will create such constitutional instability within the UK as to result, over the course of time, in independence by the back door. Certainly that would be my tactic if I were a Scot and keen on independence.

He probably realises that he is not going to be able to get a Bill with a referendum offering these three options through the Scottish Parliament as at present constituted, but he is no doubt looking beyond that to the Parliament as constituted after the next Scottish elections. No doubt he would be willing, if he had to, to reach "devolution max" and subsequently independence after a period of "Calmanisation", but the clear preference coming from the white paper is to avoid that detour and go straight to "devolution max" where he would be well placed to create severe difficulties for unionist government within the UK leading ultimately to independence.

Devolution max

This option involves remaining within the UK but having control of a wide range of things which are currently reserved matters. People in Scotland would continue to have British nationality and to participate in UK affairs within the realms of defence and foreign affairs, to the budget for which they would presumably contribute, together with what the white papers refers to as "macroeconomic policy" and possibly some social protection and pensions, but aside from that they would set all of their own social priorities and most particularly determine most of their own taxation. On this the opaqueness of the white paper is most marked - one of the main levers of macroeconomic policy for the UK government is taxation. If that is taken away through devolution, the main macroeconomic lever left is the fixing of the Bank of England repo rate (sometimes called the bank rate); but this could not be devolved anyway without Scotland adopting its own currency, or acceding to the Euro (in which case the Scottish government would be subject to the rate fixed by the European Central Bank).

Let us then carry out a thought experiment with a system of "devolution max" of this kind in force which goes down the road that the SNP are charting. Were the Scottish government to become financially autonomous, responsible for raising its own taxation to meet its own expenditure, the UK parliament would only set taxation for the rump of the UK - England, Wales and Northern Ireland. It seems inevitable that members of the UK parliament elected for Scottish constituencies would no longer be able to vote in connection with the fixing of rates of taxes such as income tax and corporation tax applying outside Scotland, to which their constituents would not be subject: were they to do so, it would fly against the constitutional links between taxation and representation (in fact as I have mentioned even the much more modest Calman proposals raise issues concerning this constitutional link), and be grossly unfair to people in the remainder of the UK.

However, if there were to be a UK government dependent on its Scottish members for its majority, we could then be left with a UK government which could only wield a majority on matters of defence and foreign affairs but not on taxation. It could therefore be left unable to progress its policies on anything. It would probably be forced to march its Scottish members through the lobbies to force through taxation measures, and policies in all areas except defence and foreign affairs, which could not apply in Scotland. People in the remainder of the UK, and particularly in England, would probably not stand for it. Constitutional mayhem would result: and the pressure points leading to break-up could well come from England rather than Scotland.

The unionist parties

It is probably for this reason that only the Scottish Liberal Democrats have come out in favour of "devolution max" - or at any rate, Tavish Scott their leader has. Such is the chaotic state of Liberal Democrat policy making that, akin to the debacle over Vince Cable's mansion tax, no attempt has been made by them to address the wider issue of how the remainder of the UK could be governed in a way which would actually work in the event of "devolution max". Thankfully we do not need to spend too much time wringing our hands over this at the UK level as the Liberal Democrats are never going to be elected to government at Westminster to give effect to their policy. However, if they hold the balance of power in the Scottish parliament after the next Scottish elections they may turn out to be the SNP's version of the Bolsheviks' "useful idiots" in terms of assisting in passing a referendum Bill in the Scottish parliament. This surely must be one of Alex Salmond's hopes.

How the Tories would take this on depends on their leader at the time (which might not be David Cameron if the party fails to secure a working majority at the next election). David Cameron is wedded to the union but support for the union amongst the Tories cannot necessarily be assured in the future. A different leader might be open to the siren calls of Scottish fiscal autonomy notwithstanding the constitutional instabilities this would create. The post-Thatcher era has left the Tories as, in effect, an English party, so in that sense they do not have a great deal to lose.

The Labour party have the most at risk from "devolution max". They tread a delicate path requiring them to keep their Labour bases in Scotland and to a lesser extent Wales adequately rewarded on the one hand, and not being seen as an anti-English party on the other hand. "Devolution max" would mean they could stop worrying about dissatisfaction with the Barnett formula, but they show no signs at all of thinking about how to resolve the present constitutional anomalies arising from asymmetrical devolution, which would not leave them well prepared if faced with a situation where they had to deal with the problem of a successful "devolution max" referendum. Electoral dynamics also mean that it is only they (either with a small UK majority on their own part or in a Lib/Lab pact) who could end up in government faced with the constitutional dilemma to which I have referred, and one fears that their first and maybe last reaction would be to put their heads in the sand.

In consequence, neither the Labour party nor (in the short term) the Tories are going to go down the "devolution max" road. Were they to be manoeuvred by Alex Salmond into it, say via the Liberal Democrats in the Scottish parliament, I would not give the union more than a few years to survive. For Alex Salmond, job done.