Scottish nationalists should be careful of what they wish for

UK Prime Minister Theresa May’s Brexit plan was described as dead on arrival last week by Scottish First Minister Nicola Sturgeon. While departure from the EU was the backdrop to the Edinburgh meeting, Sturgeon’s mind is at least as much focused on the political positioning that will best enable a second Scottish independence referendum in the early 2020s, which could break up one of the world’s longest and most successful political unions.

Sturgeon, who urged May to develop a Brexit “plan B,” and also deliver a fair agreement with Scotland over devolved powers to Edinburgh under such an agreement, is rightly concerned about the prospect of the United Kingdom leaving the EU with no deal. Yet despite her understandable disappointment at the 2016 Brexit vote, and opposition to May’s exit stance, she is leading Scotland and the wider UK down a potential political black hole that will probably weaken all parties given that their future is better together. For instance, a UK Parliamentary Committee warned in 2014 that losing the Scottish tax base, especially at a time of fiscal austerity, could lead to further budgetary cuts to the armed forces. Moreover, the UK’s large overseas aid budget and extensive network of diplomatic and trade missions would also be affected. Together with military cutbacks, this would undermine both hard and soft power that has enabled the nation to punch above its weight for so long. Had, therefore, Barnett been applied “in the normal way”, then Wales would have received an additional £1.67 billion and Scotland £2.9bn (strangely, they omit to mention that England would receive around £30bn). This, however, either deliberately misunderstands how Barnett works or displays a remarkable level of ignorance for the Scottish and Welsh finance secretaries, the latter of whom is a former professor of social policy at Cardiff University.

But the “normal way” in which Barnett operates is that, as a civil servant put it back in 1978, Scottish expenditure is treated “as a block” and either increases or decreases “in proportion to that agreed for equivalent English programmes”. It does not operate in reverse, so if Scotland, Wales or Northern Ireland receives additional funds, then England gets nothing.

And despite arguments to the contrary, the Tory-DUP deal is not unprecedented. In the 2000s, Wales and Northern Ireland received extra funding to support capital investment or implement EU responsibilities. Even cash in return for votes isn’t new. In 2008, Gordon Brown won a Commonsvote on detaining terrorist suspects for 42 days without charge after agreeing to a shopping list of demands from the DUP.

None of these examples involved Barnett, thus Derek Mackay’s letter includes a number of conscious or unconscious red herrings. His argument, for example, that because the £1bn for Northern Ireland will be spent on “devolved matters” then Barnett ought to apply sounds plausible, but only if the English “baseline” was being altered, which it isn’t. Mackay also rejects the suggestion that recent funding for City Deals is “wrong and not in any way comparable” because it’s conditional upon “match funding” from the devolved administrations. That is true, but it’s still money which, to use the Scottish Government’s own language, “bypasses” Barnett, almost £1bn of direct UK Government spend on Scotland. Mackay also alludes to the Treasury’s “Statement of Funding Policy”, which encourages the UK and devolved governments to “work together in a spirit of mutual respect, and aim to reach agreement wherever possible”. There is a good argument that the Tory-DUP deal breached at least the spirit of that, but it still has nothing to do with Barnett.

That said, the UK Government’s handling of the whole affair has been woeful. When, a few weeks ago, Westminster-based journalists started framing the DUP negotiations in the context of Barnett (because, frankly, they didn’t understand how it worked), it should have made it explicitly clear that it did not apply. Instead David Mundell bought into that narrative, therefore turbo-charging the Scottish Government’s usual grievance machine.

The writer is an associate at LSE IDEAS at the London School of Economics.

 

Scottish nationalists should be careful of what they wish for

UK Prime Minister Theresa Mays Brexit plan was described as dead on arrival last week by Scottish First Minister Nicola Sturgeon. While departure from the EU was the backdrop to the Edinburgh meeting, Sturgeons mind is at least as much focused on the political positioning that will best enable a second Scottish independence referendum in the early 2020s, which could break up one of the worlds longest and most successful political unions. Sturgeon, who urged May to develop a Brexit plan B, and also deliver a fair agreement with Scotland over devolved powers to Edinburgh under such an agreement, is rightly concerned about the prospect of the United Kingdom leaving the EU with no deal. Yet despite her understandable disappointment at the 2016 Brexit vote, and opposition to Mays exit stance, she is leading Scotland and the wider UK down a potential political black hole that will probably weaken all parties given that their future is better together. For instance, a UK Parliamentary Committee warned in 2014 that losing the Scottish tax base, especially at a time of fiscal austerity, could lead to further budgetary cuts to the armed forces. Moreover, the UKs large overseas aid budget and extensive network of diplomatic and trade missions would also be affected. Together with military cutbacks, this would undermine both hard and soft power that has enabled the nation to punch above its weight for so long. Had, therefore, Barnett been applied in the normal way, then Wales would have received an additional 1.67 billion and Scotland 2.9bn (strangely, they omit to mention that England would receive around 30bn). This, however, either deliberately misunderstands how Barnett works or displays a remarkable level of ignorance for the Scottish and Welsh finance secretaries, the latter of whom is a former professor of social policy at Cardiff University. But the normal way in which Barnett operates is that, as a civil servant put it back in 1978, Scottish expenditure is treated as a block and either increases or decreases in proportion to that agreed for equivalent English programmes. It does not operate in reverse, so if Scotland, Wales or Northern Ireland receives additional funds, then England gets nothing. And despite arguments to the contrary, the Tory-DUP deal is not unprecedented. In the 2000s, Wales and Northern Ireland received extra funding to support capital investment or implement EU responsibilities. Even cash in return for votes isnt new. In 2008, Gordon Brown won a Commonsvote on detaining terrorist suspects for 42 days without charge after agreeing to a shopping list of demands from the DUP. None of these examples involved Barnett, thus Derek Mackays letter includes a number of conscious or unconscious red herrings. His argument, for example, that because the 1bn for Northern Ireland will be spent on devolved matters then Barnett ought to apply sounds plausible, but only if the English baseline was being altered, which it isnt. Mackay also rejects the suggestion that recent funding for City Deals is wrong and not in any way comparable because its conditional upon match funding from the devolved administrations. That is true, but its still money which, to use the Scottish Governments own language, bypasses Barnett, almost 1bn of direct UK Government spend on Scotland. Mackay also alludes to the Treasurys Statement of Funding Policy, which encourages the UK and devolved governments to work together in a spirit of mutual respect, and aim to reach agreement wherever possible. There is a good argument that the Tory-DUP deal breached at least the spirit of that, but it still has nothing to do with Barnett. That said, the UK Governments handling of the whole affair has been woeful. When, a few weeks ago, Westminster-based journalists started framing the DUP negotiations in the context of Barnett (because, frankly, they didnt understand how it worked), it should have made it explicitly clear that it did not apply. Instead David Mundell bought into that narrative, therefore turbo-charging the Scottish Governments usual grievance machine. The writer is an associate at LSE IDEAS at the London School of Economics.