Devolution and an in-out referendum Part 2 – The hard facts to be put before the Celts

Devolution and an in-out referendum

Part 2 – The hard facts to be put before the Celts

Posted on October 5, 2014 by Robert Henderson in Editorial, Elections // 1 Comment
In part 1 I looked at the UK electoral arithmetic which suggested that England might well  vote to leave the EU  while one or more of Scotland, Wales and Northern Ireland would vote to stay in the EU.  I then proposed a strategy to diminish the stay-in vote in the Celtic nations. This was to bring home the realities of life in and outside the UK for Scotland, Wales and N. Ireland.
The primary matters the Scots, Welsh and Northern Irish should be reminded of before they vote to leave the UK are:
  1. Wales and Northern Ireland are economic basket-cases which rely heavily on English taxpayers to fund their public expenditure. To lose that subsidy would cripple them both. Nor would they get anything like as much extra funding from the EU – assuming it would have them as members – as they would lose from the end of the English subsidy.
Scotland is in a better position because it is larger and has, for the present at least, significant oil revenues.  But it is a very narrow economy relying very heavily on public service employment – a significant part of which deals with the administration of English public service matters – while the private business side of is largely comprised of oil and gas, whiskey, food, tourism and financial services.
The figures below are the latest official estimates of the tax raised in each of the four home countries to the end of the 2012/13 financial year. These figures should not be treated as exact to the last million because there are difficulties in allocating revenue to particular parts of the UK, for example, with corporation tax, but they are broadly indicative of what each country collects in tax.  I give two sets of figures to show the differences when oil and gas is allocated on a geographical and a population basis.
Table 1 Total HMRC Receipts (Geographical Split of North Sea Revenues), £m
2012-13
UK                England    %           Wales      %       Scotland   %        Northern Ireland %
469,777   400,659 85.3%    16,337 3.5%   42,415 9.0%       10,331   2.6%
Table 2 Total HMRC Receipts (Population Split of North Sea Revenues), £m
469,777   404,760 86.2%    16,652 3.5%   37,811 8.0%        10,518    2.6%
Compare this with public spending for each of three small home countries in the calendar year 2013 (I was unable to find expenditure figures for the financial year but they would be little different) :
Scotland      £53.9 billion  – difference  of £12 billion approx. between tax raised and money spent
Wales            £29.8 billion   – difference of £13 billion approx. between tax raised and money spent
Ireland         £19.8 billion   – difference of £9 billion approx. between tax raised and money spent
NB differences between tax raised and money spent are based on Table 1 figures which give the most favourable interpretation of Scotland’s tax position.
The three smaller countries are accumulating debt at a much greater rate than England.  In addition, small countries which go independent would find raising the money to meet their overspends would be much more expensive than the cost of financing the debt as part of the UK
  1. The vast majority of their trade is with England. Barriers created by England’s departure from the EU could have very serious economic consequences any of other home countries remained within the EU.
  2. Much of what they export to countries outside the EU has to pass through England.
  3. All three countries would be net takers from the EU budget not contributors. The EU is unlikely to welcome with open arms an additional three small pensioner nations. There would be no guarantee that the EU would accept any or all of them as members, but even if it did the terms they would have to accept would be far more onerous and intrusive than they experience now. In particular, they would almost certainly have to join the Euro as this is a condition for all new members.
  4. An England or a reduced UK outside the EU would have to impose physical border controls because any part of the UK which seceded and joined the EU would be committed to the free movement of labour within the EU (more exactly the European Economic Area – EEA). That would mean any number of immigrants from the EEA would be able to enter either England or a reduced UK via whichever part(s) of the UK had seceded and joined the EU.
  5. Being part of the UK gives the smaller home countries great security because the UK still has considerable military clout – ultimately Britain is protected by nuclear weapons – and the size of the population (around 62 million and rising) is sufficient in itself to give any aggressor pause for thought. The proposal for armed forces made in the SNP sponsored White Paper on independence recommended armed forces of 10,000 regulars to start with rising to 15,000 if circumstances permitted.   That would be laughable as a defence force for a country the size of Scotland which has huge swathes of land with very few people on that land.  An independent Wales and N Ireland would be even worse off militarily.
  6. They could not expect to walk away from the Union without taking on a share of the UK national debt and of taxpayer funded pension liabilities proportional to their population, have a currency union to share the Pound, have UK government contracts for anything or retain the jobs exported from England to do administrative public sector work  for England, for example, much of the English welfare administration is dealt with in Scotland.
If this is done, with any luck the enthusiasm for leaving the UK to join the EU if England or England plus one or more of the other home countries has voted to leave the EU will diminish sufficiently to make a vote to remain in the EU unlike or at least reduce the vote to stay in to level where there is not an overwhelming vote to either stay in or leave.