Not the DVLA question. Cross-Border Governance after Independence

Dr. Nicola McEwen, Academy of Government

Dr. Nicola McEwen, ESRC Fellow

Dr Nicola McEwen, ESRC Senior Scotland Fellow and Director of Public Policy, Edinburgh Academy of Government, assesses the White Paper’s prospectus for shared cross-border arrangements after independence.

It used to be called the DVLA question. A vision of Scottish independence which is embedded within the British Isles, with lots of cross-border arrangements and services jointly delivered. In the White Paper published this week, the Driver and Vehicle Licensing Agency is in fact one of the institutions that would be replaced by a Scottish body after independence, but there are many more where the Scottish government wants continuity and shared service delivery.

Many of these are functional, low profile institutions, like the Office of Rail Regulation, the Civil Aviation Authority and the Green Investment Bank. The National Lottery and the Big Lottery Fund would also continue as now, and the UK research councils – an issue dear to the heart of many academics – would be shared and co-funded.

And while no-one should expect the UK government to pre-negotiate this side of a referendum, one is left with the feeling that the electorate deserves more clarity from both sides in this debate.

Other shared arrangements are envisaged on big ticket issues like the BBC and the currency. In the former, a Scottish Broadcasting Corporation would participate in a joint venture with the British Broadcasting Corporation, ensuring access to existing BBC services and programmes. In the latter, the White Paper reaffirms the Scottish government’s commitment to press for a formal currency union with the rest of the UK, with Scotland’s government effectively becoming a shareholder in the ownership and governance of the Bank of England.

Managing institutions and services on a cross-border basis would require some mechanism for joint decision-making, oversight and governance. Yet, the White Paper says very little about how such governance arrangements would be designed. Experience from elsewhere suggests that a variety of treaties and bilateral agreements would be necessary, supported by less formal day-to-day co-ordination and communication. But some formal mechanism for intergovernmental relations would be needed to underpin and facilitate informal coordination, not least to resolve any disputes that may emerge.

All such shared arrangements would of course be subject to negotiation with the UK government if Scots vote YES next September. The White paper presents Scottish-rUK co-operation and co-ordination as the common sense approach, which would be in the interests of both an independent Scotland and the rest of the UK. This is somewhat presumptuous. The Scottish government may legitimately claim to be in a position to determine what is in Scotland’s best interests, but it can’t define the interests of the rest of the UK. The UK government, for its part, has given heavy hints that formally sharing a currency and other such arrangements may not be in their interests, with the Secretary of State and others demanding a ‘plan B’ from the Scottish government in case such offers of partnership and co-operation are refused. This is clearly a politically pragmatic response, raising doubts without offering a definitive position. And while no-one should expect the UK government to pre-negotiate this side of a referendum, one is left with the feeling that the electorate deserves more clarity from both sides in this debate.

Dr Nicola McEwen is ESRC Senior Scotland Fellow and Associate Director of the ESRC Scottish Centre on Constitutional Change.

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3 Responses to Not the DVLA question. Cross-Border Governance after Independence

  1. Peter A Bell says:

    It is rather obviously true that the Scottish Government can’t define the interests of the rest of the UK. But that does no mean that what is in the interests of the UK is totally unknowable. Those interests can quite readily be deduced with all the certainty that is required for the purposes of the White paper.

    On the currency issue, for example, we know that abolition of the currency union will cause serious problems for the rUK. We know that Scotland is rUK second largest trading partner and so it would be very much in the interests of the rUK to keep business transaction costs low and cross-border trade simple.

    We know too that abolishing the currency union would add circa £50 billion to rUK’s trade gap. It is rather obviously in rUK’s interest to avoid that.

    So it is not a case of the Scottish Government defining rUK’s interests but very much one of acknowledging the reality. Something the anti-independence campaign is very reluctant to do.

  2. David Walker says:

    I think we have to distinguish between two different concepts here. Saying it’s in our ‘mutual interest’ to have a currency union is one thing, but the terms on offer are quite another.

    What we’re actually discussing isn’t whether the rest of the UK would accept a currency union in principle, but what they’d ask in return. For it to be in Scotland’s interest we’d need the Bank of England to act as a lender of last resort (otherwise we’d be open to bond market speculation and might have to pay a far higher rate of interest on our debt). The rest of the UK might also insist on a fiscal compact. They might insist on a budget scrutiny mechanism, and there would be negotiations over how much of the national debt Scotland takes on.

    These are all serious issues that can transform a currency union from being the simple no-brainer the SNP are portraying it as, to something that isn’t actually in Scotland’s interest at all. So while it might be mutually beneficial to have a currency union in principle, that doesn’t really get us very far if we don’t know what the substance of the agreement would be. If I walk into Tesco and say it’s mutually beneficial for me to buy my groceries from them then I’d be completely correct, but that doesn’t mean I can dictate the price I pay at the checkout.

  3. I personally feel a number of points mentioned in the white papers are far too ‘out’ there at the moment. I think these points are maybe being stated simply to arouse the Scottish Public into voting for independence in the first place, however some terms being suggested such as being a share holder in the Bank of England does seem ludicrous to say. I really believe the Bank of England will want to let power of it’s own currency cross borders, if it didn’t go to the EU, it won’t go to Edinburgh.

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