Scots Say No: Independence Takes A Backseat

22 Sep 2014

Last Friday, the Scottish independence referendum, on whether Scotland should be an independent country, took place with the ‘No’ side winning after 55.3 percent voted against independence.

Numerous campaign groups, political parties, businesses, newspapers and prominent individuals were also involved, raising prominent issues such as currency, the legal system, EU membership, and public expenditure. To pass, the independence proposal required a simple majority where all European Union (EU) or Commonwealth citizens resident in Scotland aged 16 or over could vote.

However, one day after Scotland voted to stay in the United Kingdom, British nationalists took to the streets of Glasgow to celebrate their victory, but the gathering quickly developed into what many witnesses have described as a riot.

So why has this issue divided the Scottish people? What did Scotland have to gain from separating itself from the Union and what did it have to lose?

Scottish National Party Leader, Alex Salmond, believed that Scotland was constrained by the economics polices of the UK government and that giving Scotland power over fiscal and economic matters would result in growth.

However, opponents to Salmond noted that when Scotland's banks came close to collapse in 2008, taxpayers across the UK helped bail them out, and in addition, being part of the union gave Scottish companies access to 60 million people across the UK without having to worry about border controls.

Dr Paul Frijters, from the School of Economics at The University of Queensland (UQ), believes that Salmond’s opponents “overstated” the case on open borders and the “so-called 2008 bailout” was all “smoke and mirrors”.

“Once independent, Scotland would most likely be part of the EU and there would be open borders with the rest of the UK anyway in terms of consumer and labour markets, just as there are such open borders within the whole of the EU this very moment,” Dr Frijters said.

“As to bailouts of Scottish banks: the main owners in 2007 of the Royal Bank of Scotland were institutional UK investors, and something like 90% of the activities and employees were in the rest of the UK. So the 2008 “bailout” was in no real way of a Scottish bank, but of a UK bank.”

“It is only because of the name that people can be lead to believe the bailout was of a Scottish bank, […] you get this kind of nonsense a lot in the media.”

Despite his opinions on the economic issues of the Scottish referendum, Dr Frijters is happy with last week’s results.

“[I’m] firmly in favour of the Union and am so happy with the result. The peoples of the UK should work through their problems together, not by splitting up the British family,” Dr Frijters said.

Although Scotland currently has a separate legal system, the vast majority of statutory employment laws in Scotland are identical to those in England and Wales, making life easy for employers who employ staff across the UK. That, combined with a single tax regime, a single currency and a single employment tribunal system, has made it straightforward for employers to standardise HR and payroll practices across the UK, regardless of where employees are based.

Knowing this, Dr Graeme Orr, from the TC Beirne School of Law at UQ, believes a ‘Yes’ vote would’ve jeopardised these laws by reducing uniformity and eventually widening the differences in some of the regimes.

“Business generally prefers uniformity […] but the independence movement will lead to a compromise with a ‘federal’ Scotland having greater tax and regulatory powers,” Dr Orr said.

“Neo-liberals like to see that as opening up a competitive federalism, as capital will shop around by hopping between borders. But modern [Scottish] nationalism is built on a social-democratic and collectivist ideal.”

Furthermore, the white paper of independence has suggested that, if Scotland did separate from the Union, it would have a far more liberal immigration policy than the UK, with some suggesting a need for border control between Scotland and England.

However, Dr Orr doubts “the differences would’ve been great” because both countries would’ve remained in the EU, yet also believes immigration isn’t as big of an issue for Scotland as it is for England.

“Scotland is a physically big country for just 5 million people so it has room for population growth,” Dr Orr said.

“But it is currently as afflicted by unemployment as most of Western Europe.  And whilst politically tolerant, even its big cities are not quite as cosmopolitan as the big English centres, such as London and Birmingham, so a sudden social shift was unlikely.”

Moreover, Dr Orr believes the bigger issue to consider is how the “better-off” Scottish people who were frightened of change voted ‘No’ and the “less-off” with less to lose tended to vote for ‘Yes’.

“Economic analysts have to confront the gulf which exists throughout the west and especially in the northern hemisphere, based on wealth and class,” Dr Orr said.

“That gulf has evolved since the early 1970s, but the GFC has deepened it, with dramatic effect and potential for socio-political instability.”

“This wasn’t just a vote about which flag to wave, but rather an inchoate hope for change fuelled by uncertainty and resentment.