All posts by thomas

The great currency consensus

You're making decisions by consensus, but are you collaborating?
You’re making decisions by consensus, but are you collaborating?, a photo by opensourceway on Flickr.
The Better Together campaigners seem to claim the Yes side are conducting a civil war on the currency issue (whether to continue to use the UK pound, or whether to introduce a separate Scottish currency).

However, in reality the differences within the Yes camp are mainly about time scales.

Nobody (well, almost nobody) seems to suggest that a new Scottish currency should be introduced on day 1 (i.e., March 2016) — advocates of a separate currency tend to think it should be introduced a few years afterwards (e.g., in 2019) to give the new state a chance to set of the Central Bank of Scotland, print the banknotes and mint the coins, etc.

Those who advocate retaining the pound tend to argue their case based mainly on the short term. For instance, here’s what the Fiscal Commission Working Group wrote:

7.11 The economic area of Scotland is sufficiently large to support its own currency.

7.12 In the long run, the creation of a new Scottish currency would represent a significant increase in economic sovereignty, with interest rate and exchange rate policy being two new policy tools and adjustment mechanisms to support the Scottish economy.

7.13 In the short-run there would however, be a number of practical challenges associated with moving to a new currency, including the not insignificant steps required to re-denominate contracts and maintain intra-UK supply chains.

I don’t think they (or any other proponents of maintaining a currency union with the rUK) have tried to quantify the short and long runs, but I reckon they think the “sterling union” would last at least ten years or so (i.e., until at least 2026).

To sum up, almost everybody on the Yes side agrees the pound sterling will still be used shortly after independence (e.g., in 2018), but probably not in the long run (e.g., in 2030). The only difference is a question of time scales, and of how vigorously to pursue a proper currency union (as opposed to simply using the pound without representation on the Bank of England’s MPC).

The differences within the Better Together parties are probably larger. The LibDems are still in theory in favour of joining the euro (and when the Eurozone recovers, they will start saying this more loudly), and the Tories are wedded to the pound. This means they don’t just disagree about the time scales, but about the direction of economic policy.

A difference of perspective

Newspaper, a photo by FireFawkes on Flickr.
If you watch the BBC and STV and read one or two Scottish newspapers, such as The Scotsman or The Herald, but you don’t really read any blogs or other social media, I guess your perspective of the independence campaign is as follows: Better Together and the Westminster Government again and again point out potential problems, and Yes Scotland and the Scottish Government react to these as if they’d never considered this issue before, and the Yes campaign never seems to do anything proactive.

If on the other hand you got fed up with the unionist media in the past and are now mainly getting your knowledge from pro-independence blogs, such as the Arc of Prosperity, Wings over Scotland, Bella Caledonia, Newsnet Scotland, National Collective and all the others, and if you’re additionally friends with other Yes people on Facebook and Twitter and perhaps active in your local Yes Scotland group, I bet your perspective is more like this: Yes Scotland and the wider Yes campaign are busy fleshing out the details of independence, while Better Together spread fear, uncertainty and doubt, often without any evidence whatsoever. At the same time, tens of thousands of Yes Scotland volunteers are out there talking to ordinary voters on the doorsteps.

Which narrative is correct? It depends on your perspective, I guess.

Because of this difference, the recent accusations against Yes Scotland of inactivity probably seem extremely reasonable to the first group, and utterly ludicrous to the second one.

However, given that the first group is by far the largest one at the moment, it leaves the Yes campaign with two options: (1) Try to break through the bias of the unionist media so that normal people start realising what’s really happening, or (2) make everybody read blogs and connect to neutral and pro-independence people on Facebook and Twitter.

Given that (1) is extremely hard to achieve (although of course it shouldn’t be abandoned), I think more attention should be paid to (2). Maybe the Yes campaign should for instance provide every household with a list of Scottish blogs (unionist, neutral and pro-independence). Perhaps it would also be an idea to print a small newspaper containing some of the best articles from the pro-independence blogs, and this could then be handed out to undecided voters who aren’t big users of social media.

Independence as a protection against NHS privatisation

Jeremy Hunt is Privileged
Jeremy Hunt is Privileged, a photo by Feroze Alam on Flickr.
Most people are hopefully aware that the Scottish NHS and the English are almost completely separate, sharing little more than the name. I have often argued that the Scottish Government ought to rename the Scottish NHS in order to emphasise this fact.

Because of the existing independence of the Scottish NHS, it will hardly be affected at all by Scottish independence (just as the education system and the other fully devolved policy areas). When some unionists say that independence is a threat to the NHS, they are clearly scaremongering.

On the other hand, remaining in the UK is a big threat to the Scottish NHS as we know it.

This is because the English NHS is undergoing privatisation at an alarming pace.

So far, the changes in the English NHS have not affected us too much in Scotland, but if large amounts of expenditure now move from the public to the private sector, it’s likely to lead to huge Barnett consequentials, which means that Westminster’s block grant to Scotland will fall if the English public sector spends less money.

If the block grant decreases, it’s likely to force the Scottish Government to privatise the Scottish NHS along the same lines as what is already happening in England.

Better Together and the unionist parties need to tell us how they are planning to allow the Scottish Government to maintain the Scottish NHS. Will they ensure that the changes to the English NHS won’t affect the block grant?

If they won’t guarantee this, they should admit that the Scottish NHS is safer in the hands of an independent Scotland.

Dividing England along the Severn-Wash line

Isoglosses for 'last', 'cross' and 'sun'
Isoglosses for ‘last’, ‘cross’ and ‘sun’. Based on this image by NordNordWest modified by User:Xhandler, with isoglosses from An Atlas of English Dialects

In the past I’ve been writing about ways to split up England for the purpose of making federalism work in the UK (see this and this and this).

For some bizarre reason one split I never suggested in these blog posts was in many ways the most obvious one.

As a linguist, I’ve been aware for years that English dialects split into two main groups: Southern English south of a line roughly from the Severn to the Wash, and Northern English north of this line. (Scottish dialects are a completely different story.) Three of the most important isoglosses are shown on the map on the right.

However, this line turns up in lots of other contexts, e.g.:

  • Economics: “The current government’s attempts to bridge the north-south divide look doomed to failure. All but one of the 20 worst districts for hidden unemployment lie north of a line from the Severn to the Wash […]”
  • Politics: “South of a line drawn from the Wash to the Severn estuary, Labour has just 10 seats outside of London.”
  • Geology: “The line links the mouth of the River Tees between Redcar and Hartlepool in the north east of England with the mouth of the River Exe in Devon, the south west. The lowlands (sedimentary rocks) are predominant to the east of the line and higher land (igneous and metamorphic rocks) dominates to the west. As well as geology, those areas to the north and west of the line are generally wetter in climate than those to the east and south. Similar lines are commonly drawn, for similar purposes, between the Severn Estuary and the Wash, and between the Severn and the mouth of the River Trent.”
  • Ornithology: “[The nightingale is] a secretive bird which likes nothing better than hiding in the middle of an impenetrable bush or thicket. In the UK they breed mostly south of the Severn-Wash line […]”
  • Medicine: “Although the 1916 and 1917 waves of meningitis in the civil population were less intense than the primary wave of 1915 […], the underlying pattern of heightened disease activity in counties to the south of the Severn-Wash line persisted.”

I’m sure there are many more examples, but these should suffice to show that the Severn-Wash line is the most obvious border. North England and South England would be different in so many ways that they would quickly develop separate identities.

Obviously I don’t think England will ever be divided, but the consequence is that an undivided England will always dominate the UK to such a great extent that Scottish independence becomes a necessity.

(Crossposted from my personal blog.)

Using the pound sterling after independence

Lloyds Banking Group Archives - 'Oldest Surviving Scottish Banknote'
Lloyds Banking Group Archives – ‘Oldest Surviving Scottish Banknote’, a photo by Scottish Archives on Flickr.

Scotland currently has a very strange currency set-up — we’re technically speaking using the pound sterling, just as England, but three “Scottish” banks have got the right to issue their own banknotes in a currency board arrangement (I put Scottish in inverted commas because the Royal Bank of Scotland is owned by UK government, the Bank of Scotland is part of the Lloyds Banking Group, and Clydesdale Bank is part of the National Bank of Australia). I don’t know of any other modern countries where private banks issue bank notes in lieu of a devolved government.

After independence, there are several options available to Scotland.

As I’ve written before, my personal preference would be a currency board arrangement, where the National Bank of Scotland issues one Scottish crown (or pound or dollar or whatever) for each pound sterling in its vaults. In this way, it will still be very easy to do business with the rUK, but the coins and banknotes will all be issued by the NBS. The advantage of this system is that if the rUK economy collapses, the link could be broken and the Scottish crown could either be tied to the US dollar or the euro instead, or it could start to float freely, without the need to issue new notes or coins. During the independence negotiations, Scotland would of course be entitled to demand representation on the Bank of England’s monetary policy board in return for maintaining the currency board (which would be to the rUK’s advantage).

I think this policy would be more robust than trying to maintain the status quo exactly, where the Bank of England’s notes and coins are also circulating in Scotland, because it would be much harder to change the set-up if it becomes desirable to leave the sterling zone (who knows, the euro might be looking fantastically attractive again in ten years’ time).

What’s important to remember here is that changing a currency takes time. No matter what the outcome is, I’d expect the status quo to continue at least two or three years after independence day (until 1st January 2019 or so), which means that the actual way forward will be decided by the independent Scottish Parliament elected in May 2016, not by the current SNP government.

The fact that Scotland can decide to implement a currency board without the approval of the Bank of England shows that the unionists’ threat of the day (that there wouldn’t be Scottish banknotes after independence) is absurd. Even David Blanchflower said so today (“George Osborne would be better off revisiting his misguided and failing policies for growth rather than scaremongering to the people of Scotland”) and I don’t think anybody has ever accused him of being a Scottish nationalist.

PS: I’d recommend following Blanchflower on Twitter. For instance, he tweeted this today:

Thatcher on Scottish independence

Baroness Thatcher portrait
Baroness Thatcher portrait, a photo by Downing Street on Flickr.
In Margaret Thatcher’s “The Downing Street Years”, she has this to say about Scottish independence:

If [the Tory Party] sometimes seems English to some Scots that is because the Union is inevitably dominated by England by reason of its greater population. The Scots, being an historic nation with a proud past, will inevitably resent some expressions of this fact from time to time. As a nation, they have an undoubted right to national self-determination; thus far they have exercised that right by joining and remaining in the Union. Should they determine on independence no English party or politician would stand in their way, however much we might regret their departure. What the Scots (not indeed the English) cannot do, however, is to insist upon their own terms for remaining in the Union, regardless of the views of the others.

Until I read this, I had been puzzled about why David Cameron agreed to a referendum so readily (to the extent that I’ve been known to joke that Cameron surely must be an undercover agent for the independence movement); however, it’s now clear to me that he’s just following his bible to the letter.

Apart from explaining Cameron’s behaviour, what I find interesting about this paragraph is that I don’t think many people in the pro-independence camp will find much to disagree with. We are in favour of independence exactly because we don’t believe we can insist on our own terms for remaining in the Union, so we want to move to a situation where we are in charge of our own destiny. On the other hand, I think many Scottish Labour politicians will have problems with this Thatcher quote — the way they think they can promise more devolution after a No vote without prior approval from all major UK parties seems to imply they believe Scotland can pick and choose freely from the devolution shelf while remaining in the UK.

Better Together’s donation rules

Yes Scotland has some very easy donation rules: Anybody can donate up to £500 (even people who have absolutely no connexion to Scotland), but to donate more than that you need to be domiciled in Scotland. Fair and easy.

On the other hand, Better Together’s donation rules really are somewhat difficult to comprehend. They seem to be happy to allow donations from the rest of the UK, but possibly only from “real Scots”, as they like to call them:

Yes Scotland and Better Together donation rules

Let’s have a look at all the Better Together boxes:

  1. It’s clear Better Together will accept unlimited donations from “real Scots” living in Scotland.
  2. They haven’t said much about donations from “foreigners” in Scotland. It’s possible that they (like the SNP and Yes Scotland) consider everybody living here to be Scottish, in which case they’ll allow unlimited donations from this source, too.
  3. I’ve written “unlimited” in this box because otherwise there’s no way that Ian Taylor (born, educated and domiciled in England, but with Scottish ancestry) would have been allowed to donate £500k.
  4. I’m basing this on this quote from The Herald: “Better Together campaign director Blair McDougall […] said he would refuse to take cash from foreign donors, but would accept UK-wide donations up to £500.”
  5. Better Together’s website contains this: “we will ask all donors to confirm they are not from overseas; we will check that anyone who gives a donation of over £500 is not from overseas”. So people from abroad can still donate up to £500 if they pretend to live in the UK.
  6. Same as above. It appears Better Together don’t differentiate between “real Scots” and “foreigners” when they live outwith the UK.