Article Published July 16th, 2020

President Clinton admonished us that it was “the economy, stupid”. Perhaps, in the current febrile situation this should be amended to being “it’s the politics, stupid”.  Faced with a 25% drop in GDP in the UK in quarter 2, this might seem surprising to some. But take a closer look. Whether it be the Cummings affair, or the mistakes made by the UK government and Public Health England in controlling the Covid outbreak, the political consequences are looking poor for the freshly elected UK government. When polled, voters in the devolved regions of Scotland and Wales now have more faith in their own devolved governments to deal with the crisis, than they have in the UK’s government based in Westminster.

And this may represent one of the first times that judgements about both political and economic competence have swung towards the governments of the devolved regions and against Westminster. This represents the continuation of a longer term trend affecting the state of the political and economic union within the United Kingdom, a Union that is so often taken for granted by England, and that has so often been criticized in the devolved territories.

Taking a step back and looking at how the Union between the underlying territories of the UK developed, it appears largely as a result of monarchical family and dynastic alliances, rather than as a result of any popular enthusiasm for a regional union. The United Kingdom emerged from the activities of the English royal family, as they became kings and queens of Scotland and Ireland, with Wales simply absorbed politically back in the Middle Ages. The key treaties bringing Scotland and Ireland into the United Kingdom of Britain and Ireland were the 1707 Union Treaty with Scotland, and the 1800/01 Act of Union with Ireland. These acts merged the parliaments of Scotland and Ireland with that of Westminster, and were supported by a majority of parliamentarians in England, Scotland and Ireland. This was not a union forced at the muzzle of a musket. It was also a Union that held out a number of political and economic carrots to the acceding territories. In Scotland’s case the Union helped to overcome some embarrassing financial difficulties that arose after the collapse of a poorly planned outbreak of Scottish colonialism.  The failure of the Darien colony in what is today called Panama, left a trail of debts and economic damage behind it, reminiscent of what would be later called the South Sea Bubble in England, and even more recently the damage caused by the Great Financial Crisis in 2008/9.

The Union Treaty of 1707 provided some compensation for the losers, including the Scottish government, in the Darien affair. It also provided an entry point for Scottish interests to join in other English colonial enterprises, which proved beneficial in the longer run. And not to forget it guaranteed a Protestant succession to the (Scottish) monarch. This was contentious, as two subsequent Jacobite rebellions, in 1715 and 1745, were to show.

The Act of Union with  Ireland held out the promise of greater civil rights and emancipation  for  Catholic land owners and farmers in Ireland, and hence in developing their share of the combined enterprise, bearing in mind that Ireland’s then population of 5.5  million (higher than it is today) was nearly half the size of that of England and Scotland in 1801.

 

Disappointed Hopes

With the passage of time, the hopes that helped to support the desire for “ever closer union” within the UK have been steadily disappointed. It is similar to being a minority shareholder in a company. The management make mistakes, so you vote against them. Yet as minority shareholders it is almost impossible to actually outvote the dominant partner, England.

This is not to ignore that great efforts were made in Ireland to unravel the Act of Union through legal and democratic means. Had it not been for the first World War, Home Rule for Ireland would have been achieved. But it was a political football Westminster found hard to deal with, since Home Rule immediately led to resistance in Ulster, revealing weaknesses in political trust between key power brokers in Ireland.  These difficulties were to fundamentally weaken the degree of independence achieved by the Irish Free State after winning control over 26 of the 32 counties in Ireland. Rather than becoming a fully independent state, as the IRA and De Valera had hoped for, the ratification of the Anglo Irish Treaty of 1921 by the Dail (Irish Parliament) meant that the Irish Free State became a dominion within the British Empire, even requiring an oath of allegiance to the British crown.

This, on top of the concessions made to Ulster, proved too much for the IRA and other anti treaty forces, who then conducted a bitter civil war which they lost. Not a great advertisement for the use of military force to achieve independence in the “British” isles.

 

Devolution in Scotland and Northern Ireland

Thus far opinions arguing for full independence in Scotland and Wales have not emulated developments in Ireland. Yet, it is also clear that over the years, political and social feelings about the Westminster parliamentary model have soured in Scotland and Wales. As earlier in Ireland, the share of votes for political parties supporting independence has been growing. In Scotland this has led to the SNP becoming the largest political party, and in dominating the Scottish parliament at Holyrood. In the process, nationalist sentiment in Scotland has marginalized the “unionist” Conservative and Labour parties. This had the result of fatally damaging Labour party electoral chances in winning a majority in UK general elections.

Ironically, it was George Robertson, then the Labour shadow secretary of state for Scotland, who said in 1995 that devolution would “kill independence stone dead”. A theme confirmed by Tony Blair, who also admitted that one of the main drivers of Scottish devolution was to prevent Scotland’s independence from the UK, and more particularly from England. It is possible that devolution may have effectively slowed down the move towards independence, but certainly not killed it stone dead. In a recent YouGov opinion poll 51% of those polled in Scotland would now vote “yes” for independence, with most favouring a second referendum after the next elections to Holyrood.

This is not an overwhelming majority opinion, yet there are reasons for thinking that Scottish opinion is shifting more towards independence, threatening to reverse the result of the earlier 2014 referendum.

In Northern Ireland, the remaining area of Ireland not yet fully independent of Westminster, an overall majority of voters supported the Remain position in the 2016 EU referendum, although a majority of Unionists voted against Brexit.  This contrast between the preferences of the two communities has created a delicate political situation in the Province, made more complicated by the looming possibility of a “hard” Brexit, by which the whole island of Ireland would be particularly badly affected. Relations between the British government and its traditional Unionist supporters in Northern Ireland have been spectacularly worsened by the former’s willingness to create a new customs border down the middle of the Irish Sea to ensure the continuation of an open border between the Irish Republic and Northern Ireland, the major achievement of the Good Friday Agreement of 1997. The Good Friday Agreement foresaw a possible referendum on Irish unity in the event that a majority for that course seemed to be emerging in Northern Ireland. It would be a bold commentator who could claim that such an emergence is unlikely in the years to come.

 

Broken Promises

There are important factors contributing to this desire in the devolved regions to put more distance between themselves and the Westminster government politically. One is the perception that the national governments in Wales and Scotland have handled the Covid crisis better than the UK government. In Scotland 74% of those polled thought the SNP government was doing a better job than the English Conservative government.  When asked about whether the UK government was handling the Covid crisis badly, 40% and 48% of those polled respectively in Wales and Scotland thought the UK government was performing badly. International comparisons also show that the UK has had more excess deaths, and higher fatality rates than other European countries, and is one of the worst performers globally. And this seeps away at the trust needed between voters and politicians that is an essential element in making the British Union work.

Trust has also been seeping away owing to broken promises over the economy. Over the 20 years of devolution, regional growth rates have generally declined in the period 1998 to 2018 as compared with the period 1970 to 1998. The only “devolved” region to have prospered has been London, whose performance owes more to its skill mix and role in the global economy than to devolution. The devolved regions’ relative income per capita has also fallen between 1997 and 2012 in Wales and Northern Ireland, while rising slightly in Scotland. In short, if devolution was designed to do more than brighten up the regional paintwork, it has largely failed. And this in turn has contributed to growing disaffection with the current status quo.

More recently still, there are signs that the current Westminster regime is prepared to undo many of the “freedoms” won under devolution. This is not just about a failure to consult the devolved regions for their views on Brexit. It is also a determination to take back powers, previously devolved, in areas such as agriculture, infrastructure, state aids to industry, that had previously been subject to devolved region input, and on occasion left them with the final word on how these policies should be applied in their local areas. It has been suggested that this reduction in devolved region powers exceeds what the Thatcher regime imposed on the regions.

 

Hard Brexit and divorce

In previous articles and blogs for the Federal Trust (in particular “Hard Brexit and the Regions”), this author identified that many of the devolved regions would suffer more badly following a Hard Brexit – then considered an unlikely outcome –  than regions such as London and the South East. The changes modeled in those articles were, by the standards of what actually happened, mild. A 15% devaluation of the pound, and a recent 25% drop in GDP were not factored in. The ending of the transitional period with the EU at the end of December 2020 implies that just as other states might be showing signs of a more sustainable post Covid economic recovery, Britain will be facing further self inflicted wounds entirely of its own making.

The government appears to misunderstand that if Britain becomes a zero tariff, zero quota land, and remains outside of the EU Customs area, goods exported from the UK will have to be controlled as they cross the external EU tariff. Checks will have to be made on levels of local content and source of origin. And this will result in congestion and delays of goods flowing from Britain to the EU. And this will also apply to goods flowing from the UK to Northern Ireland, if a hard border between Northern Ireland and the Republic is to be avoided. Moreover, if UK technical standards differ from those of the EU, then imports from the EU too will have to be checked at the UK border, adding further delays, and driving up costs.

It appears entirely possible that the devolved regions have a lengthening list of criticisms about the UK government.  These support their view that left to their own devices, they could do better than the UK government in managing their political, economic and social affairs. New Labour’s hopes that devolution would stop independence “stone dead” appear to be misplaced. Rather, with the devolution genie now out of its bottle, further political fireworks are to be expected on the constitutional front as we roll towards a Hard Brexit and when further difficulties in controlling Covid occur. The combined impact of Covid and a Hard Brexit could well be the straws that break the Union’s back. And this will be attributable as much to incompetence at Westminster, as it will be to rising nationalist sentiment in the devolved regions.