Belfast Telegraph

Tuesday 30 September 2014

DebateNI home of Northern Ireland politics

Scottish independence: Even a No vote by Scots will lead to tremors in Northern Ireland

Today marks the beginning of a new month in which the Scottish people will take part in a referendum to opt for independence, or to maintain the union with England and the rest of the United Kingdom

Whatever the outcome, next month's referendum on Scottish independence will have a profound effect on Northern Ireland. The question is whether Stormont can handle the aftershocks of either a Yes or a No vote.

So far most attention has focused on what might happen if Scotland votes for independence and opts out of the United Kingdom.

That would be a deep shock, given the strong links we have with Scotland dating back to the Plantation of Ulster and beyond.

The whole image of the UK would be changed and weakened in a way that would challenge unionists and encourage republicans and nationalists.

There is also the fact that, in recent years, Scotland has been a net contributor to the UK exchequer, while we have been a steady drain.

The loss of Scotland would make Northern Ireland an even greater burden on English taxpayers at a time when the whole notion of the UK would be up for debate as never before.

Judging by the polls, a No vote seems more likely, but even that would send tremors through our fragile political and economic system.

First of all, the Yes vote is likely to be well over 30%, probably 40% or more. That will mean that the option of independence will remain on the agenda, and the debate on the future of the UK will not be over.

A No vote to independence would also leave us with a Scotland that has far more autonomy than it does now. This week flesh was put on the idea of 'Devomax' in a statement from the three main UK parties.

They pledged that, if Scotland remained in the UK, they would be prepared to devolve extensive powers over taxation and welfare benefits to Edinburgh.

The joint commitment, signed by David Cameron, Ed Miliband and Nick Clegg, says: "We support a strong Scottish parliament in a strong United Kingdom and we support the further strengthening of the parliament's powers." They pledge to act quickly to grant Holyrood more autonomy, whoever wins the next general election.

For his part, Alex Salmond, the Scottish First Minister and SNP leader, has vowed to take this up and expand Scottish fiscal autonomy to the maximum. He adds that he expects a Yes vote.

That will enable Scotland to opt out of the UK's unpopular welfare reforms, perhaps by introducing a system of supplements.

The details have yet to be spelt out, or negotiated, but the proposal is that the Scots will get control of anything between 40% and 60% of their revenue.

It will most likely allow the Scots to adjust income tax, VAT and corporation tax if it chooses to do so. If Scotland gets such powers, then it is likely that we in Northern Ireland will, too.

The difference is that Scotland, which has more than five million people and game-changing North Sea oil revenue, has a far better tax base than we do and we couldn't compete with it.

It is also not lumbered with our cumbersome system of all-party Government. It'll be able to agree spending adjustments far more easily and painlessly than we are.

Imagine, for example, that Scotland got control of corporation tax and reduced it, like the Republic. How would we attract inward investment with two neighbouring regions that have lower rates of business tax, a better industrial infrastructure and a more stable political system whose leaders can actually take hard decisions?

Scottish cuts in other duties – for instance capital gains, or inheritance tax – would also pose a challenge our Executive is in no shape to meet.

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