The following article, written by Jonathon Shafi of conter, outlines the political significance of the SNP government’s Building a New Scotland. He argues that adopting this paper means “any Scottish sovereignty is more distant than ever”.



The realisation of any Scottish sovereignty is more distant than ever 

We don’t need to rehearse the political events that have taken place since 2014, here and internationally. The need for an updated case for independence is obvious. After a bland “scene setting” paper, and a threadbare “democracy” paper, it has to be said that expectations for the economics of independence publication were not exactly high.

Economist George Kerevan gives us an outline of the Building a New Scotland: A stronger economy with independence report, which having had years to research and write, is underwhelming at best:

“We don’t learn a lot that’s new in the latest ScotGov position paper on the mechanics of independence. Basically, this latest document is a rehash of the earlier SNP Growth Commission report of 2018. There’s lots on Scotland’s economic potential and a list of new institutions to be created – including a central bank, but nothing that really confronts the harsh realities that have appeared since 2018.  These include the return of galloping inflation, a global energy crisis, and the trashing of UK public finances by the Tory regime at Westminster. If independence does happen next year, then the incoming government will have to confront these issues head on. This paper does not enlighten us on how.”

Independence Captured has extensively covered the incoherence of the Growth Commission, and in particular the Sterlingisation policy. I, and many others, have campaigned against it from day one and sought to highlight the ruinous effects it would have if it ever came to pass. The pandemic and the recent volatility of the pound only reinforce the need for an independent currency, adding exclamation points to the criticisms of Sterlingisation.

As we reported last week, leading SNP figures were happy to go on the record to reiterate the policy during and after the SNP conference. The process by which the SNP leadership arrived at this position has been contoured by the influence of the corporate lobby. As a result, years which could have been spent promoting the need for economic independence, have been wasted.

The confirmation from the Scottish Government that, “from independence day Scotland would continue to use the pound Sterling,” is not surprising to anyone who has been charting the political development of SNP. But it is no less damaging to the independence cause.

Politically, it represents an orientation that cleaves so tightly with the economic infrastructure of the United Kingdom, that it undermines the point in pursuing such a project at all. As the German economic sociologist, Wolfgang Streeck, recently commented:

“I don’t understand why the Scots should leave the UK and remain with respect to monetary policy subject to what would then be a perfect dictatorship of the Bank of England. In monetary terms Scotland would practically remain part of the UK, without any representation in the UK parliament. One would wonder why a nationalist political party in its right mind should take the risk and expend the enormous amount of political capital needed to win another popular vote on Scottish sovereignty.”

Why, indeed. Consider this. The time between a vote for independence that carries the required political weight, and “Independence Day”, could take years. That’s the period in which the negotiations would take place. The First Minister states baldly, that even after that moment, monetary policy would be governed by the Bank of England.

How long does the period of Sterlingisation last? The answer is not only vague, but it in fact militates against the introduction of a Scottish currency and central bank. It is said that “criteria and economic conditions” would have to be met. The Scottish Government is clear that there would be no “fixed timetable.”

In other words, Sterlingisation would be an indefinite arrangement. The result is a net reduction in sovereignty, because at the same time, there would be a total of zero Scottish MPs in Westminster.

A Scottish pound couldn’t be introduced, we are told, until “market confidence” is established. In essence, this means that the markets have more sovereignty than the Scottish people. They, and the UK financial apparatus, will determine whether or not a Scottish central bank is viable.

In the intervening time, Scotland will be wide open to any number of crises, and totally reliant on the UK Government, or indeed, IMF loans with the strings of privatisation attached. Furlough? Can’t do it. Borrowing? That would be set at a premium. Green New Deal? Impossible. Indeed, that is partly why Patrick Harvie, co-leader of the Scottish Greens, opposed the Growth Commission currency proposal in 2019:

“Without independence we have one hand tied behind our backs, but with the Growth Commission we’d have the other hand tied instead, gaining political independence but without the real economic control that we need. People who were open but not convinced in 2014 are far more likely to back independence if it’s based on a positive, bold vision for Scotland’s future. Will the First Minister accept that what the Growth Commission offers is closer to the failed model of the UK, and that the Green party’s plan for a Green New Deal represents the alternative, bold new vision that Scotland needs?”

Now that the Greens are in government with the SNP, there has been scant, if any, criticism when it comes to the official case persisting with Sterlingisation.

The Growth Commission report became infamous for a number of reasons. One of which was the notion that an independent currency could only be set up once six economic tests had been met. The process would take a minimum of ten years, but probably longer. SNP branches mobilised to opposed this, and closer examination revealed that the tests were, in effect, barriers that would prove difficult to overcome.

The new White Paper doesn’t contain the words, “economic tests,” but not because they are not included. As Head of Policy and Research at Common Weal, Dr Craig Dalzell, told Independence Captured:

“The Scottish Government’s plan for launching a new currency is essentially unchanged since the 2018 Growth Commission. While that report isn’t explicitly mentioned by the white paper and the “six tests” it advocated for have been dropped as a single list, the requirements for launching a new Scottish currency still remain and still take the form of two sets of three criteria that match very closely to those former tests.

“The big difference now is that the timescales to meet those tests are even less firm and the criteria to judge whether Scotland has passed those tests even less transparent. In 2018 I responded to the Growth Commission by examining the tests and found that Sterlingisation actively worked against several of them.

“This currency plan will leave Scotland without the means to respond to crises of precisely the kind we’ve seen in the last few years, be they a pandemic, an energy crisis, global supply chain shock or, given that we’d be tied to UK economic policies, political mismanagement that we’re seeing from the UK Government at present.”

This, in my view, represents the complete and total capitulation of the leadership of the national movement. It undermines the idea of Scottish sovereignty so thoroughly as to raise the question posed by Wolfgang Streeck: what is the point? Moreover, it would leave Scotland in a perilous position as we detailed here. Please take a read if you are not familiar with “Sterlingisation” and what it would mean in practice.

After all the campaigning, after getting and winning a referendum, after the UK Government and “team Scotland” have concluded negotiations and after independence day is celebrated in the streets, control over the economy would remain with the Bank of England for an indefinite period subject to stringent tests.

European Union conundrums 

If that was bad, it actually gets worse, thanks to the blatant inconsistencies within the “new” economic case. Much of the content appears to be predicated on the idea that an independent Scotland will be a member of the European Union. The SNP have spent a great deal of time in recent years attempting to “stop Brexit”, and much of the independence case has become synonomous with support for the EU.

In a column for The Herald in February of 2020, I wrote the following:

“If independence has become what feels like a single issue campaign for EU membership, there should be a rock solid plan for entering the EU upon independence. Yet, remarkably, the Growth Commission, talked up as the negotiating position following a Yes vote, would inhibit EU membership because the proposal for Sterlingisation with the UK would leave Scotland without monetary policy autonomy, as the Growth Commission report admits.”

Emphatically, the Scottish Government did not set out a credible route map to rejoining the EU in the supposedly revamped White Paper. The rhetoric around “Scotland in Europe” is just that. Rhetoric. But the danger for those who support Scottish independence is obvious.

If the acid test ever does arrive, in the course of a real referendum, the present position will collapse under the weight of scrutiny which will come not just from opponents of independence, but the institutions themselves.

As it stands, supporters of independence are finding it difficult to support the Scottish Government’s plan. It is, frankly, impossible to reconcile the glaring contradictions in the case. Professor of Accounting at Sheffield University, Richard Murphy made the following point in a thread on the matter. There’s lots I disagree with Mr Murphy on politically, but he puts it bluntly and accurately:

“I think this paper lays out a policy that would be disastrous for Scotland. It could even crush it. As a result, I doubt the conviction of those who wrote it about independence. Do they really want it, I wonder? It’s that bad.

“Without using a Scottish currency Scotland cannot join the EU, and a whole section of the report is dedicated to joining it without ever mentioning the pre-condition that the Scottish currency must be in use first of all.”

When pressed on this, the First Minister can only offer sleight of hand. She says that, despite the need for an independent central bank, Scotland could still apply for EU membership. Sure. But I could apply to be the Chief Medical Officer. Unless I can show the relevant qualifications, it is a futile act.

No matter your view on the EU, every single time a politician reels out the “independence in Europe” yarn, there can only be one legitimate response. That unless and until Scotland as its own currency and its own independently run central bank, there is no possible way back into the EU.

The whole point of the EU is that it is an institution based on rules, commonly shared, around which member states must comply. How on earth can a country align with such a regime without control over its own monetary policy? It can’t. In this regard, Brexit has made the process harder, given Scotland would be trapped under the terms of Sterlingisation, with a non-EU member.

Yet even without the added complexity of Brexit, this isn’t a new problem. There is no evidence that the SNP leadership have taken into consideration any of the difficulties faced in the last referendum. As a former EU economic affairs commissioner said in 2014:

“As to the question of whether sterlingisation is compatible with EU membership, the answer is that this simply would not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its own, and thus no necessary instruments for EMU.”

It is confounding, but it is assuredly the case, that the SNP and the Greens have staked almost the entirety of the independence case on EU membership, while they promote a currency position that wont allow this to happen in the first place.

Considering this is meant to be a government which prides itself on “detail,” this appears to be a quite remarkable oversight. And that’s being generous.

Wither democracy?

Other huge questions arise. Even if it were to come to pass, after the copious and self-imposed obstructions, that Scotland found itself in a position to rejoin the EU, are the electorate to have any say in the process? Because the position of the SNP leadership also appears to strip the Scottish people of their democratic right to decide future relations with the Europe.

Once again, power is to be handed upwards to unelected bodies. If it is not to the Bank of England, it is to the European Commission. The 2016 Brexit referendum is a wholly different question to the proposition that an independent Scotland should join the EU. The parameters of the debate are changed entirely, and the costs and benefits have to be weighed up democratically. Especially as Europe is itself in a period of protracted economic and political crisis. For one thing, the question of austerity would have to be considered.

In the words of the First Minister:

“We do confirm that we would set clear fiscal rules to put and keep public finances on a sustainable path. we would intend these to align with the broad principles of the European Growth and Stability Pact, which is currently being reformed.”

The Stability and Growth Pact is a set of rules designed to ensure that countries in the European Union pursue “sound public finances” and “coordinate their fiscal policies.” In practice this means public spending cuts. As Joshua Fjelstul, research fellow in the Department of Political Science and International Relations at the University of Geneva, explains:

“There are two mechanisms through which the EU can enforce the Stability and Growth Pact and incentivise austerity, one preemptive, the other reactionary. First, the EU can pre-approve member states’ budgets, which could prevent over-spending before it occurs. Second, the EU can impose financial sanctions for over-spending, which could incentivise fiscal discipline.”

There should at least be a debate about Scotland’s future in Europe. But to have that properly there must be a viable route to become a member in the first place. That wasn’t presented in Building a New Scotland: A stronger economy with independence, despite how central it has become to independence.

My view is that the Scottish people should discuss, consider contrasting arguments and vote on matters such as the EU. Indeed, isn’t the point of independence to set up the required institutions in order to allow Scots to make informed decisions about their future democratically?

That power, and the very notion of a reinvigorated popular sovereignty in an “independent” Scotland, will only wither on the vine as a result of the suffocating policy of indefinite Sterlingisation.

Electoral calculus

Curiously, there is no mention of the European Free Trade Association, or EFTA, in the document. This is often cited as a potential staging post in a sequence of events that leads towards eventual EU membership. There is an inbuilt assumption, based on a fantasy, that EU membership lies around the corner. We might ask why this is.

In my estimation, there is an obvious reason. The SNP are wielding the issue of Brexit as part of their armoury in the coming General Election campaign in which the main competitor in Scotland will be the Labour Party. The idea that Brexit can be reversed through independence has been, and will continue to be, a key feature of SNP general election campaigns.

Indeed, you can see electoral triangulation all over the place in the paper. If you want an independent currency, there’s plenty of clips of the First Minister saying the words “Scottish pound.” If instead you crave continuity, and are alarmed at what seems to be a rolling crisis at Westminster, you can be assured that the SNP won’t “scare the horses.” If you want to send a message that you oppose Brexit, there’s lots of material there to guide towards the SNP. After all, they will be the only party who will continue to stand, in theory at least, for full EU membership at the next election.

The SNP leadership are no fools. They know that the criticisms around Sterlingisation are entirely credible and legitimate. But they also know that it’s not going to be tested in the real world for some considerable time, and not while the current First Minister is in power. Even if the Supreme Court ruled in favour of the Scottish Government, it would be for a referendum that explicitly held no legal or political weight. It would be a test of opinion, and a campaign tactic at best.

In this sense, they can have their cake and eat it. The problem, then, is simple. There isn’t an independence strategy, and there isn’t an independence prospectus that will truly deliver Scottish sovereignty. There is, however, a party strategy. It won’t advance the cause of independence, but it will shore up the fortunes of the SNP, who as I often repeat, need to keep independence on the boil without it overflowing.

This is not seven years of hard work, going into a serious, ambitious and trailblazing independence case. It is a component of a carefully crafted electoral strategy, safe in the knowledge that the contents of the various White Papers won’t be put into practice in the foreseeable future.

No response to UK crisis

As British politics lurches through an ever deepening swamp of problems, support for independence remains either behind or tied. Independence won’t happen because Westminster is in disarray. It will only happen if there is a deliberate strategy, and a popular vision, that gives the project purpose on its own terms.

The backdrop to the launch of the paper on the economics of independence couldn’t be more stark. The UK is in a deep-set political and economic crisis. It is, in many ways, uncharted territory, as can be illustrated by the churn of personnel running the British state.

This is not a crisis of the Tory Party alone. It is a moment in which a series of entrenched social, economic, democratic and political crises have combined to form a previously unfathomable set of circumstances.

We might very well ask: who is exercising the authority of the highest office of state? It is certainly not Liz Truss. She will be replaced sooner than later. But in the meantime, the new Chancellor, Jeremy Hunt, is setting up an “Economic Advisory Council” to guide proceedings.

The council, of course, is not composed of citizens groups and unions, but of a collection of managers and technocrats reminiscent of a form of governance seen in in Italy and Greece in years gone by. The council includes:

  • Rupert Harrison, a top aide to former finance minister George Osborne
  • Gertjan Vlieghe and Sushil Wadhwani, who both served on the Bank of England’s Monetary Policy Committee
  • Karen Ward, chief market strategist for EMEA at J.P. Morgan Asset Management.

In a sense what’s new about this is just how out in the open it all is. The government is in a state of collapse, and without any democratic input whatsoever, the above grouping is brought together to craft an economic policy that aligns in its totality with the will of the markets.

Debate, far less input, about the impending austerity coming in the direction of working class communities already hammered by the last decade of cuts and a pandemic, is not on the table.

Independence might have been pitched as a democratic alternative to these kinds of events. But what we have instead through the policy of the Scottish Government, the SNP leadership, and an increasingly pliable Scottish Green Party, is a mirror image of events taking place in Britain today.

The talk of “well being” and a “fairer, greener, happier” Scotland is simply puff around the edges, and typifies the disconnect between words and reality that so readily permeates through the public relations operation the SNP are known for.

For they, in the same spirit as Jeremy Hunt, have handed a veto to the markets and the UK financial institutions over whether or not Scotland should be allowed to gain full economic control. This, even after a vote for independence, and the years of negotiations preceding “Independence Day.” That is the nature of the Sterlingisation policy: indefinite and subject to tests which are difficult in the extreme to meet.

Meanwhile, disconcerting juxtapositions can be drawn. The SNP conference excluded a motion on utilising tax powers around the cost of living crisis, presented by the SNP Trade Union Group. The party hierarchy also excluded a currency motion, backed by at least a dozen party branches, posing an alternative to Sterlingisation.

It’s not even up for debate. Independence, I’m afraid, has indeed been captured.



also see:

The Alba Party and the Left in Scotland – Allan Armstrong, RCF