THE SCOTTISH INDEPENDENCE REFERENDUM 2014

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The historic Scottish Independence referendum was held on September 18, 2014 in all cities and counties of Scotland. The independence referendum question, which voters answered with either “Yes” or “No” was “Should Scotland be an independent country?” The “No” side ultimately won, with 55.3% voting against independence and 44.7% voted in favour.

The overall turnout was just under 85% after the people gave their votes. Yes Scotland was the main campaign group for independence, while Better Together was the main campaign group in favour of maintaining the union. Many other campaign groups, political parties, businessmen, newspaper agencies and well renowned personalities were also involved.

The Scottish Independence Referendum Bill, setting out the arrangements for the referendum, was passed by the Scottish Parliament in November 2013, following an agreement between the Scottish and the United Kingdom governments and was officially enacted as the Scottish Independence Referendum Act 2013.

This was the fourth time that a referendum was held in Scotland after the licensing referendum in 1920 and the two devolution referendums in 1979 and 1997. It is also the eleventh time in United Kingdom that a referendum was held.

For those who do not know why and how Scotland joined the United Kingdom, here’s a small account of history regarding the merger. The Kingdom of Scotland and the Kingdom of England were established as independent countries during the Middle Ages. After fighting bloody wars during the 14th and 15th centuries, the two monarchies entered a personal union in 1603(The Union of Crowns) when James VI of Scotland also became James I of England.

The two nations were temporarily united under one government when Oliver Cromwell was declared Lord Protector of the Commonwealth in 1653, but this was dissolved when the monarchy was restored in 1660.

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Scotland and England united to form the Kingdom of Great Britain in 1707. Great Britain in turn united with the Kingdom of Ireland, another powerful monarch state in 1801, thus forming the United Kingdom of Great Britain and Ireland. However, again in 1922, the first ever referendum took place in United Kingdom and in Ireland both.

Almost 95% of its people voted for independence, as people thought that it would help Ireland develop faster and also to get rid of the sectarian violence, that ravaged the kingdoms of England, Scotland and Ireland for the last 45 years.

It resulted in the secession of 26 counties of Ireland from the United Kingdom and formed the Irish Free State or Southern Ireland. In 1937, the name was officially changed to the Republic of Ireland. The rest of the 6 counties voted to remain with the UK and hence, formed the state of Northern Ireland. Therefore, the countries of England, Scotland, Wales and Northern Ireland collectively came to be known as the United Kingdom of Great Britain and Northern Ireland since 1938.

Given below was the criteria laid by the Scottish Parliament in 2013 on voting for the independence referendum:-

  • British-born citizens who are permanent residents of Scotland.
  • Citizens of the 52 other Commonwealth countries who are residents in Scotland.
  • Citizens of the 27 other European Union countries who are residents in Scotland.
  • The members of the House of Lords who are residents in Scotland.
  • Service/Crown Personnel serving in the United Kingdom or overseas in the British Armed Forces or with Her Majesty’s Government who are registered to vote in Scotland.
  • Convicted prisoners were not allowed to exercise their opinions for the referendum.
  • The normal voting age was reduced from 18 to 16 for the referendum. The move was supported by Labour, the Liberal Democrats and the Scottish Green Party.

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For the referendum to be a major success and to garner positive results, various issues were addressed by the politicians of all Scottish parties, in order to woo the voters:-

  •  Immigration – The UK has long been against from certain EU policies. One is the opt-out from the Schengen Area, meaning there are full passport checks for travellers from other EU countries except the Republic of Ireland, which is part of the Common Travel Area(CTA) with the UK. The Scottish government proposed that an independent Scotland should remain outside the Schengen Area and join the CTA, ensuring that no passport controls would be needed at the Anglo-Scottish border.
  • Agriculture – In 2013, as part of a European Union(EU) member state, Scottish farmers received £583 million in subsidy payments from the EU under the Common Agricultural Policy(CAP). Annual CAP payments are made to the UK, which then determines how much to allocate to each of the devolved administrations, including Scotland. Supporters of independence therefore believed that an independent Scotland would receive greater agricultural subsidies than when part of the UK. Opponents of independence believed that Scottish farmers benefited because the UK was one of the larger EU member states and therefore had a greater say in CAP negotiations. They also questioned whether an independent Scotland would immediately receive full subsidy payments from the EU, as recent new member states had had their subsidies phased in. 
  • Child and Health Treatments of Adults – In the brochure of Scotland’s Future, the Scottish government pledged to expand childcare and woman care health provisions in an independent Scotland. The white paper of the brochure stated that this policy would cost £700 million, but that this would be financed by increased tax revenue from an additional 100,000 women returning to work. Scottish Labour leader Johann Lamont said that the policy should be implemented immediately if the Scottish government believed that it would have a beneficial effect. The former first minister of Scotland, Alex Salmond responded that under devolution the costs of the policy would have to be financed by cuts elsewhere in public expenditure. In March 2014, the National Day Nurseries Association said that the plan could not be implemented unless greater funding was provided by local authorities to private nurseries. A report by the Scottish Parliament Information Centre questioned the economic benefit of the policy, pointing out that there were only 64,000 mothers of children aged between 1 and 5 who were economically inactive.
  • Citizenship The Scottish government proposed that all Scottish-born British citizens would automatically become Scottish citizens on the date of independence, regardless of whether or not they were living in Scotland. British citizens in Scotland would also be considered Scottish citizens, even if they already hold the citizenship of another country. Every person who would automatically be considered a Scottish citizen, would be able to opt out of Scottish citizenship provided they already held the citizenship of another country. The Scottish government also proposed that anyone with a Scottish parent or grandparent would be able to apply for registration as a Scottish citizen, and any foreign national living in Scotland legally, or who had lived in Scotland for at least 10 years at any time and had an ongoing connection to Scotland, should be able to apply for naturalisation as a Scottish citizen.
  •  Defence and Military The Scottish Nationalist Party(SNP) said that there was a defence underspend of at least £7.4 billion between 2002 and 2012 in Scotland. Hence, the independence would allow the Scottish government to correct the miscalculations. In its white paper, the Scottish government planned that an independent Scotland would have a total of 15,000 regular and 5,000 reserve personnel across land, air and maritime forces by 2026. In July 2013, the SNP proposed that there would be a £2.5 billion annual military budget in an independent Scotland. The House of Commons Defence Select Committee said that the £2.5bn budget was too low. The Royal United Services Institute said in 2012 that an independent Scotland could set up a Scottish Defence Force, comparable in size and strength to those of other small European states like Denmark, Norway and Ireland, at an annual cost of £1.8 billion. The authors acknowledged that an independent Scotland would need to come to some arrangement with the rest of the UK on intelligence-gathering, cyber-warfare and cyber-defence, that the future cost of purchasing and maintaining equipment of its forces might be higher due to smaller orders.
  • Crime Prevention and Intelligence A UK government paper on security stated that Police Scotland would lose access to the intelligence apparatus of the UK, including MI5, MI6, SIS and GCHQ. The paper also said that an independent Scottish state would need to build its own security infrastructure. Former Police Scotland commissioner Theresa May commented that an independent Scotland would have access to less security capability, but would not necessarily face a reduced threat. In 2013, Allan Burnett, former head of intelligence with Strathclyde Police and Scotland’s counter-terrorism co-ordinator until 2010, said that an independent Scotland would face less of a threat, intelligence institutions will be readily created. He also added that Scotland would create its own security service like MI5 or MI6 to work alongside police and tackle terrorism, cyber attacks and serious organised crime.

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  • Economy and Currency A principal issue in the referendum was the economy. The UK Treasury issued a report in 2013, which said that Scotland’s banking systems would be too big to ensure depositor compensation in the event of a bank failure. The report indicated that Scottish banks would have assets worth 1,254% of GDP, which is more than Cyprus and Iceland before the last global financial crisis. It suggested Scottish taxpayers would each have £65,000 of potential liabilities during a hypothetical bailout in Scotland, versus £30,000 as part of the UK. Economists including Andrew Hughes Hallett, Professor of Economics at St Andrews University, rejected the idea that Scotland would have to underwrite these liabilities alone. He observed that banks operating in more than one country can be given a joint bailout by multiple governments. In this manner, Fortis Bank and the Dexia Bank were bailed out collectively by France, Belgium, and the Netherlands. The Federal Reserve System lent more than US$1 trillion to British banks, including $446 billion to the Royal Bank of Scotland(RBS), because they had operations in the United States. In February 2014, the Financial Times noted that Scotland’s per capita GDP is bigger than that of France when a geographic share of oil and gas is taken into account, and still bigger than that of Italy when it is not. As of April 2014, Scotland had a similar rate of unemployment to the UK average (6.6%) and a lower fiscal deficit (including as a percentage of GDP) than the rest of the UK. Scotland performed better than the UK average in securing new Foreign Direct Investment in 2012–13 (measured by the number of projects), although not as well as Wales or Northern Ireland. The GDP growth during 2013 was lower in Scotland than in the rest of the UK.

Another major economic issue was the currency that would be used by an independent Scotland. The principal options were to establish an independent Scottish currency, join the euro or retain the pound sterling. Throughout the 1990s and early 2000s, the SNP’s policy was that an independent Scotland should adopt the euro, though this was relegated to a long-term rather than short-term goal by the party’s 2009 conference.

There was disagreement over whether Scotland would be required to join the euro if it wished to become an EU member state in its own right. All new members are required to commit to joining the single currency as a prerequisite of EU membership, but they must first be party to ERM II for two years, something that requires an own currency. The Scottish government argued that countries have a de facto opt-out from the euro because they are not obliged to join ERM II. 

The SNP favoured continued use of sterling in an independent Scotland through a formal currency union with the UK, with the Bank of England setting its interest rates and monetary policy and acting as its central bank. The white paper Scotland’s Future identified five key reasons that a currency union “would be in both Scotland and the UK’s interests immediately post-independence”. Yes Scotland said that a currency union would benefit both Scotland and the rest of the UK, as Scotland’s exports would boost the balance of payments and consequently strengthen the exchange rate of sterling.

Meanwhile, UK economists and financial experts stated that the effect on the balance of payments and the exchange rate would be “largely neutral”. The Scottish government stated that not having a currency union could cost businesses in England, Wales, and Northern Ireland £500 million in transaction charges when trading with an independent Scotland. Plaid Cymru treasury spokesperson Jonathan Edwards commented that such costs were a “threat to Welsh business”. Johann Lamont said that any additional transaction costs would fall largely on Scottish companies, costing businesses in Scotland 11 times more than those in England.

The Institute of Directors stated that any new transaction costs would “pale in comparison to the financial danger of entering an unstable currency union. The Scottish Socialist Party favoured an independent Scottish currency, pegged to sterling in the short term. The Scottish Green Party said that keeping sterling as “a short term transitional arrangement” should not be ruled out, but also said that the Scottish Government should keep an open mind about moving towards an independent currency.

  • Government Revenues and Expenditures The Barnett formula, which means a mechanism used by the Treasury in the United Kingdom to adjust the amounts of public expenditure allocated to Northern Ireland, Scotland and Wales automatically to reflect changes in spending levels allocated to public services in England as appropriate, has resulted in higher per-capita public spending in Scotland than England. If North Sea oil revenue is calculated on a geographic basis, Scotland also produces more per capita tax revenue than the UK average. The Institute for Fiscal Studies reported in November 2012 that a geographic share of North Sea oil would more than cover the higher public spending, but warned that oil prices are volatile and that oil is a finite resource. The Government Expenditure and Revenue Scotland report for 2012-13 found that North Sea oil revenue had fallen by 41.5% and that Scotland’s public spending deficit had increased from £4.6 billion to £8.6 billion. In May 2014, the UK government published an analysis identifying a “Union Dividend” of £1,400 per year for each person in Scotland, mainly due to the higher level of public spending under the Barnett formula. The Scottish government disputed this analysis, saying that each Scot would be £1,000 better off per year under independence by 2030. Three economic experts said that both estimates were possible, but they both depended on unknown variables such as the division of UK government debt, future North Sea oil revenues, possible spending commitments of an independent Scotland and future productivity gains.
  • Energy Market – Most issues regarding energy are controlled by the UK government, although control over planning laws allows the Scottish government to prevent the construction of new nuclear power stations in Scotland. Supporters of independence want to retain a single energy market for the whole of Great Britain after independence, in order to maintain price stability and support for suppliers. Opponents have said that independence would threaten the single energy market. Euan Phimister, professor of economics at Aberdeen University, has said that although independence would affect the relationship, it is likely that there would be continued English demand for electricity generated in Scotland because OFGEM projections suggest that there is little spare capacity. The second largest supplier of energy in the UK, SSE plc, believes that a single market would be the most likely outcome under independence, although it would require negotiations and may involve changes to the existing system. Approximately 90% of the United Kingdom’s North Sea oil fields are located in Scottish territorial waters. The tax revenue generated from an offshore site is not counted within the nation or region nearest to it, but is instead allocated to the UK Continental Shelf. The revenue from North Sea oil has been used to support current expenditure, rather than creating a sovereign oil fund. The SNP believes that a portion of the revenues should be invested in a sovereign oil fund. The Scottish government, citing industry regulator Oil and Gas UK, estimated in Scotland’s Future that there were 24 billion barrels of oil equivalent remaining to be extracted.  In September 2014, an investigation by industry recruitment website Oil and Gas People stated that there were extensive oil reserves to the west of the Western Isles and Shetland. The report anticipated that the region would be developed within the next 10 years because of improvements in drilling technology, rig design and surveying.
  • Joining the European Union – The SNP advocated that an independent Scotland should become a full member state of the European Union(EU) with some exemptions, such as not having to adopt the Euro. There was debate over whether Scotland would be required to reapply for membership, and if it could retain the UK’s opt-outs. The European Commission(EC) offered to provide an opinion to an existing member state on the matter, but the British government confirmed it would not seek this advice, as it did not want to negotiate the terms of independence ahead of the referendum. There is no precedent for an EU member state dividing into two sovereign countries after joining the EU. Supporters of independence stated that an independent Scotland would become an EU member by treaty amendment under Article 48 of the EU treaties. Opponents say that this would not be possible and that an independent Scotland would need to apply for EU membership under Article 49, which would require ratification by each member state.

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The opinion polls for the referendum started in 2012. Only 17% of the respondents had supported for independence at that time. However in mid-2013, the percentage of yes supporters gradually increased to 42% as compared to 57% of its supporters who were opposing independence. In September 2014, after a lull in changes of percentages, the numbers once again swayed owing to the awareness generated by the people to the Scottish citizens.

After the referendum on September 18, 2014, an organisation named “YouGov” released the final opinion poll, setting 47% in favour of independence and 53% against it. Voting took place between 7am to 11pm in polling places like schools, church halls, libraries and community centres. A huge juggernaut gathered to exercise their opinions and in some places, people still waited in queues in huge numbers to cast their votes and were not denied the chance of vote even after the polling hours.

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Only 4 counties of Scotland – Dundee, Glasgow, North Lanarkshire and West Dunbartonshire voted in favour of independence with an average of 55%. The rest of them voted against independence and hence “No” became the winner. British Prime Minister David Cameron congratulated the success of the referendum and also respected the people’s decision to stay with the UK.

He also added that the unity of the 307 years of relationship was saved and firmly established between Scotland and England. The given picture shows the results of the referendum in Scotland. Dark colours of red or green signifies against independence or in favour of independence strongly and light colours of red or green means against independence or in favour moderately.

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He went on to say that “it would have broken my heart to see our United Kingdom come to an end and I know that this sentiment was shared not just by people across our country but also around the world”. Alex Salmond stated that he accepted the “verdict of the people” and called upon “all Scottish citizens to follow suit in accepting the democratic verdict of the people of Scotland”.

He called the referendum a “triumph for the democratic process and for participation in politics”. Northern Ireland’s First Minister Peter Robinson and Welsh First Minister Carwyn Jones also responded positively to the result. Other countries have also welcomed the result and have replied that they will continue to serve UK and also come to aid in case of any emergency issues.

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