Scottish referendum: A door has opened for democratic renewal across Britain

The Scottish inventor of the telephone, Alexander Graham Bell, coined the
phrase “When one door closes, another opens”. His fellow Scots’ nail-biting
rejection of independence shelves the debate on secession. But it prises
open the possibility of a wider democratic renaissance – that must be for
the whole of the United Kingdom, not just Scotland.

To mutterings south of the border, the debate about Scottish
self-determination won’t end with the referendum. Even without their
talismanic leader Alex Salmond, the Scottish Nationalist Party (SNP) will
turn its crosshairs on “devo-max”, plans for devolving more powers to the
Scottish Parliament, knowing Scottish support runs at around 60 per cent.
Following the Scotland Act 2012, the Scottish government will raise around
30 per cent of its own tax revenue, up from 14 per cent. Conservatives,
Labour and the Lib Dems now pledge further tax-raising powers and greater
control over social security. And devo-max could draw on international
models, including Germany, Canada and Spain – where the Basque region levies
and spends income, corporation and inheritance taxes, paying Madrid for
national shared services like defence and financial regulation. Yet,
devo-max must come at a price.

With greater financial freedom, Scotland must expect extra responsibility and
any deal must be fair to all parts of the UK, in two ways. First, devo-max
would render the Barnett Formula, used by the UK government to subsidise the
devolved administrations, utterly untenable. This week, David Cameron, Ed
Miliband and Nick Clegg vowed to keep it – Mr Clegg breaching the Lib Dem’s
2010 manifesto promise to scrap it.

Yet, that formula, based on outdated spending patterns and population numbers,
is already divorced from any objective assessment of need across Britain. If
Scots want greater powers to tax and spend, why should the rest of the Union
keep subsidising them to the hilt? Many bristle that Scottish public
services already receive over £2,000 more investment per person, each year,
than some parts of England. That doesn’t just subsidise free prescriptions
and university tuition. Proportionate to its population, Scotland has double
the nurses and ambulance staff compared to England, and 43 per cent more
police officers. Nor is this just a Southern gripe. Scottish public spending
per person on housing and community amenities is double the level in the
Midlands, Yorkshire and the Humber and the North West. By comparison, Wales
gets a rum deal too.

Overhauling the Barnett Formula may have implications for the allocation of
North Sea oil revenue. But, that must surely also take into account all the
British taxpayers’ money invested in extracting the oil. And, amidst the
haggling, all sides need a dose of realism. Last year, North Sea oil
production hit its lowest level since 1977, with forecasts estimating it
will halve again by 2030. By then, English shale will have eclipsed Scottish
oil.

The second price of devo-max must be steps to bridge the democratic deficit
between Scotland and the rest of the Union. South of the border, it smarts
that Scottish MPs in Parliament still vote on matters like social care or
school reforms – now devolved to the Scottish Government – for England.
Similarly, is it right, as Scots increasingly tend to their own affairs,
that 59 Scottish MPs could tilt the balance of power in the event of another
hung Parliament in Westminster?

On Friday, the Prime Minister made clear this issue “requires a decisive
answer”. Likewise, the Conservative Party’s 2010 manifesto promised to
resolve this “unfair situation”. We need to correct the imbalance without
creating another tier of politics and bureaucracy. At a bare minimum, any
new legislation should implement Ken Clarke’s common sense plan –
commissioned by David Cameron in 2006 – to restrict Scottish MPs from
legislating in Westminster on issues that don’t affect Scotland. In truth,
we need a constitutional convention to bring together all parts of Britain,
and ensure a fair result.

Devo-max could spur democratic reform well beyond devolution. We still have
one of the most centralised systems of any Western democracy. That leads to
“one-size-fits-all’ governance, magnifying the effects of bad policy, and
suffocating local innovation. The coalition has made steps in the right
direction, establishing locally elected police and crime commissioners and
giving councils a bigger slice of the tax revenue from the sale of new
homes. But, Whitehall still grips 80 per cent of the public purse strings.
In contrast, in other advanced countries, on average around half of local or
regional government spending is financed by local tax revenue. Across the
political spectrum, there is now a groundswell of ideas on how to deliver
stronger local democracy – to incentivise local business growth, tailor
policy to local needs and ensure it is accountable to the taxpayers who foot
the bill.

The No vote won’t end Scots’ yearning for more control over their own lives.
Rather than resenting it, the rest of Britain should look on it as an
opportunity for democratic renewal across the Union. As Professor Bell
ruefully added: “We often look so long and so regretfully upon the closed
door, that we do not see the ones which open for us.”