State of the Union: is it reform or die?

In 1688, Britain’s Protestant elite was so desperate to avoid putting the Catholic James II on the throne of England that it invited a Dutchman, William of Orange, to take it instead. In 1922, after years of civil war in Ireland, Britain gave up its power in Dublin and split the country in two.

For all the British like to claim that ours is a long-settled constitution, not prone to  continental-style crises, there have been numerous upheavals.

Is Scottish independence the next such shift? In the latest elections, the Scottish National Party was returned to power on what it terms a pro-independence majority. First Minister Nicola Sturgeon insists a second referendum is “the will of the country”, but Unionists point out she fell short of an overall majority, the barrier the SNP crossed in 2011 to secure the 2014 referendum. The Prime Minister has so far refused to entertain the idea of a rerun.

Unionist politicians and thinkers are certainly taking no chances. In and out of government a host of initiatives are being discussed and debated with the aim being to save the Union, or reinvent it. 

Lord Salisbury is a former leader of the Lords, a Conservative, chair of the cross-party Constitution Reform Group (CRG) and chair of Reaction. He believes the Union needs a fresh start if it is to survive. 

Last month, he wrote an open letter to the three main party leaders on the need for a third way on constitutional reform. “The sadness was that the debate on our future was reducing itself to two options”, he wrote. “On the one hand, independence for Scotland and Wales together with Northern Ireland’s unification with the Republic; and, on the other, a version of the status quo.”

Salisbury admits this third way is radical. It involves refashioning the United Kingdom as a federal state. The House of Lords would be abolished, becoming a UK federal chamber. The Bank of England would become the UK Central Bank, with provisions for it to be governed by politicians from all four nations. 

And the House of Commons – currently the apex of British parliamentary sovereignty – would be restyled as an English devolved parliament. 

The proposed reforms are designed to pre-empt a crisis. “Once the Blair changes (Devolution in 1997) had happened, the genie was out of the bottle and it was impractical to put it back in again”, says Salisbury.

“If de facto you’re heading towards a federal solution, why not take the leap?”

Unlike France or the United States, there is no single codified document explaining where power lies in the UK. Parliament is supreme. But the 1997 Devolution Act transformed the Union’s self-image. A unitary state has been replaced by what then-Prime Minister David Cameron called a “family of nations” – in spirit, if not in law.

A debate is emerging on how best to reflect this new reality. Former Labour Prime Minister Gordon Brown, who leads Labour’s own UK-wide constitutional commission set up by Sir Keir Starmer in December, has promised “a radical alternative to nationalism”. Brown proposes enhanced cooperation.

We do not yet know what that means but the options are boiling down to two – stick with a unitary, Westminster-based system, or twist with a federal alternative.   

The Act of Union Bill, which would put the CRG’s reforms in motion, had its first reading in the Lords in 2018. In anticipation of a second, the Group drafted leading economists from the Treasury and Bank of England to work out a federal financial system. 

But there is scepticism among the moderates. Lord Dunlop, a Cameron-era veteran of the 2014 referendum, says the bill is “well intentioned” but “misguided”. 

Key to the debate is the role of England, a country which constitutes 84% of the United Kingdom’s population and over 90% of its economic activity. Under a federal system, supporters admit, the English First Minister would have an awful lot of power. “There are no successful examples of a federalist system where you have that imbalance”, Dunlop says.

Professor John Denham at the University of Southampton, a former Labour MP who specialises in English identity and devolution, agrees that an incremental approach is the best option. “The powers of the Scottish parliament today are not the same as existed in 2000”, he says. 

“The big mistake about devolution was that the Labour government, of which I was a part, thought it could do these two bits of devolution and nothing else needed to change. There was no strategy behind it.”

Despite disagreements on practice, those advocating constitutional reform agree that the foundation of the Union needs to change from a Westminster-focused, top-down model to one that raises power from “the bottom up”. 

In practice that means addressing two separate questions. In England, the metro-mayor reforms of George Osborne provided councils with the power to form their own Combined Authorities. This is a step in the devolved direction, but the reforms prioritise cities over rural areas.

And in Scotland especially, reform involves reversing the centralisation of power that has occurred at Holyrood. The leaders of cross-party committees – including those MSPs who questioned Nicola Sturgeon during her hearing on the Alex Salmond case in February – are selected by party leaders including Sturgeon herself, as opposed to an independent plenary, as at Westminster. 

Despite winning the 2014 referendum, Unionists felt on the backfoot in Scotland. The “Vow” pledged to Holyrood by the main Westminster parties – to offer more powers, and more funding – only emboldened the nationalists. 

“We thought that there was a powerful case for the Union”, says Salisbury, who founded the Constitution Reform Group in the aftermath of the 2014 referendum. “But there are two things that matter in politics – momentum and initiative – and the only thing keeping the Union together was a form of Project Fear.”.

Dunlop agrees. “We need to do a better job of explaining the purpose and value of the United Kingdom post-Covid”, he argues, citing the pandemic as one of those “collective moments” when British financing and leadership was crucial for vaccine roll-outs.

The government knows this. But it is stuck with old machinery – a Joint Ministerial Committee system that relies on the will of politicians to get things organised between London and the rest of the country. 

This week, the Prime Minister initiated a conference with the devolved leaders in Scotland and Wales to discuss their “shared challenges”. Mark Drakeford, Wales’ Labour First Minister, told Parliament’s Welsh affairs committee in March that he had had only one meeting with the Prime Minister since the start of the pandemic.

That was, say critics, an indictment of the Prime Minister’s often poor organisation. But the pandemic has exposed fault lines in devolution like never before. “There is no institutional architecture to make the United Kingdom work. It is all ad hoc, random, and made up as we go along”, Drakeford has complained.

It is a concern echoed in the results of the government’s Dunlop Review published in March, which looked at how the functioning of the Union could be improved practically. “Inter-governmental relations in the past have been a kind of defensive damage limitation exercise”, says Lord Dunlop, who chaired the report. “What it should be is an agenda-setting body for identifying where there are common interests.” 

As a self-proclaimed “evolutionist”, Dunlop wants to turn the tide on what he calls “devolve and forget” – the model whereby responsibilities are simply cast out from London to Holyrood and Cardiff without continued close cooperation with the centre.

This was another weakness exposed by the pandemic. While Boris seemed to be calling the shots early on, strategies on lockdown soon diverged, creating a panoply of different regulations across the four nations – some so small they barely made a difference to policy.

The Dunlop Review recommends the creation of a UK Intergovernmental Council to manage relations between Downing Street and the devolved administrations. Some Whitehall civil servants, it suggests, should be moved to Glasgow, Edinburgh and Cardiff to extend knowledge and cooperation on joint policy areas. Under Michael Gove, some of this has started to happen already.

Like supporters of a federal option, the Review suggests clarifying where London stops and devolution starts. The problem is most evident with money. For the first decade of devolution, the new parliaments raised no taxes of their own. From an administrative point of view, it worked well. But it soon created a political problem. Parties like the SNP could blame Westminster for funding shortages, while seizing credit for local investment.

The Dunlop Review recommends branding UK-government-funded projects to raise the profile of the Union – much like the EU does – and creating a UK Prosperity Fund to oversee British spending in devolved areas. 

Salisbury also wants to see greater clarity between UK and devolved spending. But full federalists argue this doesn’t go far enough. They want to see the Barnett formula – designed originally to close the gap, but which has evolved to give Holyrood and Stormont favourable financial settlements from the Treasury each year – scrapped in favour of a deliberative body which would set out UK spending over five-year periods.

Critics who say enough has been devolved already will say that the difficulty with recasting the system is that it will only show how large the subsidy to Scotland is, leaving a shortfall if reforms are introduced and giving the SNP another grievance.And Lord Forsyth, former Scottish Secretary and Conservative peer, argues that an occupation with giving the devolved parliaments more money and more powers will not necessarily win votes – or save the Union. 

“It’s not about subsidies, and it’s not about money. It’s about persuading people that they are in a partnership, which is actually to their benefit”, he says.

Forsyth points out that the UK has given less power and money to Wales than to Scotland via the Barnett formula. Yet nationalism is a problem in only one of those countries. The difference, he thinks, comes down to campaigning, not constitutions. He is critical of the Cabinet’s failure to engage with voters north of the border before last week’s elections.

“Boris didn’t come to Scotland, the chancellor didn’t come… why do Unionist parties really believe they can make the case for the Union by ignoring an election in Scotland and not explaining how the partnership is essential to their welfare?”

Here emerges one of the trickiest elements of the debate. Reformers do want to give the devolved institutions more responsibility. But keeping the Union relevant often involves bypassing the devolved governments – as with the furlough scheme, administered directly by the UK Treasury across Britain.

The prospect of a more dynamic – and, at times, muscular – Union has clear advantages. But how it intervenes is crucial. “If you look at what the government is now saying – that we’ve got to send more cheques with Union Jacks on, we’ve got to have more flags outside public buildings – shouting “Union” at people is not going to overrule their sense of identity and place in the world”, argues Denham. 

Members of the CRG voice similar concerns, notably Lord Lisvane. He warns that devolution must avoid “imperial condescension.” Pushing too hard from London risks not only “provoking” Holyrood, says Salisbury, but undermining trust in the authority of the British state itself. “It rather begs the question, ‘under what arrangements of authority are you doing this?” Only a formalisation of powers under a fresh constitution would make that authority clear.

A second referendum on Scottish independence still looks unlikely for the next few years, and the immediate crisis could pass.

Reformers say the time should not be wasted, and that it should be used to introduce a reformed Union, to lessen support for full-blown independence. Sceptics think more powers just feed the Nationalists who can never be satisfied short of the break up of the UK.

Britain has faced constitutional crises before. The trick in dealing with them has been to anticipate problems before they arise. It has also been about knowing when, and when not, to concede to popular demand. It is tricky.

Dunlop points out that popular support for a federal system is low. An incremental approach is also more pragmatic, he says. 

But for supporters of a more radical alternative, “bumbling along” will not do. If Scottish voters are presented with another forced choice on independence, they may gamble the Union away unless they see that an old and valued partnership is being updated.