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Scots Seen Slipping Away Makes U.K. Seek Silver Bullet

Photographer: Jason Alden/Bloomberg

As Prime Minister David Cameron visits Scotland this week to support the campaign to hold the U.K. together, the Treasury in London is preparing the latest document setting out the fiscal arguments over independence. Close

As Prime Minister David Cameron visits Scotland this week to support the campaign to... Read More

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Photographer: Jason Alden/Bloomberg

As Prime Minister David Cameron visits Scotland this week to support the campaign to hold the U.K. together, the Treasury in London is preparing the latest document setting out the fiscal arguments over independence.

The U.K. government is waking up to the fact that it is losing control of the debate over Scottish independence and needs to come up with more convincing proposals to sway voters, two government officials said.

Private polling conducted on behalf of the government suggests support for independence in Scotland is growing irrespective of the arguments advanced by Prime Minister David Cameron’s Conservatives, his Liberal Democrat coalition partner and the opposition Labour Party, said the officials, who asked not to be named because the government discussions are private.

Some ministers see Cameron as having been complacent about the Sept. 18 referendum and that more needs to be done to bolster the case for keeping Scotland in the 307-year-old union, the officials said. The government is considering granting extra powers to Scotland before then as it searches for a silver bullet to stop the vote slipping away from the “No” camp, according to one of the officials.

“The Scottish Parliament has started a journey and the direction of travel is to continue to give further powers,” John Stevenson, a Scot who represents Carlisle in northern England on behalf of Cameron’s Conservatives, said in an interview. “So far the ‘No’ campaign has concentrated on the accountants, the economic argument. We’ve got to widen that and be a positive argument for the union.”

Benefits Stressed

As Cameron visits Scotland this week to support the campaign to hold the U.K. together, the Treasury in London is preparing the latest document setting out the fiscal arguments over independence. The paper will be published at the end of the month and focus on the benefits of remaining in the union rather than the costs of independence, one official said.

“I want this country to stay together,” Chancellor of the Exchequer George Osborne told lawmakers today, reiterating that Scotland won’t keep the pound if it becomes independent and detailing the potential risks to mortgages and jobs in Scotland. “These risks don’t exist if we stay together.”

Granting the Scottish Parliament in Edinburgh greater control over taxation and some degree of foreign representation for the Scottish government are among the most likely measures to be announced before the referendum, analysts including Tim Bale at Queen Mary University in London said. The discussion over more powers is ongoing as the government casts about for a decisive campaign tactic, one of the official said.

“All three parties have signaled in the event of a ‘No’ vote more power will be devolved to Scotland and I suspect some further detail will be coming,” Philip Norton, a professor of politics at Hull University and a Conservative member of the unelected House of Lords, said in an interview. “There’s lots of discussion on what will happen in the event of a ‘Yes’ vote, but we need to think on what happens in a ‘No’ vote.”

Scottish Deal

With opinion polls showing the pro-independence campaign led by First Minister Alex Salmond gaining ground, the main parties at Westminster are all prepared to hand over more powers regardless of the referendum outcome as they acknowledge enough people in Scotland want change.

The dilemma for Cameron is whether he can offer enough to augment the existing settlement known as devolution and satisfy Scottish voters in time to quash any chance of him becoming the leader who presided over the U.K.’s breakup.

“People want confidence that devolution is on a journey, to get the best deal for Scotland as part of the union,” a Downing Street spokesman said on customary condition of anonymity when asked about the possibility of more powers for Scotland. “In the real world people are not stressing about the finer details of devolution.”

Latest Poll

A monthly survey by TNS published today showed 42 percent of respondents planned to vote to remain in the U.K. with 30 percent supporting independence.

The 12-point gap was unchanged from the month before, though among people who said they were certain to vote the gap narrowed to nine points. The poll of 996 people was conducted April 23 to May 2. No margin of error was given.

The government agreed to Salmond’s case to hold a referendum because it thought a “No” vote was guaranteed, according to one of the officials. The government’s private polling suggests that male supporters of the Labour Party, who would normally be relied upon to oppose independence, are the most worrying group before the vote, the second official said.

While the main political parties have independently suggested the Scottish Parliament would be given more responsibility should it stay part of the union, they have shied away from making concrete promises.

Borrowing Powers

The Treasury’s public face in the debate, Chief Secretary Danny Alexander, said in February that Scotland would be given new powers to borrow as much as 2.2 billion pounds. That was under existing legislation being introduced on broadening the potential sources of funding for the Scottish government.

Successive U.K. governments have failed to quash calls for greater autonomy in Scotland.

Labour Prime Minister Tony Blair’s government transferred powers over policies including health, education, justice and the environment to a reconvened Scottish Parliament in 1999, arguing that the process known as devolution would crush the nationalist cause. The U.K. retains control over the broader economy, taxation, defense and foreign affairs and sets a budget for Scotland that’s transferred from the Treasury.

Instead, Salmond’s pro-independence Scottish National Party ousted Labour as the largest party in the legislature in 2007 before going on to win a majority four years later and negotiating the independence referendum with Cameron.

‘Drifting Further’

The referendum “will lead to the country drifting further from the U.K. whatever choice voters make,” said Bale, a professor of politics at Queen’s University.

Giving further powers to Scotland could also raise the question of giving England more autonomy, said Stevenson, the Carlisle lawmaker and a member of Cameron’s Conservatives.

Salmond sought to reassure voters across the border that an independent Scotland won’t cause upheaval to their lives and can become an economic counterweight to London. He gave a speech in Carlisle in April on St. George’s Day, the celebration of the patron saint of England, while Cameron used the occasion to repeat his call for unity in Britain.

“If Scotland gets more devolved powers I think other parts of the country will start to think, ‘hang on, if Scotland’s got these powers why can’t we have them,’” said Stevenson. “We’re at the point where there need to be debates on this.”

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net; Craig Stirling at cstirling1@bloomberg.net Rodney Jefferson

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