Articles:
The British Question

Before the 2010 general election, David Cameron
lamented what he called “broken Britain,” but quickly dropped the idea once he
got into office. Now that he has won office again, such words promise to come
back to haunt him. His legacy, when he stands down in 2020 if not before, could
be to leave Britain truly broken.

It
is universally accepted—for it could hardly be more obvious—that the triumphant
and probably somewhat surprised Prime Minister faces two huge tasks: he has to
craft a new constitutional settlement to satisfy not just the roaring lions of
the Scottish National Party (SNP) but also the English, the Welsh and the
Northern Irish; and he has to sort out Britain’s relationship with the European
Union sufficiently to be able to campaign for the country to stay in the EU
when he holds the referendum he has pledged.

Yet
these are merely aspects of a larger task: to restore 

Britain’s confidence in itself, in its future and in the strategic choices it
has made over the past half century about how best to protect the country and
to project its influence around the world. That choice has been to do so
through our ties both with the United States and the EU, through the use of our
armed forces inside and outside Nato, through our support for international
organisations, through our openness to all the forces of globalisation, and
through the soft power of entities such as the BBC. All that now stands in doubt.

University of Zurich. While defining what he saw as necessary for viable
political entities, he said something that made every Brit in the audience wake
up. “An entity without taxation is a useless entity,” he said. Without the
power to raise their own taxes, the Scots (and the Welsh and Northern Irish) do
not have the real ability to make their own choices and to be accountable for
them. Which means the ability to make their own mistakes.

initiatives are likely to garner such European support. Looking at what the
European Commission is already pushing for, and bearing in mind the demand
being made by Germany on indebted eurozone countries—liberalise your markets to
boost growth—the most fruitful area is likely to be the very policy that
Thatcher helped initiate back in the 1980s: the still unfinished single market.
Another related area is the creation of a fully connected energy grid (for
electricity and gas), which can be pushed as the best long-term way to
reduce Europe’s dependence on Russia as well as a cost-effective way to counter
climate change. 

 Or
think of it another way. Anyone who has travelled through airports abroad,
especially in Asia, may have seen posters from “the GREAT Britain campaign”,
bragging about how we are culturally GREAT, creatively GREAT, entrepreneurially
GREAT and all the rest. Cameron’s task is to prove that this advertising
campaign has not just been phony or a big mistake. Whether he succeeds in this
will depend essentially on how much he really cares about these issues, and on
how much we do, too. 

For
the electoral worry about whether Cameron had the passion to win will now
become the governing worry: does he have the passion, and the guts, to do what
it will take to restore confidence in Britain, in Britishness and in Britain’s
international strategy? In practice, if he does have that passion he will need
to show it by repeating his approach during the 2010 coalition negotiations
with the Liberal Democrats and again making “a big, open and comprehensive
offer,” this time about both the constitution and Europe.

In
both cases, a cheese-paring, half-hearted and narrow offer will guarantee
failure. For it will hand the initiative to those who do care, and right now
there is a big caring imbalance inside Britain. In Scotland, we know full well
how much the Scottish National Party and its voters care, which so far means a
lot more than the English do. In the United Kingdom as a whole, on the issue of
our international strategy the ones who have shown they care the most are the
eurosceptics in the Conservative Party, voters for the UK Independence Party
and the anti-EU and anti-immigration print media, led by the Daily Mail and
theSun.
If he wants to win, Cameron has to make the rest of us care, too, in order to
deal with that imbalance. Indifference is the real enemy.

The
UK is at stake, and with it the country’s place in the world. Both have been
withering in recent years. This is strange, because normally when a country
enjoys an economic growth rate that is among the fastest in the rich world its
confidence and status rises, not falls. Even though Britain is outside the
euro, one might also have expected our stronger recovery and effective reforms
to have won us friends and admirers in Europe, rather than being increasingly
ignored on the sidelines. It is an exaggeration, but the perception is real:
that Britain has been withdrawing from the world stage.

Indeed,
we are trying to confirm the perception. On 7th May, 49.5 per cent of voters
supported the two parties dedicated to holding a referendum on Britain’s EU
membership and to putting the tightest lid on immigration, the Tories and Ukip,
and 50 per cent of Scottish voters supported the secessionist SNP. As a result,
a phrase that will be heard more and more over the next two years will be “the
British question.” You don’t ask such questions when you feel tall and
confident of the answer. 

When
applied to Germany in the 19th century, such a national “question” concerned
how best to unite the Germans, and a century later the German question came to
concern how best to cope with Germany’s strength in the middle of Europe. For
Britain it is now the opposite: how best to deal with the country’s internal
divisions and with its apparent instinct for self-isolation from Europe. 

Yet
it may be more helpful, in the light of the election results, to think of this
as “the British questions” and to divide them into three, albeit overlapping,
interrogations: Who (or how) are we? Who do we want to govern us? And, most
important of all, who cares?

Who are we?

The division of
Britain into the Scottish yellow of the SNP and the English blue of the Tories
reflects a nation divided about what it is, and perhaps about what it is for.
This has just repeated the evidence of last September’s referendum on Scottish
independence: the Yes campaign in September won 1.6m votes for its 44.7 per
cent share, while on 7th May the SNP garnered 1.45m votes for its 50 per cent
share of a lower turnout. 

In
trying to explain this vote, and the fact that the independence referendum
happened at all, to foreigners, I have often struggled to define quite what in
the history of this country has entailed that a place that calls itself “the
United Kingdom of Great Britain and Northern Ireland” has come to have such a
messy set of governing arrangements. A browse through the election results
rather underlines this.

For
example, in Northern Ireland, the nation of the UK where the majority is
keenest on maintaining the union, none of the national parties fields
candidates. Meanwhile in Wales, the nation containing the largest proportion of
people fluent in a local language other than English, 87 per cent voted for
Tories, Labour, Lib Dems, Ukip or the Green Party rather than Plaid Cymru, the
Welsh nationalist party. And Scotland, which provided much of the leadership of
the previous Labour government, now looks like a one-party state.

All
of this has its various historical roots, but to outsiders just confirms what a
rum lot we British are. And in the election, there were at least two other
dividing lines related to who we are. These are whether we are on the left or
the right, and whether we feel comfortable being open to the world or whether
we would prefer to be more closed.

The
issue of left or right is more the stuff of traditional politics,and would
normally have been answered simply by whether the winners were Labour or the
Tories. However the SNP’s demolition of Labour’s decades-long dominance in
Scotland (Labour used to command 50 per cent of the popular vote, too) has
complicated matters. Did Scotland vote left while England, Wales and Northern
Ireland voted right? Or is that tempting conclusion blurred by the nationalist
desire either for independence or greater autonomy?

The
answer is not at all obvious, however much the SNP leader Nicola Sturgeon talks
about having won “a mandate to end austerity.” All Britons, not just Scots,
have had a painful time since the 2008 financial crash. Living standards have
fallen every year since then, in the longest period of declines in real wages
since records began in 1855, according to the Bank of England—a decline that
has ended only in the past nine months or so. 

Scotland may have
suffered more than England during the 1980s, but that has not been true of this
slump. The Scottish unemployment rate has tracked the UK rate closely during
the recession, and now at 6 per cent of the labour force is only slightly ahead
of the UK figure of 5.6 per cent—and is a lot better than the 8 per cent rate
in the northeast of England or the 6.7 per cent rate in Wales. Such joblessness
figures might explain why Labour won 25 of Wales’s 40 seats, or why Ukip fared
well both in Wales and the north of England. They don’t explain Scotland.

Had
the opinion polls turned out to be correct, the Tories’ failure would have been
explained in post-election punditry largely by the lack of a “feel-good
factor”: strong figures for Gross Domestic Product growth had not reached
sufficiently into people’s sense of wellbeing. That ought, however, to have
applied more or less equally to both Scotland and England.

This
is also the background to the revival—for that is what it is—in British concern
about immigration. While Britons have felt grumpy about their falling living
standards, well-educated Europeans have been flocking to Britain, seeing it as
a land of opportunity, especially London. There has also been an inflow of
lower-skilled workers from eastern Europe and from outside the EU, which are
the ones that catch the headlines and the eye. So, whatever your view of
immigration, there has been a triple-whammy: lower-skilled migrants to bring
votes to Ukip, migrant professionals to alarm the middle class and pressures on
the National Health Service from a growing population to alarm everyone.

Which
again leaves Scotland unexplained. There, despite supposed worries about jobs,
incomes and public services, Ukip picked up barely any votes (1.6 per cent) and
the SNP has said it wants to encourage more immigration, not less. This is, to
liberal ears, a welcome and rational response to demographic pressures and the
desire to boost economic growth. But it doesn’t fit with any notion of the
Scots either as pre-Thatcher lefties or as Braveheart blood-and-soil ethnic
nationalists. 

Who do we want
to govern us?

It fits more
readily with another theme: grumpiness not solely about economic prospects or
immigrants but about a perceived lack of control, or at least voice. The answer
to the question of who we want to govern us has become a matter of which place
that government is in, and whether we think it is near enough to reach out and
give it a thump when we feel like it.

This
is why the idea propagated by Nigel Farage and Ukip that three-quarters of UK
laws are made in Brussels is so powerful. Statistically, it is nonsense:
research by the House of Commons Library has long shown that even on the widest
definition of “law,” the proportion is never much above a quarter. But Brussels
is to London what London is to Edinburgh, Belfast or Cardiff: a far-away,
uncomprehending and incomprehensible place that especially in bad times can
seem to have someone else’s interests in mind rather than your own. And a place
that often does its best to confirm this impression.

Which
brings us back to Sturgeon and her claim of a mandate to end austerity. Anyone
who delves into the numbers knows that even on the most generous of assumptions
about allocation of North Sea oil tax revenues, a Scotland with full fiscal
autonomy would have to have more public austerity, not less, as its budget
deficit would be larger than the UK’s even on unchanged public spending plans
and it could not expect to be able to borrow large amounts of money on its own.

So what can she be
asking for? Taken literally, she will be seen as asking English taxpayers to
increase their subsidisation of Scotland (as expressed by the Barnett formula
block grant of cash) through higher UK public borrowing. Or she may simply be
using “austerity” as a currently easier line with which to beat the new
Conservative government than would be independence, given the referendum defeat
last September, intending to switch back to independence once she has been
rebuffed and when the Scottish parliament elections approach next year.

What
this creates, though, is a wide opening for Cameron. With hindsight—though this
also was widely commented on at the time—the devolution of power to Edinburgh
and Cardiff that New Labour enacted in 1998 came with one crucial flaw. It did
not match the transfer of spending and decision-making power with a
corresponding transfer of tax-raising powers or financial responsibility.

On
election day, I happened to be at an event in Switzerland, the St Gallen
Symposium, which had a theme of “Proudly Small” into which Scotland slotted
perfectly. The opening talk was by Bruno Frey, an economics professor at the
nearby 

So
what Cameron needs to propose, in a “big, open and comprehensive offer,” is a
package to give them precisely that. This would have to mean the transfer of
the bulk of tax-raising powers to each of Wales, Scotland and Northern Ireland,
as a path to a properly federal system. Doing so would be a way to call the
SNP’s bluff while anyway moving the UK in a direction it needs to go if it is
to be sustainable: you want more powers and more freedom, well now be
accountable for it to your voters, your taxpayers, all under the benign
umbrella of the UK. Let us compete with one another for the best policies and
incentives, the best paths to economic growth and fairness, subject of course
to EU state aid rules: we all believe in competition, don’t we?

Who cares?

Something on
those lines will be needed both to deal with complaints about where the UK’s
nations are governed from and about supposedly different political cultures or
policy preferences in those nations. It will be complicated, since the
constitutional details surrounding it, about electoral constituencies and
systems, the House of Lords and how to deal with England, will also have to be
agreed upon. That is why to focus on tax-raising powers may be wisest: we all
care about our taxes and how they are spent far more than about boring
constitutional structures. 

Dealing
with Scotland and the EU simultaneously sounds challenging but might actually
be an advantage. Tory and Ukip opponents of Britain’s 40-year-long EU strategy
care about regaining sovereignty and being governed from London rather than
Brussels; but they also care about the Greatness of Britain, believing as they
do in the country’s ability to prosper outside the EU. The parallel prospect
that it could instead split up, with the SNP guaranteed to demand a fresh
independence referendum if the UK votes to leave the EU, ought surely to give
pause, at least to some of their supporters.

That
sense that there is a contradiction between the two elements of Ukip’s
name—“United Kingdom” and “independence”—could provide some of the fear-factor
in the EU referendum campaign. But alongside such a negative tactic, Cameron
will also need something more positive to make voters care about staying in the
EU and sticking to the strategic path laid down by his predecessors Edward
Heath and Margaret Thatcher. 

For
that, he would be wisest to make a “big, open and comprehensive offer” to the
27 other EU member states at the same time as he bargains for adjustments that
meet some of the eurosceptics’ complaints. If he is to achieve those
adjustments—to EU migrants’ welfare entitlements, for example—he is anyway
going to need allies inside the EU. To get them, he would do best to persuade
countries—led by the Netherlands, Sweden, Poland, Italy and above all
Germany—that with Britain they can create a better EU and a healthier European
economy than without it. If Britain looks committed to that better EU, other
countries are likelier to agree to make concessions.

To do that, he will
need to get a sense of what sort of  initiatives are
likely to garner such European support. Looking at what the European Commission
is already pushing for, and bearing in mind the demand being made by Germany on
indebted eurozone countries—liberalise your markets to boost growth—the most
fruitful area is likely to be the very policy that Thatcher helped initiate
back in the 1980s: the still unfinished single market. Another related area is
the creation of a fully connected energy grid (for electricity and gas), which
can be pushed as the best long-term way to reduce Europe’s dependence on
Russia as well as a cost-effective way to counter climate change. 

Such
a package, in effect a joint British and German push to extend the single
market into services and digital commerce and to build an energy union, would
satisfy a useful EU principle: if you see an open door, push on it. That is a
better approach than banging your head against a wall, which is what demanding
rapid changes in EU treaties, as many eurosceptics want, would amount to. 

Brick
walls are Cameron’s biggest political opponents, but when it comes to the
public the enemy is not that. It is indifference. Europe is never high on
opinion poll rankings of which issues matter most, and what little the public
knows about the EU tends to be the negative stories about bent bananas rather
than positive ones. If the Prime Minister cares about Britain staying in the
EU, and remaining the United Kingdom, he is going to have to make the rest of
us care too, by making the UK feel more workable and the EU feel more
constructive. In the battles of the next two years, the outcome will be a
paraphrase of the SAS motto: “Who cares wins.”