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Devolution means new opportunities for public sector suppliers

By: SA Mathieson
Published: Friday, September 26, 2014 - 12:49 GMT Jump to Comments

Last week’s Scottish independence NO vote brought wider English regional devolution two steps closer. Suppliers should be examining their prospects now.

Like any company with an interest in Scotland, suppliers to its public sector would probably like to know if last Friday’s vote rules out independence for a generation, in the words of both the prime minister and Scottish first minister.

The answer is probably, but not definitely. The final result was clear, but while 2m Scots voted to stay in the UK just over 1.6m voted to leave, and did so with a great deal of noise and enthusiasm. If Westminster leaders do not deliver on what former prime minister Gordon Brown has called “home rule for Scotland,” with the second reading of a bill to achieve ‘devo-max’ (maximum devolution without actually leaving the UK) before the election, Scottish nationalist politicians will accuse them of treachery.

The SNP would then be likely to sweep the board at the 2016 Scottish elections with a demand for a fresh referendum, then go on to win it. But after a wobbly weekend, it seems unlikely that the three main unionist parties will fall into this trap.

It can be argued that last week was the best opportunity nationalism will get for a while: the North Sea oil and gas tax revenues that supported the case for independence are falling, and under the generous Barnett formula Scotland went from having a per person fiscal deficit £239 lower than the rest of the UK in 2011-12 to one £470 higher in 2012-13, according to calculations by Scottish chartered accountancy body Icas.

It also seems likely that the unionist side in a future referendum would learn from all the mistakes it made this time around, most significantly not taking the job seriously enough until the eleventh hour. The nationalists could do better by making a more realistic case – the Scottish Government’s plans for independence, including on currency and EU membership, were easily criticised for their unrealistic optimism – but on the other hand, realistic plans would be less attractive for swing voters.

However, other events could move Scotland towards the exit. A UK-wide vote to leave the European Union, in the referendum planned by the Conservative party by 2017, could trigger a similar string of events in Scotland as a failure to implement devo-max. All in all, suppliers to Scotland’s public sector will have to keep a close eye on Scottish politics.

But something else is happening. David Cameron’s linking on Friday of devo-max in Scotland to devolution for Wales, Northern Ireland and England’s cities may or may not have been an attempt to shore up his position with his backbench MPs and undermine the Labour party. Yet there is an obvious logic in developing devolution across the UK, not just Scotland. This may be problematic in Northern Ireland, where politicians remain divided on sectarian lines, but the Welsh Government is likely to have more powers for the asking.

Most interesting for suppliers – as it will represent the biggest change – is the likelihood of devolution to parts of England outside London, whose mayor and assembly already have a degree of self-determination. The mention of cities in Mr Cameron’s statement indicates that the first in line are the likes of Greater Manchester, which already has a combined authority running the conurbation’s public transport, along with other big multi-council conurbations in the north and Midlands.

However, the daily subscription email service Council News Monitor has already picked up on smaller cities such as Plymouth and Bristol and counties such as Somerset and Cornwall putting in claims for greater control over their areas.

The future of the United Kingdom may look more like the United States, where suppliers have to pay attention to the British equivalents of states (nations, cities and perhaps counties), along with what may become a kind of federal government. This may be more complicated, but a supplier who can’t see resulting opportunities probably isn’t looking hard enough.

To receive Council News Monitor free for now, courtesy of The Information Daily, sign up for alerts here.

Icas analysis of Scotland’s fiscal position (May 2014)

For suppliers Scotland is another country within or without the Union (TheInformationDaily.com, June 2014)

Scottish Independence Referendum: statement by the Prime Minister (Sept 2014)

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.

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