The United Kingdom may be approaching a pivotal moment as the government faces increasing pressure to set out plans for regional devolution and answer the case for Scottish independence.
A majority pro-independence Scottish government elected in May, led by the SNP, will intensify pressure for a second independence referendum, reflecting increasing momentum that could prevail unless the UK government starts to make a more persuasive case for the Union.
In parallel, calls for further devolution are growing within England and the elections in Wales may reveal increased support for independence. Brexit has put new pressure on Northern Ireland's place in the UK.
State of Play in Scotland
The past year has seen escalating tensions within the Scottish independence movement and a steady – if sometimes haphazard – increase in UK government efforts to make the case for the Union. Despite a small recent drop, polling consistently shows support for Scottish independence near the 50% mark, and the SNP remains on course to win the Holyrood elections in May 2021.
The performance of the Alba Party and the Greens will determine the scale of a majority in Holyrood for independence. Alba risks splitting the nationalist vote if it – as currently looks likely – secures less than c5% in the list section ballot.
The contest for second place also matters because it will determine who is seen as the leading Unionist voice in Scotland. So far, new Scottish Labour leader Anas Sarwar has performed well but, in the polls, Labour is still trailing the Scottish Conservatives under Douglas Ross.
A government led by the SNP will seek to further set itself apart on devolved policy areas, particularly health, climate and the economy, while not shying away from highlighting constraints, such as Westminster’s immigration and trade policy, that allegedly are holding the country back. Presiding over a pro-independence majority in Holyrood, the SNP will seek to deliver its “roadmap to a referendum”, promising to legislate for a vote. The UK government will almost certainly refuse any request for a poll.
At that point, the governments in both London and Edinburgh will face hard choices. There will be pressure on the SNP from parts of the pro-independence movement, especially Alex Salmond and his Alba Party, to press on regardless. The option of a legal challenge to explore whether Holyrood can hold an advisory referendum without Westminster’s consent will be raised, and nationalist frustration could also spill over into public protests.
The UK government will find it difficult to defend the current settlement, and it will face calls to offer a viable route forward other than the status quo or a second referendum.
Even without a parliamentary majority for independence, it is unlikely that the issue will go away. Scotland is evenly split on independence and there are no signs that it is losing its divisive power. It is the top issue for voters now, far ahead of others like education and health. Johnson’s (and his government’s) unpopularity north of the border will continue to provide ammunition to the SNP in years to come.
Challenges beyond Scotland
In parallel, pressure is building in England for more devolution and Westminster decentralisation. The commitment to ‘levelling up’ is interpreted by many as implying increased powers to the regions (including among Conservative MPs in Red Wall seats).
In Wales, support for independence is still the minority view but is rising, particularly among the young. Despite a well-regarded handling of the pandemic, Labour dominance in Wales looks fragile again, and we may see a Labour/Plaid Cymru coalition government.
Brexit continues to cast uncertainty over Northern Ireland’s relationship with the rest of the UK. While an early border poll on unification is unlikely, the governance of Northern Ireland risks spiralling once again into crisis, meaning a further distraction for a UK government under pressure on many other fronts.
Meanwhile in Westminster
How the UK government will respond to these challenges is unclear – nor does Labour have a discernible vision to offer. The Prime Minister appears to favour a ‘muscular Unionism’, focused on attacking Scottish nationalists and asserting a more visible role for the UK government in the devolved regions.
Others seek a more collaborative approach to reset inter-governmental relations. Which approach will win out is uncertain, further undermining the UK government’s attempt to stabilise the Union.
The experience of the Scottish referendum in 2014 suggests this will be a long, hard-fought struggle. Politicians on both sides will try to draw business in and politicize economic decisions on both sides of the border. Regardless of the outcome in May, pressure on the pro-independence side will highlight the benefits of maximal divergence (e.g., tax, public services, net zero), while unionists will try to demonstrate both the advantages of the Union and the costs of separation.
The governance context in which businesses operate is likely to change significantly in the years ahead - whether from the risks to the Union in Scotland, post-Brexit impacts in Northern Ireland, upheaval in Welsh politics or further steps to devolve decision-making to English regions. Decision-makers across the private and public sectors will need to be alive to the potential change and to devise a clear-sighted strategy to manage risks and opportunities.
Franziska Kohler is a Manager at Flint. She wrote this piece with input from Flint Partner Matthew Hanney and Specialist Partner Philip Rycroft. To find out more about how Flint can help you navigate the risks and opportunities of these developments get in touch.