WALES, SCOTLAND AND THE UK

I accepted the invitation to come to Scotland to talk about the Union with both pleasure and trepidation. I know that in coming I risk being accused of interfering in your affairs. Let me be clear – I am not here to deliver a lecture from Wales about what is good for Scotland. What happens on 18 September next year is entirely a matter for the people of Scotland.

At the same time, there is a wider perspective which deserves to be heard in the debate. I accepted the invitation because I genuinely do hope that Scotland does not break away, because that decision will affect the whole of the UK.

So, it is in a spirit of fellowship, as a friend of Scotland, that I am here as a Welshman to express my view.

An independent Scotland?

For us in Wales, the key question is our future within the UK. Independence is not on the agenda, but we follow Scotland’s debate with very close interest because the outcome will have a major impact on the Union to which we belong.

It follows that we take the prospect of an independent Scotland very seriously indeed.  Could Scotland survive as an independent country? Of course it could, but would it be in a better place?

Scotland is a nation of rare genius and dynamism. Your history of invention and enterprise and education is rarely matched across the world. The question is not whether you can survive on your own – of course you can.  The question is whether, over the long term, you will be better as an independent nation?  Or are you actually better off in a fundamental union while continuing to develop robust devolved institutions which give expression to Scotland’s political priorities, its culture and national identity?

I come here today to offer my thoughts on this question, drawing on those links between Wales and Scotland which remain very important to us.

Scotland- Wales links

Wales values its long relationship with Scotland, and its shared history and values.  Keir Hardie came from Govan to Wales to represent Merthyr Tydfil as one of the UK’s first Labour MPs. Among his many other achievements, Hardie was one of the first visionary advocates of Home Rule All Round. In the previous century, Robert Owen, the reformer from Newtown in Montgomeryshire, came to Scotland to found his model community based on co-operation, solidarity and mutual support. In New Lanark he put into practice those values which are widely shared in both our countries.

 

In this context, how could I not mention Nye Bevan and his wife Jennie Lee – a real alliance of our two countries. And that remarkable Secretary of State, Tom Johnston, with his deep knowledge of the Glasgow Friendly Society, was able to build on the legacy of David Lloyd George to help provide the template for our UK-wide system of national insurance.

These people, and there are many others, represent a set of political values that unite our two countries. We have much to learn from each other as we try to sustain these values in the face of austerity and international economic conditions. Crucially these are the values which underpin the social citizenship that to my mind represents one of the Union’s most important achievements.  I will say more about this later.

In my remarks this evening I will focus on three issues.

First, I will outline the recent experience of devolution in Wales. This has not been an easy process but I am confident that devolution is the right framework to express our aspirations as a nation within the UK. I will suggest that our experience has some salience for your debate here in Scotland.

Second, I will suggest that the time is now right to establish a stable territorial constitution for the UK.

Third, I will ask what the Union is for in the 21^st Century. Your debate in Scotland forces us to address this question. Perhaps this is no bad thing. Of course we must focus on hard nosed practical issues – but we need to go beyond that. To survive, the Union must inspire people at a deeper level than short term interests alone.It must demonstrate that it can accommodate and respect the devolved institutions and their authority and legitimacy.  And it must appeal to a wider citizenship that supports every part of the UK.

The central issue then is this: can the Union be transformed to respond to this challenge? Can we see a future for the UK which is built on a fundamental acceptance that we are a territorial Union with a devolved constitution? Can we have confidence that our constitutional arrangements will be respected and transcend party politics?  In short, can we have a proper and durable long-term settlement for the whole of the UK?

I believe the answer is yes. I believe it is possible to work out a full future for Wales, Scotland and Northern Ireland, through devolution, within the wider framework of a strong UK bound together by common threads of shared history, culture and values.

To explain why I take this view I will draw on our recent experience in Wales. This shows that if you can develop a good case, and press it resolutely on the basis of broad political and wider stakeholder consensus, then the Union is sufficiently flexible to respond.

Even with all those ingredients, there is no straight line to success.  The current process can be too uncertain and reactive. So I will go on to argue that we have now reached a point where there has to be a bigger, long term view that transcends party politics. That is why I have argued for a lasting settlement for the UK, and I will summarise the case I’ve been making on that.

The Welsh experience of devolution

Let’s start then with our Welsh experience of devolution. The journey has not been a straight line from A to B – indeed we’ve had three fundamentally different models of devolution in less than fifteen years.

Devolution has had to work hard to win hearts and minds in Wales, and it is striking how support for devolution in Wales has shifted over a generation. The trust that has been gained has been hard won and we do not take it for granted, but there is no question now that devolution is the settled will of the Welsh people. The UK Government’s long awaited response to the Silk Commission (which I’ll come back to in a moment), suggests that they too have finally come to accept this.

So, over the last fifteen years there have been frustrations. But, that is grown up politics. And that is the point about the nationalist case for independence – is it grown up politics?  I’m not sure that it is.

What is the case for independence – a strong economy? No, the IFS has sunk that boat. Better health or education? No, both Scotland and Wales can already develop their own policies in these areas.

In Wales, we have taken best practise from Scandinavia and introduced our Foundation Phase – a ‘learn through doing’ curriculum for our 3-7 year olds; we have the Youth Guarantee, which will ensure every young person in Wales has access to a place in post-16 education and training; and we’ve recently passed ground breaking legislation on a ‘opt-out’ system for organ donation

So, will independence mean a stronger sporting and cultural output? Well, we didn’t need independence to win the Grand Slam, to introduce legislation to safeguard our language or to blaze the trail with free access to museums.

So what will independence mean?  Will the Saltire seem a little more blue? Hang a little more firmly on the flagpole? Is that it?

Silk Part 1

Grown up politics, delivering for people, requires strong relationships; serious negotiation between Governments working on common goals in the interests of the people we represent.

Take for example, what happened earlier this month in Wales. The Prime Minister and Deputy Prime Minister came to Cardiff to announce a package of measures, including: borrowing powers for investment, full devolution of several smaller taxes and partial devolution of income tax, if backed in a referendum.

For a Scottish audience this will sound familiar, since broadly similar powers are already in the process of being transferred to Scotland. This was not a perfect response from our perspective. There were areas – air passenger duty, for example – where we had hoped the UK Government would have delivered. It will be no surprise if I say that the path to this announcement was not entirely smooth. I won’t recite the full saga – I’ll save that for my memoirs!

Suffice to say that at times I was reminded of Churchill’s famous comment on hearing that the Americans had joined the war: “you can always rely on them to do the right thing, after they’ve exhausted all the alternatives”. What matters though is that we got there in the end.

Despite the one or two areas where we had hoped for more, the overall package on offer is a very significant step forward – and a step forward achieved between a Labour Government in Wales and a Conservative/Lib Dem coalition at Westminster. It represents real progress for devolution in Wales. In my experience virtually no political announcement receives an unconditional welcome, but the UK Government’s response to Silk 1 came as close as any I’ve ever seen – a fact that may surprise some of you here tonight.

All four parties in the Assembly were strongly supportive, reflecting the fact that all were represented on the Silk Commission and had worked together effectively to agree a unanimous report. Business leaders were also very vocal supporters.  And public opinion is also very much in favour – around 80% of people in Wales back devolved borrowing powers, for example.

There is no doubt in my mind that this strong consensus was central to securing UK Government backing for the Silk reforms. In Scotland of course the constitutional debate is very strongly contested at the moment.

My proposition is that if you do choose to remain within the United Kingdom, then it seems to me that our recent experience of co-operation and successful negotiation with the Coalition Government means that there is a very real prospect of forging a new consensus on a lasting settlement – one that is soundly based in a UK framework.  I see absolutely no reason why that should not be possible.

Building this consensus in Wales has taken time. On fiscal devolution, the Welsh Government set the ball rolling back in 2008 when we established our own independent Holtham Commission to review our funding and fiscal powers.

As a result, Holtham gave us rigorously argued evidence on the flaws in the Welsh funding settlement, as well as constructive ways forward.  This included the case for devolving some tax powers, which really did move the political centre of gravity in Wales.

On the block grant, Holtham showed that claims of huge funding shortfalls were ill founded. But there was indeed a still significant gap of some £300 million per year between what the Welsh Government received and what was justified by relative needs. This gap was very likely to grow over the longer term, unless action was taken.  It is evidence that I, as First Minister cannot ignore, but let me emphasise that I am in no way seeking a reform to the block grant that would favour Wales at the expense of the Scottish budget. In fact, our short term priority for addressing this issue, the introduction of a funding ‘floor’ to stop further declines in Wales’ relative funding, was endorsed by the Scottish Government – an excellent example, by the way, of solidarity between nations of the UK in advancing argument with the centre

Let me be clear that what I am asking for is a fairer funding deal for all of us in the UK. I am confident that a solution to this can be found without driving a wedge between Wales and Scotland. We must not let this issue detract from the bigger question of our shared future in the UK.

Overall, the central message that I think emerges from the Silk / Holtham process, is a tremendously positive one for all of us who hope that Scotland will remain within the UK family of nations.

Put bluntly, I know that some people have doubted whether pledges by the pro-UK parties to look at greater devolution post-2014 are to be trusted. In raising those doubts, the separatist case tries to polarise the debate into a choice between independence on the one hand, and an unreformed status quo on the other.

The example of Wales shows that this is a false choice. When faced with a reasonable, evidence-based case for reform that enjoys broad support, the UK’s political structures – regardless of whatever party colour is at the helm – are capable of rising to the challenge and delivering real change.

I don’t pretend this will be easy.

There are complex questions to be addressed, not least finding the right balance between fiscal devolution and the sharing of resources across the UK to reflect relative needs. Scotland may decide to go further than Wales is likely to do on the fiscal front, for the foreseeable future at least. It seems to me that the Union could readily accommodate that broad direction of travel if that is where the Scottish people wish to go.

The crucial point is that it is entirely possible for the devolved administrations to give full expression to their democratic mandates within a common UK framework.

For this to happen, as I have said, there needs to be a broad political consensus in the devolved countries, and a genuine willingness on the part of the UK Government to respond. I have already recognised that there is some way to go on this. Do they really get devolution? Or are they still stuck in a mindset that allows them to make only limited concessions where they absolutely have to?

The latest Silk announcement suggests that there are grounds for optimism. There’s no conversion on the road to Damascus.  But there is a different tone from the centre, and there is no doubt that we owe this in part to the pressure generated by you here in Scotland.

I am both optimistic about the scope for progress and sanguine about the barriers that remain. We are far too dependent on the vagaries of party politics and short term advantage. That is why I want to put devolution on a more robust and coherent constitutional footing for the whole of the UK.

The need for a stable constitutional framework

Over the past 15 years, we have seen a period of evolution that I believe must now come to a conclusion.  It is now time to establish a stable constitutional framework that allows the devolved governments to get on with the job we were elected to do. We must have the tools to deliver without constantly hitting the boundaries of our settlement.

I am clear that the certainty and stability we need can only be achieved through a process of reform that embraces the whole of the UK. We must bring to an end the ad hoc constitutional tinkering that we have seen over the past fifteen years. The time has come to work together to forge a more coherent approach that works for the whole of the UK. This doesn’t mean an identical set of powers in each case. Practicality will point to different solutions reflecting different circumstances. But there must be a consistent set of underlying principles. I have set these out on other occasions and will summarise briefly now.

The first principle must be one of respect for the devolved legislatures and their essential legitimacy rooted in popular support. This should be enshrined in a constitutional guarantee. It is not right that any of the devolved legislatures should have to depend on the good will of Westminster for their existence. A new constitution should guarantee the continuing existence of the devolved legislatures as permanent features of the Union. I fully agree with those of you that have been making this case for the Scottish Parliament. It must be a general principle.

The second principle is consistency of structure. Scotland, Wales and Northern Ireland each has a different model of devolution. There is no logic to this. It is confusing for politicians and civil servants – and more importantly, it confuses the public. In short, we need the same basic method of devolving powers across the UK.

The final principle is a presumption in favour of devolution. The direct and immediate accountability of the devolved institutions is the basis of the case for extending devolution wherever practicable. To my mind, democratic accountability means that, where there are no UK-wide interests, the devolved legislatures should be making the decisions.

This must be the essence of a devolved constitution, based on the principles I’ve outlined: respect for the devolved institutions, consistency of structure and a presumption of devolution. Putting these principles on a sound footing can only strengthen the Union. To my mind to be a Unionist in the 21^st Century is to be a devolutionist.

I recognise that there are different views on the process of how we get there and I don’t want to get bogged down in that…  What matters is that we get to where we need to be as a Union with a stable territorial constitution. This means achieving a proper balance of power and responsibility for the devolved institutions, combined with a strong Union to support the country as a whole.

Now, this takes me to my final point. If the momentum for devolution is so compelling, so rooted in the history, identity and culture of our nations, and enjoys such broad support – why not go the whole hog and break away completely? To answer that question we have to make the case for a new Union.

What is the Union for?

Perhaps it is no bad thing that Scotland’s referendum forces us to address a question that deserves an answer. What in the 21^st Century is the Union for?

It is worth reflecting on the forces that drove the formation of the Union and the development of the British state over the past nine hundred years. Britishness is a relatively new identity which was overlaid on the much older national and regional identities across these islands.

Without question the most important driver was the spectre of a common enemy.  First it was the fear of Popish plots, then the French Revolution, the Napoleonic Empire, the Prussian Empire and finally Nazi Germany. Each of these presented a major external threat to peace and prosperity that united the peoples of each part of the Kingdom in a common cause.

At the same time, the growth of Empire created opportunities for the Scots, the Irish and the Welsh to build careers and sometimes fortunes in the service of a shared British endeavour.

Above all, Britishness meant a strong framework for the defence of these islands... Now, this may not be as strong an argument for Union as it was in the last century, but we overlook it at our peril. The world looks more stable today but it certainly wasn’t 25 years ago. Who knows what the future holds in terms of external threats, but it seems obvious to me that the UK Armed Forces – with the associated diplomatic strength – is a more robust proposition in looking after our interests in a changing world. In planning for a devolved future, this is an area where the case for combining our resources and expertise seems very compelling.

That said, Popish plots and Napoleon are yesterday’s issues. Shared defences alone cannot sustain the Union. The case must be more positive. It must transcend short term issues.

The positive case for Union starts with trade and the currency. Unfettered access to a single UK market – and that is also true of the EU – is fundamental to the Welsh economy. I believe the same is true for Scotland. The UK economy is a genuinely integrated market in a way that Europe is not, because Europe, and the Eurozone in particular, is a union of sovereign states with fundamentally different legislation and regulatory regimes.

At the core of the shared UK framework is our common currency. Sterling is the bedrock which underpins free and open trade between the all parts of the UK. It is one of the most widely trusted and traded currencies on the planet, and has been central to the economic success of the UK for centuries. We shouldn’t allow short term comment on economic difficulties to detract from that fundamental success proved over centuries.

Could Scotland have its own currency? Yes. Could Scotland use the Euro? Yes. Could Scotland use the Bank of England Pound? Yes. It could probably use the American Dollar if it wanted to!

What it couldn’t do is use the UK Pound and then demand a say in the running of the Bank of England. Scotland would be at the mercy of monetary policy determined in London, so what use Independence in those circumstances? If you use someone else’s currency, then you are bound by their rules!

And I have to say this: if one part of the currency union decides to leave, then that is a matter for them. But if an Independent nation wants to join, then that is a matter for the people of Wales, Northern Ireland and England – and as the First Minister of Wales, I would want the right to have a say.

Why? Well, it is highly unlikely that currency union without strong fiscal controls could work, there would be too much uncertainty, it would slow down decision making and the risk to Wales and Northern Ireland would be far greater – so it would only be right for the views of the rest of the UK to be heard.

Given the experience of the Euro zone in recent years, and the uncertainty which surrounded the various bail-outs, then I am not convinced that a shared currency would work from the Welsh perspective. I would be uncomfortable being part of a currency union where there are competing Governments trying to run it. If there is a disagreement, who has the final say? This is a recipe for instability – and these things matter, particularly in times of crisis…

There was little scope for dithering when Alistair Darling, as Chancellor, had a couple of hours to decide how to rescue the Royal Bank of Scotland.

In short, our shared currency is the clearest possible example of where we are stronger by collaborating and pooling risk in a highly uncertain world. But while emphasising the centrality of the integrated market and the shared currency, I believe we must make the case on a deeper level than that.

From a Welsh perspective, the case for the Union is essentially about values: democracy, fairness, equality and human rights.  I return to those Welsh and Scottish visionaries I quoted at the beginning.  I believe in the social union that they helped to build.

This is a union that guarantees the fundamental gains made by the welfare state in the 20^th Century – pensions, benefits, the universal NHS and a broad measure of equity in access to public services.  Some will say that, in the current UK political climate, those key pillars of the British welfare state no longer mean anything. I don’t agree.  I believe that the social union is still worth fighting for.

Where I argue for more devolution it is to enable us in Wales to make progress according to our political values, with direct and immediate accountability to the people of Wales.  I want devolution to strengthen the welfare state, not break it up.

From now on in there will be a great deal of debate about what an independent Scotland would look like. Some will say that everything will be up for grabs, others will argue that there will be a great deal of continuity.  As I’ve said, this is a debate for the people of Scotland.

But the reality is that independence will mean creating new borders. In other words, it will include building new barriers between people. Given all the challenges we face as a family of nations, it seems to me that is exactly the wrong direction of travel.

We should be collaborating more, not putting up fences. We should be learning from each other, not building barriers. Above all, we should be working together to build a stronger and fairer United Kingdom for all its citizens, looking outward not inward.  In my view that includes making the case for our shared European citizenship.

To my mind, this is the real danger with the Independence agenda. It risks seeing things only through a lens of short term interests and exclusive sovereignty. But is there such a thing as exclusive sovereignty any more? Would Scotland’s banks have been saved in an Independent Scotland? Would the Scottish Government have had the resources to do so?

No – they were rescued because of the fiscal and monetary umbrella that the UK Government created. Surely that is the true difference between borrowing someone’s currency and being part of it.

Conclusion

So having discussed our experience of devolution in Wales working, outlined the benefits as I see it of a lasting constitutional settlement, and why I think as a union we are stronger together than apart, I want to briefly address one other issue.

Much will no doubt be made of the notion that if you are a true patriot, then of course, you must want independence for your country. I am a Labour politician. I am a fluent Welsh speaker. I enjoy and cherish Wales’ cultural distinctiveness. I am a fierce supporter of our national rugby team.In short, I feel very patriotic about my country.

I want the very best for my country.

And I would say to Labour voters, you can be a patriotic Scot and still want to stay in the UK – because that’s what’s best for your country! The referendum decision is entirely a matter for the Scottish people, but its implications will be felt way beyond your borders.

I ask you not to forget your friends in Wales and in the wider UK.  A strong Scotland in a strong UK is a positive choice.