Workfare, Poundland, A4e - all up in smoke.

   We believe that it is entirely wrong-headed and snobbish to look down on our pre-teen chimney interns for the very valuable work they do for themselves and for the community. Spending ten hours a day sweeping the majestic smoke stacks and fireplaces of Britain is not a waste of time but essential grounding for future success in the world of work. After all, everyone has to start somewhere, and going up a chimney is as valuable a learning experience as going up to college. The fact that these young people aren't directly remunerated is quite beside the point. The experience they gain from this Mandatory Work Activity is worth far more to them in the long run than mere wages.

Or so they might have put it in Dickens' day. Ridiculous to compare Victorian forced labour to stacking shelves on the government's mandatory work experience programme? In terms of personal risk, perhaps. But what is interesting is the similarity of the arguments used than and now in defence of the practice of getting young people to do dull and routine work for nothing. There was fierce opposition to attempts to stop thousands of unpaid children being sent up British chimneys, and it wasn't finally abolished until 1875. The argument was that the young sweep would, after seven years apprenticeship, become a journeyman sweep, and have a skilled trade. That the trade largely involved getting other young children to go up chimneys was not seen as a problem.

The point is that forcing people to work, effectively, for nothing has been around a very long time, and it is unjustifiable whether it is up a chimney or in Poundland. Yet, under the government's work experience schemes, thousands of young people are being forced to work for eight weeks without pay and without any job at the end of it. And they risk having their benefits cut if they drop out of the job after the first week. This is American style workfare in action. Tough love. It is also an open invitation to exploitation.

Independence. It's all in the mind.

In first ordinary philosophy seminars students used to debate the question of whether we can rely on the evidence of our senses to give us an accurate account of the real world. Is this a real table before me, or am I just dreaming or imagining a table? I've been having similar problems with the referendum debate.

There was Alistair Darling, the former chancellor and an ardent fiscal unionist, saying at the weekend: “Most people think the present settlement does need to change and my view is that any parliament that can spend money but doesn’t have the pain of raising it isn’t satisfactory.” Well, actually most people in the Labour party do not think the present settlement needs to change – at least not in the direction of fiscal autonomy, or devolution max or federalism or whatever you like to tall it. Or so I thought.

I was under the impression that only relatively dissident figures like the former FM, Henry McLeish or the former Labour minister, Malcolm Chisholm, had been talking about giving the Scottish parliament the power, through income tax and other taxes, to raise the money it spends. But clearly I've been relying on my all too fallible senses here, and Alistair Darling agreed with them all along.

Bankers - maybe they do get it after all.

Maybe they do get it after all. Bankers are beginning to realise that their greed and insensitivity to public opinion is damaging them where it hurts: in their reputations and their balance sheets.  Barclays says it intends to slash earnings and bonuses in its casino-banking investment division, and the chairman of RBS, Sir Philip Hampton, has discovered – rather late in the day it has to be said - that banker pay is too high and needs to be “corrected”.

Stephen Hester, the chief executive of state-owned RBS last week handed back his £1m bonus (though he keeps his £1.2 million salary and annual £420,000 pension contribution). Bob Diamond, head of Barclays investment division has reportedly put his £10m bonus on hold this year. Damned decent of him. When he accepted his £6.5bn bonus in 2011 he said that “the time for banker remorse is over”, but it seems to have  come back again. Bankers have finally realised they are on the road to perdition. But why now?

Look no further than the man formerly known as Sir Fred Goodwin, who had his knighthood rescinded last week. Suddenly all the sirs and lords sitting around the boards of British banks have realised that public alienation can have a cost after all. That they can't just thumb their noses at voter opinion and sneer at politicians indefinitely. It's time to make nice and show a little restraint.

This is the answer to all those who said getting Her Majesty to repossess Fred the Shred's knighthood was a waste of time. It is also a rejoinder to those defeatists who say that nothing can be done to rein in the kleptocrats of British banking because they will just leave the country taking their banks with them. In reality, few of our financial elite want to become voluntary exiles from their country of their birth. Even fewer want to join a club of dishonour that includes the Zimbabwean president, Robert Mugabe, and the Romanian dictator, Nicolae Ceausescu.

Scotland's universities are of the people and for the people.

It's a truism that post-industrial nations like ours live by their wits – but that doesn't make it any less true. Whatever Scotland's constitutional destiny, the practical reality is that the education of its people will largely determine their quality of their lives. There really is no alternative to the hard graft of learning, now that heavy industry is long gone, and the false gods of Scottish banking, like Fred Goodwin, have been torn down and trampled into the dust.

Fortunately, Scotland has a unique advantage for a small nation of five million in having at least five world class universities – more in the 'QS top 200 even than much larger countries France – and one of the best educated workforces in the world. Yes, most of them take their qualifications south because of the lack of job opportunities here - but that's another question. Scottish higher education is an industry in its own right, drawing ever greater numbers of international students to study and benefit from our comparative advantage in the learning business.

But there is much more to this than just crude economics. Scotland's universities have never been regarded as mere education factories – they have a distinct egalitarian, or equalitarian tradition, summed up in that much-misunderstood phrase, the “democratic intellect”. There has been much debate about what George Elder Davies, who coined that phrase in the sixties, really meant. But Professor Ferdinand von Prondzynski, Principal of Robert Gordon University, in his report published yesterday, has finally discerned its settled meaning. Scotland's universities should seen as engines of social and cultural improvement - not just for the benefit of the individual, but for society as a whole. In this, the Scottish universities are markedly different to those elite universities, in America and south of the border, that increasingly regard learning as a commodity to be bought and sold, and students as consumers of a product sold at a price determined by the market.

Prondzinsky - universities report

http://www.heraldscotland.com/news/home-news/axe-bonuses-and-limit-pay-of-university-principals-says-government-report.16564569

Salmond launches "illegal" referendum campaign.

 As we waited in the Great Hall of Edinburgh Castle for the arrival of Moses, sorry, Robert Mugabe, sorry Alex Salmond, there was much chatter about Tuesday's now infamous Newsnight interview in which Jeremy Paxman compared Alex Salmond to Zimbabwean dictator and suggest that he wanted to set up a one party state in Scotland. The FM wisely refused invitations to criticise Paxo - since the interview has probably added a couple percent to the SNP's poll ratings. Instead he ticked off BBC Scotland for axing a lot of its political output, including the respected Newsweek Scotland programme.

This was as sure-footed a performance as we have come to expect from the First Minister on these occasions. I've lost count of the number of times I've heard Alex Salmond launch constitutional consultations, but this was Eck's Biggest Day Out ever. With the hall packed with international television hardware, and press from over forty countries, the political theatre couldn't have been more dramatic. As the winds howled around the Castle, Salmond confidently forecast victory in the 2014 independence referendum. Surrounded by massed weaponry of warfare in the frankly militaristic Great Hall, Salmond was right to assure the assembled international media, that Scottish nationalism - unlike say Quebec, Basque or Corsican separatism - has  always been a peaceful pursuit. There has “not been so much as a nosebleed” in the last hundred years of home rule agitation. Though I notice the FM didn't mention injury to letterboxes.

The biggest gag was The Question itself. “Do you agree that Scotland should be an independent country?” Is that it? No dodgy phrases, no weasel words, no devious circumlocutions. And no second or third questions either, unless civic Scotland gets its act together to formulate one. Here was Salmond doing precisely what he had been urged to do by the UK government and the opposition parties:  seek a straight answer to a straight question. No need to invoke the Canadian Clarity Act.    The UK Electoral Commission will have its say on the question, Salmlond confirmed, and would oversee the referendum, reporting to the Scottish parliament.

Why a second question means Salmond might lose

Marriages – they just don't seem to last these days. First the couple start living in separate houses; then the arguments begin over money; and finally, the unhappy pair end up saying: 'see you in court'. Lawyers are rubbing their hands at the prospect of rich pickings from the case of Westminster v. Holyrood. There are suggestions that some anglophile Law Lord, or a private individual, will challenge, in the UK Supreme Court, Holyrood's right hold an independence referendum. (Which possibly explains why the First Minister was so anxious to challenge the Supreme Court's remit in Scotland last year after it overturned verdicts of the Scottish appeal courts).

Now, there is a precedent here: the Canadian Supreme Court looked into the secession of Quebec in 1998, and its ruling – subsequently enshrined in the 2000 Clarity Act - was a masterpiece of legal ambiguity. The Canadian constitutional court ruled that a province had no right to leave a federation or a union on its own volition. However, the judges went on to say that if a referendum was held, with a clear and unambiguous question, and the majority was substantial for independence, then the rest of the union would have to recognise this and act on it. In other words: you don't have any legal right to break up a union, but the political reality is that you do.

SOPA wipeout. How Wikipedia lost its innocence.

It's only when Wikipedia isn't there you realise how incredibly influential it has become. Just try a few random searches. Yesterday I Googled “Scottish independence referendum” and top of the results list was the Wikipedia entry. Then I searched “global warming”, which also served up Wikipedia's page as number one. Even searching something relatively obscure, like “pensions crisis”, Wikipedia emerged top of the results table. Almost every non-news search I made came up Wiki – except interestingly, Celtic Football Club, where the club's own site is top. But even here Wikipedia was third.

This website is well on the way to becoming the number one source of information for the entire world. Wikipedia is a valuable resource, and is greatly increasing the accessibility of human knowledge. However, I'm beginning to wonder if it isn't gaining a virtual monopoly on online wisdom. Which is more than a little worrying. There was a time a few years ago when Wikipedia was the butt of stand ups and satirists because of the unreliability of some of its biographical entries, which were often full of lurid inaccuracies. These are all in the “Wikipedia inaccuracies” page on , er, Wikipedia. But no one is laughing now. Every school and university student in the industrialised world goes first to Wikipedia when they're looking for information for an essay. Not for nothing did the Wikipedia boss, Jimmy Wales, say on the eve of yesterday's blackout: “get your homework done early kids”.

Any journalist who says he or she doesn't use Wikipedia at some time or other is lying. You can't help using it because it is always there, sitting in poll position, on every internet search. Of course, I would never use it as a source on anything remotely controversial such climate change, or immigration, or the banking crisis. But as a means of checking routine facts – like the Conservative majority in the 1951 general election – Wikipedia has become remarkably and convenient and reliable. This is because, with its forty thousand editors monitoring millions of corrections by users, it is almost impossible for a simple factual inaccuracy to remain uncorrected for very long. It's entries are often sketchy and tendentious, but everyone turns to them, and they mostly get the basics right.

But just consider what immense power this places in the hands Jimmy Wales, the internet entrepreneur who set it up only ten years ago . Wikipedia's act of self-censorship yesterday was in protest at what many in the wired community believe is an attempt by big corporations in America to kill the internet by forcing it to obey draconian copyright laws. The Stop Online Piracy Act (SOPA) and its sister legislation, the Protection of Intellectual Property Act (PIPA), currently before the US Congress, have been backed by media moguls like Rupert Murdoch of NewsCorp. But in taking itself down yesterday in protest, Wikipedia was engaged in its own form of powerplay. Clearly on this one issue, Wikipedia is taking sides, and is denying access to information in an attempt to strong arm a democratically elected legislature.

Now, I don't hold any brief for SOPA or PIPA, which make it illegal for any website to distribute, knowingly, material that is in breach of copyright.    It is targeting those file sharing sites that our kids use all the time to share music and videos. Critics like Jimmy Wales claim that just by inadvertently linking to a pirate site, a website might be prosecuted under SOPA. This will drive many out of business, and curb freedom of speech. No one likes censorship, and everyone loves free stuff – but I can understand the purpose behind the legislation, which is to halt the losses that are incurred by publishers, authors, musicians, film-makers when their work is illegally distributed through internet pirate sites. The music industry and the newspaper industry have been brought to their knees by the internet. Bands can no longer expect to earn much from sales of their recorded music because it is offered online for nothing. Surely this is wrong. Creative people need to eat, like everyone else, and these sites are stealing their lunch.

To internet businesspeople this sounds like special pleading from old-tech industries who have failed to move with the times. There is a 'democracy of knowledge' on the web, we are told, and that it is evil to attempt to control this or to make money out of it. Everything should be free and accessible to all, in the digital republic. But how can film studios continue to invest hundreds of millions on making films if they are given away for nothing? How can newspapers survive if they have no revenue?

Moreover web organisations aren't exactly averse to making a lot of money out of other peoples' work. Essentially what happens is that the revenue that may once have gone into the box office or the record store now goes to the mega websites through their targeted ads. Google and YouTube make billions of dollars through advertising around content that they haven't made. At the other end of the food chain, TVShack, the site set up by a British student, Richard O'Dwyer, who is being extradited to the US to face trial for piracy, was earning £15,000 a month from advertising. Heavy handed justice perhaps -but this is surely theft.

Of course it would be worrying if websites were closed down because they inadvertently link to pirated content, though defenders of the legislation insist that intent has to be proved first. President Obama, under pressure from Silicon Valley, has called in SOPA until it can be reviewed for any unintended threat to freedom of speech. But I can't see why copyright law should not apply on the internet just as everywhere else. The truth is that websites are just like any other publishing business and the sooner the law recognises this the better.    The world wide web is not the wild west - it cannot remain unregulated. And I am really rather worried that Mr Wales has chosen to use his own muscle in trying to challenge laws which are, whatever you think of them, the product of a democratic process. Maybe it's time to say that Wikipedia has got too big for its own good. Mr Wales's website may be on the side of the angels, but after yesterday's blackout  it has lost its innocence.

The Union's last thousand days.

At times of constitutional turmoil, like last week, I'm often approached by researchers and producers from the London media looking for someone to explain the will-they-won't-they, devo-max independence-well-maybe referendum. They invariably use the word ”wily” when they're talking about Alex Salmond, as if the First Minister was a petty demagogue in some post-colonial banana republic. Isn't he 'playing games with the constitution', 'deviously delaying the referendum', 'picking a fight with Westminster'? Well, last week his wiliness was to play with a straight bat.

David Cameron believes he 'got a result' in that he finally “smoked out” Salmond on the referendum date last week. But there was really never any secret about the timing of the referendum, since it had been made clear in the Scottish election that the ballot would be held in the second half of the parliament. And for all the talk of imposing an early referendum, that's exactly what is going to happen. Similarly, as civic Scotland luminaries like Canon Kenyan Wright have argued, it really isn't up to Cameron or Salmond to decide if there are three options or two, but the Scottish people. The SNP's preference has always been to have a single question, yes-or-no ballot on independence, and for all the fuss and fluster, that hasn't changed either.

If an early referendum had been imposed on Scotland, it would anyway have been disastrous for David Cameron, since the SNP would have boycotted it. Rather like the Northern Ireland referendum in 1973, or the Keep the Clause referendum in 2000, it would have had zero credibility as a result. So, why did the Prime Minister propose it at all? Worse – why raise the prospect of an early referendum on Sunday, and then appear to back down within 48 hours? He must have realised that by intervening in this way he risked raising Scottish hackles at a Tory 'toff' trying to 'fix' Scotland's future.

Margaret Thatcher: my part in her downfall.

It was the 1987 general election campaign. I'd recently been made the BBC's Scottish political correspondent and I was furious that Prime Minister Margaret Thatcher had refused to give me an interview. So, when she arrived for a “whistle stop” press conference at Glasgow Airport, I was determined to get something out of her.

After her scripted remarks, I started hurling questions at her without waiting to be called. “Whatever happened to Tory promises on a better devolution, Mrs Thatcher?...What have you to the hundreds of thousands of Scots thrown out of work?...Do you not accept that your poll tax is destroying the TorIes as a political force in Scotland? ”. She answered my early questions, but at this she halted and said in those inimitable tones: “That's quite enough from you, young man. Now, does anyone else here want to ask the poll tax question?”. There was silence from rest of the hack pack who were clearly enjoying seeing the press conference turned into a car crash. Grudgingly she continued, and though my editor had to cut the bits and pieces together afterwards, we got an interview of sorts.

I was quite out of order, of course, and I rather cringe at the thought of it. As I was leaving she looked directly at me with that deadly smile and a shake of the head which said: “Ok – but don't think you're so clever.” I only interviewed her properly once after that and it was an uncomfortable affair. Almost as uncomfortable as seeing her again, ten feet high, on the cinema screen meticulously recreated by Meryl Streep in The Iron Lady. It was like being back a that press conference.

2011. Why I think independence is inevitable.

  Spare a thought for Iain Gray this festive season He was by no means a bad politician – as his party discovered when they looked to replace him.  But the abiding image of the 2011 Scottish parliamentary election campaign has to be Labour's Scottish leader seeking refuge in a “Subway” sandwich bar after being pursued by anti-cuts protesters. Mr Gray said he was no 'feartie', and reminded reporters that he had “walked the Killing fields of Cambodia” before entering politics. But the 'meatball marinara incident' helped seal his fate in the subsequent ballot, as Labour suffered its worst election defeat in at least 80 years.

The May 2011 Holyrood election was one of those landmark moments when a nation discovers, almost by accident, that it has altered the course of history, even if it isn't quite sure in what direction. Labour didn't just lose 22 seats – the SNP finally stormed the gates of its West of Scotland heartland, taking Glasgow Cathcart, Kelvin, Shettleston, even Anniesland, seat of the late Donald Dewar himself. The SNP swept Edinburgh too, leaving only one Labour constituency member in the capital city, the 'neonationalist' Malcolm Chisholm, and no Liberal Democrats or Tories. The Scottish Liberal Democrats also lost all their constituency seats in the Highland and Islands and in North East Scotland. After the bloodbath, the SNP was left with 69 out of 129 seats in Holyrood – a landslide that has turned the debating chamber into a supporter's club. But Alex Salmond, could legitimately claim that the SNP was now the first political party in modern history to represent the entire Scottish mainland. All three opposition leaders resigned, and the clock started ticking for the independence referendum which was now unstoppable.

2011 was also a critical year for me professionally and personally. Over thirty years of writing about Scottish politics, I'd always argued that home rule within the UK was the only plausible constitutional destination for Scotland. I envisaged a form of federalism, where Scotland would have extensive tax raising powers within a broad union with England and Wales. Of course, I accepted the right of the Scottish people to leave the UK – but I just thought it would never happen. Independence seemed too dramatic, too disruptive, too revolutionary for this small-c conservative country which, contrary to its popular image, avoids confrontation whenever possible. Now I am not so sure.

Scots did not vote for directly for independence, of course, in May but this massive vote of confidence in the Scottish National Party, and in particular its leader, Alex Salmond, was not made lightly. The Scottish voters did what commentators like me said was impossible, delivering an absolute SNP majority in a proportional election. It had the look of a watershed. And the political landscape did not just change because of the Scottish election.

The second bombshell to hit Scottish politics detonated not in Holyrood but in Brussels, in December, when David Cameron vetoed the European Union treaty on the new “fiscal compact” to resolved the euro debt crisis. Cameron has made what looks like a fundamental and irreversible change in Britain's relationship with Europe, delighting his eurosceptic backbenchers, but fatally undermining the unionist cause at home. The charge against the SNP has always been that they are “separatists”, who seek to divide nation from nation, and risk leaving Scotland alone and isolated from the mainstream of Europe. Now it appears as if David Cameron is the separatist and that Britain is now isolating itself from the other 26 members of the European Union.

The euro debt crisis has altered the dynamics of the Scottish Question in much the same way as Britain's membership of Europe altered it in the '70s. If the United Kingdom is on its way to the outer fringes of Europe, then what is left of the argument that only by remaining in the UK can Scotland be assured of representation at the “top table of Europe”? Both the former Liberal Democrat leader, Paddy Ashdown, and the Labour First Minister of Wales, Carwyn Jones, have said that Cameron's veto has “strengthened the the hands” of the Nationalists, and they should know. As regional unionists, they see the danger that this new separatist Conservative-led administration poses to the moral integrity of the United Kingdom. How it turns the arguments about Scottish and Welsh independence on their head. After the Cameron veto, does anyone seriously believe that the 26 countries of the greater EU, who have finally shown England the door, would deny membership to an independent Scotland?

The United Kingdom used to be a humane project for the common good, based on universal principles, and embodied in great social institutions like the National Health Service. Not any more. The NHS is being privatised in England. Britain today looks more like a devil-take-the-hindmost union, driven by eurosceptic English Conservatives, and dedicated to protecting the financial interests of the City of London. Scots who retain a commitment to those old values have been left adrift and confused. For it wasn't just the Tories who debased the coinage of union: it was a Scottish Chancellor, Gordon Brown, a Labour son-of-the-manse, who gave birth to the monster that is the City of London through his policy of 'light touch regulation”.

Scotland remembers the charge that they were greedy for seeking to benefit directly from oil revenues in the 70s and 80s. “It's Scotland's Oil” was a political own goal for the SNP precisely because the slogan seemed selfish and narrow-minded. Politics is always about morality rather than material interest, and Scots didn't want to appear grasping. But where did the oil wealth go? To pay for the great industrial recessions of the 1980s that destroyed Scottish manufacturing, and to help make London the investment banking centre of the world. It's difficult for Scots to still feel they have a stake in this Banker's Britain.

But that doesn't necessarily mean they intend to vote for independence in the referendum pencilled in for the middle of 2014.. It remains the case that support for independence rarely rises above a third in opinion polls – though in an amusing poll for the Scottish Social Attitudes Survey in November 65% said they would support independence if they were £500 better off as a result. The vast majority of Scottish respondents continue to say that they want a parliament with more powers within the UK - 68% in the Times/Mori poll in December. Scots have difficulty saying they want to “break up Britain” even as they vote in huge numbers for a party dedicated to precisely that.

But the sheer scale of Labour's defeat, and the absence of any coherent response from the unionist parties, has created a momentum for further constitutional change which will be very difficult to halt. Already, the Scotland Bill, which comes back to parliament in the New Year, is looking like an irrelevance. This is the bill which implements most of the recommendations of the 2009 cross party Calman Commission on devolution, which proposed extensive new tax-raising powers for Holyrood including a 50/50 division of income tax revenue. The tax proposals had been severely criticised in 2011 by nationalist economists as unfair, inherently deflationary and probably unworkable. But now Labour and the Scottish Liberal Democrats seem to be ditching Calman also.

The Shadow Foreign Secretary, Douglas Alexander, made a dramatic intervention in the autumn of 2011, telling Labour that they had been “gubbed”  and that they had to show “an open minded approach as to how the architecture of devolution can be improved”. The Liberal Democrats too have set up a commission under the former leader Sir Menzies Campbell, to look at a new, improved form of devolution as a way of getting back into contention. The Scotland Bill will require the consent of both parliaments if it is to become law in the New Year. Alex Salmond has called for the bill to include powers for Holyrood over broadcasting, the Crown Estates, excise duties and corporation tax. The Scottish Secretary, Michael Moore is making clear that he isn't having any of it, and says that if Alex Salmond wants the increased borrowing powers contained in the Bill, he is going to have to lose the rest of his wish list. The way things are looking right now, both parliaments may decide that it is best to lay the bill to rest rather than to amend it to death.

But whether the bill stands of falls, the home rule story has already moved on to the next chapter. Figures from across the political spectrum – from the Conservative-leaning Reform Scotland think tank, through the Blairite former minister, Lord Foulkes, to nationalist “fellow travellers” like the former First Minister, Henry McLeish, are calling now for virtually all tax raising powers to be handed over to Holyrood. The SNP call this, “full fiscal freedom”; Lord Foulkes calls it “fiscal responsibility”; others call it “devolution max” or “independence lite”. Whatever, it implies a fundamental change in relations with England that it might eventually look very like independence. After all, the SNP says that, after independence, it would keep the pound and look to cooperate with England on foreign policy and non-nuclear defence.

Indeed, critics of the SNP question how Alex Salmond can still call it “independence” when the Bank of England is setting interest rates and Brussels is regulating the Scottish budgets. This is the modern nationalist paradox: they appear support not one but two monetary unions - UK and EU - at the same time. Salmond has tried to resolve the contradiction by invoking a new, though largely undefined, “Social Union” between Scotland and England, as if in some way trying to retrieve the best bits of the old UK and a referendum on the euro. But the SNP seems finally to have accepted that true independence is an anachronism – that the world has changed, and that in future Scotland is destined to remain in perpetual negotiation with other supra-national authorities.

Perhaps this is why Mr Salmond seems content to sacrifice formal independence in a multi choice referendum. For if the SNP leader continues to offer not just independence, but also “devolution max” on the referendum ballot paper, he must surely realise that independence would lose. Scots would vote for devolution max, the policy now backed by Lord Foulkes and many Conservatives.  The calculation on Mr Salmond's part must be that this measure of “fiscal freedom” would be so close to formal independence that, in the modern multinational world, there would be no practical difference. Salmond could win even if he loses. But by the same token, in winning fiscal autonomy he might kill forever the 'auld sang' of full independence.

Whatever, in 2011 independence ceased to be a hypothetical and became an immediate and practical possibility, widely discussed and debated. I now think it is almost inevitable that Scotland will leave the United Kingdom as we understand it now – though it will almost certainly find itself back in some kind of confederal relationship with England. The two partners in the ancient Union are now on very different political trajectories. It would be well for everyone in Scotland - and the UK – to start preparing for the transition now. It is in no one's interest for the United Kingdom to disintegrate chaotically.

A financial nativity tale

Herald.

A telling conversation with ghost of Christmas present

Iain MacWhirter

Columnist

Christmas Eve at St Andrew's Square, in the centre of Edinburgh's financial district.

Wet snow falls on the scattering of tents housing the Occupy protesters. Jake Rice sweeps the slush out of the mess tent ... and onto the £300 hand-made shoes of Andrew Duncan, an investment banker.

AD: Jesus Christ!

JC: Oh, sorry. Didn't see you.

AD: Aye, well. You can now. And I'm bloody soaked.

JC: Um, but who ... what d'you want.

AD: Well, I was going to give you these bottles, but I'm tempted to drink them myself now.

JC: Why? You look like one of the people who've stolen 1% of the wealth. You're not from the tabloids again are you?

AD: No, and I've stolen a damn sight less of the wealth this year, I can tell you. Bonuses have been trashed by the crash.

(Sound of child crying.)

AD: Christ! you got kids here? In this?

JC: Only during the day.

AD: Yes I forgot, you lot all go home at night don't you – back to your warm middle-class beds.

JC: Actually we don't. I've been here for two months. Before that I was at St Paul's.

AD: Hear they've given up.

JC: No they haven't. They've agreed to move on rather than be forcibly removed in the New Year. We aren't going anywhere.

AD: OK, sorry. Look, I've been watching you here every day since you pitched up. Never believed you'd last. Which is why I'm bringing this crate. Just thought you deserved a bit of a winter warmer.

JC: That's kind of you, but I'm not sure we should really be taking donations from the people who've been wrecking the financial system, destroying public services and throwing people out of their homes.

AD: Ha, ha, ha! What school did you go to?

JC: That isn't the point. It's not where you come from that matters; it's what you do.

AD: Aye, well. I went to one of the worst schools in Edinburgh. We used to throw stones at people like you in your poncy blazers.

JC: Now it's my turn to tell you where to go ... If you don't understand why that doesn't matter then you can't possibly understand why we're here.

AD: Actually, I understand a lot better than you might think. Look, I'm sorry, I didn't come here for an argument or to jeer at you. As I say, in a curious way I respect what you are doing here. I'm glad someone's doing it.

JC: Why don't you join us then?

AD: Nah, I'm just not into that. I'm not a demo kind of person, never have been. Can't take it seriously.

JC: What do you actually do?

AD: I work in financial derivatives – currency mainly, and a bit of securitisation – but that's all frozen up at the moment.

JC: So you're a speculator then.

AD: Not really. I try to predict what various currencies will be worth, then we short on exchange traded funds valued in euros. At any rate, that was what we did.

JC: What possible value can there be to society in speculating on currencies? Don't you realise how people like you have driven commodity prices so high that people in Africa are having to sell their bodies to eat?

AD: Look, I never made the system. Really, it's just a job. Actually, I'm one of the people who agree about a Tobin tax, you know a tax on currency transactions – like George Soros says.

JC: A Robin Hood tax? You?

AD: I hate that phrase, but yeah. Why not? You have stamp duty on houses. Currency is just a market, it's just like selling anything – clothes or food. You make a profit on the sale. If you didn't have markets you'd not have this tent.

JC: Actually, this came from Blacks which has just gone bust thanks to people like you.

AD: I'm not to blame for high-street shops being hit by the internet. That's you lot with your MacBook Pros. You don't realise how you are changing everything with those things.

JC: OK. But if you look at the crisis as a whole, it's got a lot to do with greed, lax regulation, inequality, tax avoidance ...

AD: Well, actually. I agree with a lot of what you say. It's been appalling. Those financial scandals: endowment mortgages, payment protection insurance, private pensions, precipice bonds ... It's an utter disgrace. Trouble is ordinary people just don't understand the financial system. The politicians don't either. Next year, this Government is going to introduce a new semi-compulsory pensions system for the low paid which has been designed entirely to protect the profits of the pension providers. Bet you'd never heard of the National Employment Saving Trust?

JC: I don't have a pension.

AD: Course not. People like you don't work at all.

JC: The people are kept in ignorance by a compliant media, by the lies of the banks, and by corrupt politicians.

AD: Tell me about it. I couldn't agree more. People are completely defenceless. They should be taught about finance at school. They don't know how much they're being robbed because they're blind.

JC: But you make a living out of it. How can you stand there and say that?

AD: Actually, we're not so smart either. Look around this square at these grand bank buildings. There's absolutely nothing behind them. Empty shells. The money has all gone. They've killed themselves by their own greed.

JC: What about the trillion in public money that the Government gave you people to pay for your mistakes?

AD: Got me there, friend. Madness. Rewarding failure. Government handed a trillion to us, no strings. So what were we going to do? Go bust? That would have meant an economic depression.

JC: We're in an economic depression, or hadn't you noticed?

AD: (Turns to go) Actually I had kind of ... I've just been made redundant. Happy Christmas.

The last throw of the dice? ECB gives bankers a happy Christmas..

  Turns out that Francois Baroin, the French Finance Minister, wasn't far wrong last week.   The most hated man in the City of London said that Britain was in just as bad financial shape as eurozone countries like France, and that the rating agencies should be downgrading British debt.  We have higher inflation, lower growth and larger debts than France which is currently on the downgrade 'list of shame'.   Now Moodies has put the UK on credit death watch too. 

Douglas Alexander, Scottish nationalist?

    It's extremely uncomfortable, especially at mealtimes.  All week my mouth has been dropping open inconveniently, bouncing off my chest, getting in my food, stifling coherent speech.   The reason:  the Shadow Foreign Secretary,  Douglas Alexander's,  jaw dropping intervention in the independence debate.  In a speech in Glasgow the one time protege of Gordon Brown (they're not so close these days) appeared to dump the Scotland bill in the dustbin of history and promised "an open-minded approach as to how the architecture of devolution can be improved".

   The clear implication is that Labour at least are no longer viewing the Calman Commisson report, and the Scotland Bill it inspired, as the last word on Scottish home rule.  Or rather, Labour is no longer prepared to go into the Scottish referendum allowing Alex Salmond to have an each way bet on the result, by supporting devolution max and independence.   Alexander is unspecific about exactly how far he is prepared to go down the road towards "devolution max" but there is no doubt that Labour is now resolved not to go die in the last ditch defending the status quo, while the SNP adopt the mantle of devolution.  I talked with him in the BBC studios on Saturday, and his irritation at the way the SNP have claimed credit for home rule, and made the Scottish parliament their own, even though they boycotted the Scottish Constitutional Convention, is very clear.
If there is a better devolution available, Labour will sponsor it.

  This is an astonishing moment.  The ground is moving under our feet.  If Labour is now contemplating fiscal independence, and though Alexander has not said this, I believe that is what he means, then we are on the verge of a constitutional revolution.   Let me explain:  the Calman Commission was, in a sense, unionism's last throw of the dice.  Professor Calman made what I argued at the time was a compelling argument for the Scottish parliament to have tax raising powers.  A grown up parliament must take on the responsibility of raising the money it spends, he said.  It must be accountable for its actions, transparent, fair, efficient.  However, the Calman solution, a fifty fifty split of income tax, was never very coherent and had all the hallmarks of a Whitehall fudge.  Even its supporters have difficulty explaining how it would work, or be an improvement on the present arrangements of a bloc grant from Westminster.

    The only way forward from Calman is a form of fiscal autonomy where the Scottish parliament raises the vast majority of the money it spends.  This has the advantage of moral clarity, and fiscal transparency.  There is no jiggery pokery with revised Barnett Formulas,  no deflationary fiscal devices.   There will be tax sharing, as there is in all federal arrangements, but the fundamental principle that parliament should be accountable is upheld.  Scots would no longer, under fiscal autonomy, be able to blame Westminster for "fiddling the figures".   The responsibility falls on the Scottish parliament to balance its books, pay its way, tax as well as spend.  Make the hard choices. And they are hard.  Fiscal autonomy is no easy ride for the SNP because it's main propaganda message - 'it's all London's fault' - is whipped from under them.


  No wonder Douglas Alexander/s namesake, Danny - the Treasury (?) is sounding increasingly desperate.  The unionist coalition built around the Scotland Bill has fallen apart. But this is only a recognition of reality.  Calman was a victim of the May election, when the SNP won an absolute majority in the Scottish Parliamentary elections.  Alex Salmond can do exactly what he wants in Holyrood, and he has made clear he is not going to vote through the Scotland Bill in its present form.  Since the passage of the bill requires the consent of the Scottish parliament this has killed the bill because the SNP will simply it.  What is Westminster going to do?  Impose a radical new tax regime which has been rejected by the Scottish Parliament?  Hardly.

   Douglas Alexander is a gifted political strategist and he saw the meaning of May long before his Scottish party had woken up from their post election hangovers.  It changed everything. Not just the balance of power in Holyrood, but the whole trajectory of Scottish, and British politics.  His sister, Wendy Alexander, may have set up Calman but that was in a different age.  Labour now faced the danger of being left out of the new order - forced to go down with a bill that has been moved by the hated Liberal-Tory coalition.   Labour had no option but to change course, as he tried to tell them in October when he reminded them that they had been "gubbed".  If Labour go into the independence referendum chained to a Tory bill they will be gubbed for good.

Salmond's first own goal. Sectarianism

  From The Herald.    Like most people concerned about freedom of speech, I've been watching the progress of the Offensive Behaviour at Football and Threatening Communications Bill, with mounting alarm. Outlawing the singing of songs at football matches seemed such a ridiculous proposition that initially I thought the Scottish government weren't serious. That Alex Salmond just wanted “send a message”, and that the loopier parts of this unnecessary legislation would be dropped. And if not, MSPs would realise that such a law as unworkable as it is objectionable. Surely, reason would prevail. It hasn't.

Yesterday, MSPs in Holyrood passed a law that could make the singing of the national anthem punishable by a five year prison sentence if it is associated with “offensive or threatening behaviour” in any context that involves football. No one knows exactly what “offensive and threatening behaviour” is, and anyway, because of the Catch 22 drafting, the very singing of “sectarian” songs is itself deemed offensive. There is no list of proscribed songs because to compile one would invite ridicule - “Give Ireland Back to the Irish” - Paul McCartney? This dumb law could also make the carrying of flags, colours or religious symbols illegal at football matches, in the trains going to football matches or in pubs or any public place where football is being shown. It could make singing The Sash illegal in a pub, but not in the street outside it. This is utter madness.

Who are the separatists now? Take Britain out of Europe and you can take Scotland out of the UK

David Cameron's decision to take the UK out of Europe will take Scotland out of the UK.  The Prime Minister's use of the veto against the EU treaty on budgetary reform looks like the game-changer that the SNP leader Alex Salmond has been waiting for.   Attachment to the Union in Scotland is likely to evaporate as Scots realise that they have become an appendage to an essentially isolationist England with a sceptic media saturated with an ugly chauvinism. The hostility shown towards European nations is like a bad version of the hostility that old school Scottish nationalists used to show towards England. Only they grew out of it. 


  David Cameron's narrow nationalism, putting the interests of the City of London above those of resolving the EU budget crisis, has fatally undermined the moral case for sticking with Britain.  If the UK is now a Banker's Union, dedicated to protecting the privileges a delinquent financial elite, what price internationalism, democracy, social welfare or any of the values that were supposed to define the common British project?


The SNP has suffered greatly in the past from accusations that it is a "separatist" party, seeking selfishly to divide the UK, and pit nation against nation.  But who are the separatists now?
  


  The argument for sticking with Britain was always that this gave Scotland representation at the highest levels of decision-making in Europe.  This is clearly no longer the case.  The UK is marginalised in Europe, whatever the Prime Minister may say - a "union" of one against 26.  This isolation is the culmination of decades of revanchist anti-Europeanism,  which has coincided with the decline in popular attachment to the symbols of Britishness on both sides of the border. 


   As England turns in on itself, lapsing into a financial parochialism, Scotland turns out - seeking to rediscover in Europe the communitarian values that it believed underpinned the UK.  The SNP used to be criticised for demanding "Scotland's Oil", for seeking to grasp the nation's natural resources for itself.  Well, Scotland gave the oil away, and now finds that it was used, not for the common good, but to build an evil empire of greed.  It surely won't get fooled again. 

£500 for independence?

From the Herald.   It sounds cheap at the price. 65% of Scots would opt for independence if they were £500 better off as a result, according to the latest poll from the Social Attitudes Survey. With all that cash the SNP has been accumulating recently through legacies and donations, Alex Salmond must be tempted just to send out a brown envelope with every referendum ballot paper. Perhaps they could redirect redirect some of that £60bn in fantasy funding for infrastructure projects announced this week. Scotland could be taking its seat in the United Nations before the decade is out.

There has been much scorn heaped upon Scots for appearing to put a price on their continued membership of the UK. Almost as much as has been heaped upon the Scottish Infrastructure Secretary, Alex Neil's, Mega Plan for road and rail projects, including a high speed rail link, with a sprinkling of housing and hospitals. Most of the projects won't come to fruition until the 2020s and beyond, and rely on optimistic funding from NPD, PPP, PFI or whatever form of private finance initiative happens to be in favour at the time. The Mega Plan also depends on the Scottish parliament getting the borrowing powers contained in the Scotland Bill, to which the SNP government is vehemently opposed. The consensus amongst the Mcchattering classes is that it has the ambition of Roosevelt's New Deal, but little prospect of becoming a real deal.

But at least the SNP are trying to do something. Industry bodies, including the Scottish CBI which is no friend of nationalism, have been praising the scheme for trying to inject confidence into a flatlining economy. Some foreign pension funds are reported to be interested in financing projects which, like rail, have guaranteed revenue streams. Most of the scornful newspaper comment concedes that someone somewhere really needs to be talking about growth and the SNP government is at least suggesting there may be life after the recession. Certainly Neil's plan puts the UK government's £5bn infrastructure plan announced in the Autumn Statement in the shade.

In a country like Scotland, where half the economy is the state, no one will invest if the government isn't taking a lead. For every £100 million invested, 1400 jobs should emerge in the wider economy. It's just a pity that so many of the projects are unimaginative road improvements, picked from the briefing sheets supplied by transport lobbyists: Forth Road Bridge, M8 link, A9 duelling, Aberdeen bypass, etc. I thought that the SNP was supposed to be in the green investment business, developing renewable energy.

But there is a broader political objective here. The SNP is playing a game of fantasy independence – giving voters some idea of how life might be in future if Scotland were to to it alone. Everything the SNP does right now, from Alex Salmond lecturing the Chinese on Adam Smith, to getting civil servants to research a “Scandinavian” prospectus for independence, is all about preparing the ground for the referendum, which looks like coming in the middle of 2014. The task is to eliminate the negatives – make independence sound like a bracing hill walk rather than a leap in the dark. The SNP is trying to think us into leaving the UK.

And that much-derided poll from the Social Attitudes Survey is, they believe, an indication that Scots are thinking the unthinkable.. A £500 a year bung may seem a crass, materialistic reason for seeking national freedom, but read differently it suggests that most Scots would now opt for independence if they thought it could be made to work economically. . Certainly, there appears to be precious little romantic or emotional attachment to the United Kingdom, kith and kin, the flag or any of the other symbols of Britishness.

Perhaps this a consequence of the very materialistic way that unionists have posed the argument. Opponents of independence invariably resort to versions of the “divorce is a costly business” argument. - the £4 billion deficit, the loss of the Barnett Formula.   Scotland hurled out of the EU and left destitute like a single parent on a bleak housing estate. It is the cost of the divorce that is always emphasised, not the emotional bonds that led to the original marriage.  In fact, the Union – Parcel o' Rogues aside – was a moral project as well as an economic one. 

   Even during the days of the British Empire, when Scottish soldiers shot the natives, Scots graduates ran the colonial administration, and Scottish bankers took all the money, there was a sense of mission: that this was somehow bringing civilisation to the world. After the fall of the British Empire there was a new moral union. It was based on working class solidarity, trades unions, the war against fascism, the 1946 Labour government and the National Health Service. Scots were fully signed up to the social democratic project, to the welfare state, and largely remain so today, even though the industrial working class is no longer a political force, and the welfare state is under challenge as never before.

Scots are thinking hard cash because they no longer recognise any coherent moral message from an increasingly eurosceptic United Kingdom, dominated by the City of London, and run by a government largely composed of ex-public schoolboys. Why should Scots keep faith with a union based on plutocracy, where personal enrichment is the only mission around? The SNP believe Scots are ready for a new political narrative in which Scotland figures as a rugged equalitarian Nordic nation, with a history of self-reliance and self-help, that doesn't need state handouts and can do very well on its own.

And talking of prospectuses, the nationalists think they can offer a pretty convincing IPO for the referendum: highly educated and versatile work force; £350bn in North Sea Oil; a quarter of Europe's wind and wave energy; thriving tourist industry, five world class universities and an awful lot of water.     It would be pretty poor management that could make a mess of those numbers. If I were a Japanese pension fund, I might consider investing in it.

    So, unionists should take little comfort from that risible price drop poll.  Scots are increasingly taking independence seriously, and are costing the future. A leap in the dark might be better than being left in the lurch.

Black November: it's enough to drive you to drink.

     November was when the banking crisis of 2008 finally hit home. The governments of Europe have bankrupted themselves by taking on the debts of the banks.  The latest move by Angela Merkel and Nicolas Sarkozy is the final nail in the coffin of the eurzone economies.  It saddens be greatly to say that, but I can't see any way out for them now. 

   What was decided in Paris was that, in future, private investors will not incur any losses in future defaults by eurozone countries.  In Greece, the banks and investment houses who had bought up Greek debt were forced to take a "haircut" of some 30-40%. This freaked bond investors and made them wary of taking on sovereign debt of any Mediterranean states - which is why Italy's borrowing costs leapt above the crucial 7%.   Markozy decided that the only way to calm the markets was to give them a promise that future losses will be taken onto the state.

   All very well, but the sovereign states of Europe are already effectively bankrupt, not because of public debt, but because of the 23trillion that has been lent by eurozone banks. This is the real wild card.  By any reasonable standards, the eurozone countries are already insolvent.  And there is no one left to come along and pay their debts for them.  This is why the rating agency, Standard and Poor's (what a wonderful, Dickensian name that is) has put them all, even Germany, on notice of credit down grade.  This will make it even harder for them to borrow money, and will increase debt. 

   But all those gloating over the misfortunes of the eurozone should remember that Britain is deep in the debt pit as well, and it is only because we have been debauching the currency and igniting inflation by Quantitative Easing that we have been left alone for the time being.  There is a reckoning here too. 

Everyone should have a decent pension.

   That's what the strikers' placards said, and they are right.  Everyone should have a decent pension.  The trouble is that the vast majority of workers in Britain don't have one, and don't have the remotest hope of having one.

   The basic state pension in Britain is worth only 17% of earnings the lowest in Europe, £102 pw for a single person, or just over £5,000 a year.  The average in Europe is 57% of average earnings, around £14,000.   Even in the Netherlands, the second lowest, pensions are worth twice what they are here.  Hardly luxury, but at least it is just about possible to live on it.   The UK pension simply isn't enough to live on.

   People here are expected to save for their retirement.  But the iniquitous means testing that is applied to the pension credit actually discourages people from saving. Which is why so many don't.   The average private sector pension is only worth around £20 a week, and yet this can disqualify a pensioner from receiving the pension credit which bumps the state pension from a £102 to £137 for a singe person.  And to add insult to injury, this is classed as taxable income - unlike tax credits or interest on an ISA.    Britain has the most complicated pensions system in the world, and many people who are eligible for the pension credit don't manage to complete the pages and pages of form filling.

   Let the public sector workers keep their pensions - but only if the rest of the working classes are given similar security.  The danger is that the majority of workers, who are not employed by the state, and who cannot afford any pensions, will refuse to continue to pay, through their taxes, for the relatively generous pensions of public sector workers.  There has to be some kind of equity here.

High pay equals low growth.

 The High Pay Commission has told us what we already knew: that the very rich have turned the economy into a personal wealth-generating machine.  Earnings for CEOs have risen thousandfold over the least thirty years as average earnings have only tripled. 


  There is no conceivable economic justification for their extravagant wealth, which has arisen largely through regulatory indolence and public ignorance.  Remuneration committees composed of highly paid executives naturally acquire an exaggerated sense of their own worth.  The idea that those dull boardroom suits, with their bad breath and stale management speak, are 'masters of the universe' is laughable. 


  The capitulation of successive governments to  neoliberal fantasies about how the productive economy actually works has allowed a climate of kleptocracy to command Britain's boardrooms. If even Labour politicians are "relaxed about people getting filthy rich so long as they pay their taxes" (Peter Mandelson, 01) then it is hardly surprising that the wealthy have filled their boots. 


  The trouble is that moral condemnation of this kind of elite behaviour doesn't work.  They don't have any morality beyond brute self-enrichment.  What is needed is a critique of the economic implications of allowing he top 1% to acquire 40% of the wealth.  In a British context it is about looking at the way this concentration of wealth undermines the productive economy.  


   The kleptocrats don't spend their money in productive ways, they use it for speculation in property, commodities and other assets.  This leads to stock market instability,  spikes in the prices of property, oil and food,  and to the creation of sophisticated financial products designed to increase yield, like hedge funds, special purpose vehicles, private equity.   Poor people spend their money on food, clothes and other consumer goods all of which generate economic activity and employment.  


   Grotesque inequality of wealth is not just an abomination, it is an economic depressant in the truest sense.  It creates stagnant pools of wealth, sucking the vibrancy out of the economy and depressing growth.  Roosevelt had the right idea when he slapped initially a 70% tax and then, ultimately, a 90% tax on incomes above $200,000.  If you look at the history of taxation rates in the UK and US over the last eighty years, it is no accident that the most productive years of the capitalist economy were in the 1950s and 1960s when tax rates were double what they are today.  


   That's the trouble with capitalism today.  They don't know what side their bread is buttered.