Negotiating prior to an Independence referendum: a reply to Dafydd Trystan

Mike Hedges AM replies to a recent article on the Welsh public’s attitude towards independence

The article titled indycurious by Dr Dafydd Trystan showed a movement in favour of considering Welsh independence by the Welsh public. I have my doubts about asking people to rank their views from 1 to 10 a poll which shows almost 3 in 10 of the Welsh population more in favour than against can be seen as a major movement in public opinion.

We have a novel way of dealing with constitutional matters, where we have the referendum first and then we set about negotiating the terms afterwards. Whilst with the withdrawal from the European union it was necessary to have the referendum first to have the mandate to start negotiating withdrawal by implementing article 50, with any future Scottish or Welsh independence referenda it is possible to negotiate first so that those voting know what they are voting for.

For Scottish or Welsh independence there are a number of key areas where agreements is necessary for independence. The below is just a flavour as opposed to a definitive list.

Firstly is the currency that each country will be using. The pound sterling will become obsolete so a Scottish pound or Welsh pound as well as the remaining British pound will need to be created. An example of an amicable split was the split up of Czechoslovakia. Following the split the two countries created new currencies but prior to that the two countries had capital controls implemented and all cross-border money transfers between them were halted to avoid any speculative flows. Stamps were glued onto 150 million federal banknotes which were then taken around the country with the help of the police and the army.

The exchange for notes stamped by Czech or Slovak stamps, at a 1:1 rate, was completed in four days subsequently the stamped notes were  replaced by new ones. People could turn a maximum of 4,000 crowns which was approximately 87 pounds into cash. The rest had to be deposited and the old money ceased to be legal tender. Whilst the initial rate was 1 to 1 this did not hold and the Slovak currency devalued by 10 percent in mid-1993 and remained weaker than the Czech crown until Slovakia’s euro entry in 2009.

Every Country needs a Central bank that can act both as a lender of last resort and also set interest rates. Currently the bank of England does that but if there is a split then new central banks will need to be formed and the assets and liabilities of the bank of England transferred, according to an agreed formula, to the new central banks.

There are also a number of government agencies such as the DVLA and national insurance that cover the whole of Britain. What will become of them, will they be split or will each country allow, what will become a foreign country to carry out these functions.

Share of national debt would need to be agreed either on a population basis or on some other agreed formula and again arbitration could be used if agreement could not be reached.

What rate and how are Pension and social security payments to be paid. People will build up National Insurance contributions from Independence in each country but who will be responsible for current pensioners. Will it be where they live now or where they lived prior to retirement? National insurance rates will have to be set and collected in each country. Corporation tax will have to be set and collected in each country. Vat rates and duties on Petrol and Tobacco will have to be set and collected in each country with the danger of substantial cross border movement if rates diverge significantly.

With the Armed forces it will be important that armed forces personnel are allocated to the correct country, and based in their own country.

The sea border would need to be defined and agreed either by negotiations or via arbitration. A hard or soft land border will depend on a number of issues such as membership or non membership of the EU and different rates of duty and VAT. Will there be a free trade agreement between the countries and free movement of people, if so that needs negotiating. A police protocol will be needed for cross border investigations and either separate national security and special branch staff or an agreement to jointly fund and share.

For the leaving date needs to be shortly after the vote, the above needs to be negotiated prior to the vote. Of course if the above are agreed then people will be voting on what the future looks like rather than taking a leap of faith into the unknown.

As said at the beginning this is not a definitive list just a flavour of what needs to be negotiated, I believe before not after, an independence referendum.


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Mike Hedges is AM for Swansea East

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