Could Scotland really leave the UK without paying its share of debt?

Constitutional expert tells Andy Gregory why such a move could risk an independent Scotland’s route to EU membership

Alex Salmond, leader of the Alba Party, is seen during a campaign event at The Falkirk Wheel (Peter Summers/Getty Images)

Alex Salmond has captured fresh attention with the claim that Scotland should be able to become independent without taking on a share of UK debt – but to what extent should this stance be taken seriously?

His new Alba Party is urging Nicola Sturgeon and the SNP to adopt what it dubs a “clean break settlement” – arguing that austerity and coronavirus has “utterly” changed the economic world and that independence advocates “must adjust to the new realities”.

Alba asserts that any UK debt accrued through quantitative easing – money printed centrally – “is largely owed by one branch of government (the Treasury) to another (the central bank) and therefore forms no legitimate liability for the Scottish or any other people”.

It says the debt as a share of GDP has doubled since the 2008 crash “when the government and Bank of England embarked on wholesale quantitative easing”.

Figures published in October show the UK government’s gross debt reaching more than £1.87 trillion – which equates to around £26,900 per person in the UK – in part because of massive spending to deal with the coronavirus pandemic.

Professor James Mitchell, chair in public policy at Edinburgh University, believes Alba’s claim to be “campaign rhetoric designed to appeal to a section of SNP voters and put pressure on the SNP leadership, rather than a serious engagement with the issues”.

Suggesting that “Alex Salmond and Nicola Sturgeon have swapped positions” in recent years, Prof Mitchell said: “Salmond was always the cautious, pragmatic, gradualist who was keen on a third option on the ballot paper in 2014, while Sturgeon was the hardliner who wanted a straight fight with unionists.”

Indeed, Alba’s clean break policy stands in stark contrast to the SNP’s proposals in its white paper on independence from 2014, published under Mr Salmond’s leadership, which said an independent Scotland would take on a “negotiated and agreed” share of the UK debt.

“Now Salmond is seeking to portray himself and his party as hardline,” says Prof Mitchell, “which may work to the SNP’s advantage if this allows the SNP to appear relatively moderate and allow Sturgeon to warn that Alba awaits in the wings if the SNP’s demands for a referendum are ignored. 

“But this seems to be Salmond’s attempt to distinguish Alba from the SNP [and] appeal to hardline nationalists disappointed in Sturgeon ... more than a serious engagement with the issues.”

The SNP did not respond to a request for comment on Alba’s policy, but it has previous argued that Scotland’s deficit after independence is entirely notional because it would depend on a deal agreed between Holyrood and Westminster.

Under the Scotland Act that created devolution, no administration in Edinburgh can run up a debt by spending more than it receives from the Treasury or raises in additional taxation – in contrast to the UK government.

Brexit illustrates how the unpicking of decades of mutual obligations can be a matter of long and grinding debate.

In August 2019, the freshly elected prime minister, Boris Johnson, had claimed that a no deal Brexit would mean the UK would not need to pay a divorce bill – a claim quickly disputed by the European Union. Mr Johnson would later float the threat of non-payment as a bargaining chip in wider negotiations, but due to a multitude of reasons – not least the desirability of a free trade agreement – the UK now stands to pay around £39bn in total to its former bloc by 2057.

While the parallels to be drawn with Scotland’s obligations in paying off UK debt are clearly limited – Britain’s Brexit divorce bill comprises mostly outstanding budget payments – they shine a light on the realities of breaking up longstanding political and economic unions.

“As our experience of Brexit should have made clear, a referendum vote is only the start of a process and talk of a ‘clean break’ is electioneering rhetoric,” Prof Mitchell said, adding: “Decisions of such importance cannot be imposed by one party without considerable cost if attempted. 

“Independence, like Brexit, would be a process, not an event. The idea of walking away from existing commitments and responsibilities would damage the Scottish Government in the eyes of the international community, not least financial institutions on whom an independent Scotland would rely. Debt and assets would need to be carefully addressed and this would take time.”

Professor Marc Weller, chair of international law and international constitutional studies at the University of Cambridge, broadly agrees.

“Even if the people of Scotland opt for independence, there is no provision in international law for what the Alba party calls a ‘clean break’ divorce,” the former UN mediator and expert in international dispute settlement tells The Independent.

“Secession does not mean abrupt, unilateral departure. Instead, the seceding party is obliged to negotiate in good faith about the terms of a settlement. In other cases national debt has been assigned according to population numbers, sometimes balanced against national assets that are being divided.”

A unilateral departure without a settlement “would leave Scotland isolated and would risk the necessary support from London for EU membership”, he warns.

“EU membership is only possible with a clean certificate of health from London – otherwise it is bound to be blocked by Spain and others fundamentally opposed to secession, and certainly non-consensual secession, as a matter of principle in their own vital national interest.”

However, not all economists are in agreement.

Richard Murphy, a visiting professor in international political economy at City, University of London, among other institutions, recently argued that “Scotland won’t need to repay the UK national debt unless the UK does as well – and there’s almost no chance of that”.

Writing in pro-independence The National, Prof Murphy went further in suggesting that any debt owed should be adjusted for both quantitative easing and historic oil surpluses – an argument based on the disputed, but not categorically disproven, assertion of nationalists that Scotland has “subsidised the rest of the UK in most of the last 40-year period”.

And he interpreted a Westminster publication from 2014, titled “UK debt and the Scotland independence referendum”, as a concession that “Scotland will not be liable for debts managed by London before independence”.

Issued to reassure investors amid threats that Scotland would refuse to pay its debt share without a currency union, it states that “the full spectrum of assets and liabilities – past, future and contingent – would need to be considered in negotiations between the continuing UK and Scottish Governments, on a case-by-case basis”.

Salmond said at the time: “We remain prepared to negotiate taking responsibility for financing a fair share of the debts of the UK provided, of course, Scotland secures a fair share of the assets, including the monetary assets.”

Seven years after these arguments culminated in a 55 to 45 vote against independence, recent polling suggests the SNP may be on its way to seizing a “knife-edge” majority in Holyrood on Thursday – a result Ms Sturgeon would use to claim a mandate for a fresh “legal” referendum.

With the BMG Research poll for The Herald indicating that Holyrood could end up with 79 pro-independence MSPs out of 129, the stage for a second independence referendum seems set.