Wednesday, 17 September 2014

Who will Britain's civil servants be working for on Friday morning? Urgent decisions this week, if there is a “yes” vote – but in whose interests? - Prof Perri 6 - Chair in Public Management, Queen Mary

If the people of Scotland vote for independence tomorrow, Thursday 18th, the process of separation will not, as too many politicians have suggested, be postponed for eighteen months of negotiation. It will begin around five in the morning on Friday, 19th September.
Civil servants in the Treasury, in the Bank of England, the Foreign Office, the Ministry of Defence and those parts of the Home Office which are responsible for immigration policy will immediately find themselves briefing ministers on how to negotiate with the Scottish government. De facto, therefore they will already be working for what will, in these hitherto reserved functions, be a “rump UK” government. More to the point, they will be advising ministers on how to protect the interests of England, Wales and Northern Ireland in those talks, not those of Scotland which will already be represented by the Edinburgh government. Long before independence would be announced, the role and accountability of senior London civil servants and the interests they serve will have changed drastically. They will have to adjust the advice they offer to ministers accordingly – and do it immediately when they start work on Friday morning.

First to be affected on Friday morning will be the duties and role of Treasury civil servants. After a “yes” vote, they will be working with the Bank of England to craft the precise wording of assurances given to the markets, in the hope of stemming both an outflow of funds from banks and bank accounts registered in Scotland and a run on sterling combined with a great sell-off of British government bonds. How far should they advise ministers and the governor of the Bank to go? In the interests of Scotland, of course, it would be best for the UK to give an open-ended guarantee of the value of deposits in Scottish banks. But the markets might test such a commitment very quickly. Is that really in the interests of English, Welsh and Northern Irish UK citizens that what will, after a “yes” vote, by five o'clock on Friday morning already be more their Bank of England than it will be Scottish citizens' Bank? Should Treasury officials advise the governor and the Chancellor to expose “rump UK” citizens to such potentially huge liabilities? This is not just a question of civil service ethics. It is a constitutional and a public management question which has to be answered in a hurry. Sir Nicholas McPherson, Permanent Secretary at the Treasury, must surely have been pondering this question rather carefully because he may well later be called to the Public Accounts Committee to explain the advice he gives on Friday morning.
After a “yes” vote in Scotland, the senior officials in the Ministry of Defence will begin facing the same dilemma later on Friday morning. Major defence suppliers with big sites in Scotland will be on the 'phone to them when the MoD switchboard opens. They will want information about MoD intentions for existing contracts which, already, will be regarded as having been placed in, effectively, a foreign country. They will also want to know what the MoD's policy will be about placing new contracts. With that information, many will need to make announcements by Friday lunchtime to their shareholders explaining whether or not they intend to relocate. The MoD officials will be providing advice to the Secretary of State, Michael Fallon, already in part on the basis of the interests of the rump UK, rather than of the whole of the UK including Scotland.
The Home Office has a little more time before decisions have to be made that might carry  really big financial consequences. Whereas the markets will react immediately to the UK ministers' announcements written on the basis advice of from their civil servants about the currency, the position of the banks and the value of the defence contracting companies, the Home Office has time to prepare its advice to Mrs May, the Home Secretary, on how to advise her when she enters talks with her counterparts in Edinburgh about whether Scotland's proposed immigration policy is one that the rump UK can regard as compatible with the rump UK interests in the Common Travel Area. But as they begin to prepare their advice on Friday morning after a “yes” vote, they will already be thinking about their duty to ministers of what will already be the rump UK rather than the whole of the UK.
But, after a yes vote, a key minister in the UK government would be in a more serious plight. The Chief Secretary to the Treasury, the Rt Hon Danny Alexander, will be impaled on the horns of a dilemma. On the one hand, Mr Alexander is a minister in the UK government. He must decide what announcements to make to reassure the markets on Friday after a “yes” vote, bearing in mind the interests of the citizens of the rump UK. In the ordinary course of events the Chief Secretary would expect to be a key negotiator for the UK with his counterparts in Scotland. But Mr Alexander is also an MP for a Scottish constituency. Can he therefore uphold cabinet collective responsibility for decisions taken after a “yes” vote about how the UK pursues its negotiations with the Scottish government? The dilemma may not be so serious for the Secretary of State for Scotland, Alistair Carmichael. His special role probably enables his role to be fenced off, or subject to special restrictions on what he can and cannot make decisions on. But the Chief Secretary to the Treasury cannot function at all if he is subject to restrictions of that kind. So by next week, after a “yes” vote, some clear arrangement will have to be come to about the Chief Secretary's position. And whatever arrangements are made will set a precedent for any solution put in place in parliament after a “yes” vote to address the “West Lothian question” of what issues Scottish MPs can vote on in the period after a “yes” vote and while Scottish MPs still sit in Westminster at all.

In short, a “yes” vote tomorrow will make Friday morning the biggest test of the the civil service since the creation of the Irish Free State in 1922. Let us hope that the British civil service is ready.

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