Thursday, 29 April 2010

Is The UK Likely To Break-Up After The May 6 Elections?

The United Kingdom of Great Britain and Northern Ireland, commonly known as United Kingdom or just UK, consists of England, Scotland, Wales and Northern Ireland. Each of these regions is a sub-nationality with its own flag, saint and sub-culture. Scotland is much autonomous than the other regions and has a Parliament in Edinburgh headed by a First Minister. Northern Ireland has an Assembly at Stormont in Belfast which has the power to legislate on a number of issues. Wales too enjoys a fair degree of autonomy and in Wales, the Welsh language has the same status as English. Wales’s bickering with the UK is nothing compared to Scotland. Even though the UK as a whole shares the same culture, the Scottish National Party has raised the slogan of independence and won some degree of support (may be 30%) from the Scots. However, the majority of the people in Scotland do not support the demand for independence. In a sense, the least autonomous region within the UK is England, since MPs from other regions elected to the British Parliament are involved in making decisions for England.

The UK goes to the polls on 6 May. It is predicted that the elections may throw up a hung Parliament. Because the UK follows a first-past-the-post system, parties do not win seats in proportion to their share of the total vote. For example, in the 2005 elections, Labour won 36.1% of the vote and had 349 seats. The Conservatives won 33.2% of the vote and had 210 seats. The Liberal Democrats won 22.6% of the total vote but had only 62 seats in Parliament. It hardly needs to be stated that the first-past-the-post system favours the large parties and puts smaller parties at a disadvantage. Labour is the biggest beneficiary of this system and so has had little inclination to change it. Neither are the Conservatives minded to modify the rules. In the upcoming elections, YouGov predicts that the Conservatives will win 33% of the total votes, Labour 29% and the Liberal Democrats 28%. However, Labour is still likely to have the most seats in Parliaments – predicted to be 280 seats, while the Lib Dems with 28% of the total vote will only have 94 seats.

Since no single party will have a majority in Parliament, a coalition government is expected to be formed. This situation has placed the Lib Dems in the role of a king maker. All eyes are on Nick Clegg to see which party he will support. Will the Lib Dems support the Labour or can they co-habit with the Conservatives?

Gordon Brown is not a very popular man these days. When he took over from Tony Blair, Brown was hailed as a welcome relief from the Blair spin. For the old guard within Labour, Brown represented a return to Old Labour values. The man who had a very successful tenure as the Chancellor of the Exchequer, the man who everyone believed did not support the Iraq war, was expected to trim the sails and return Labour to its past glory. Sadly, none of these materialised. Brown’s allegedly arrogant and high-handed manner alienated many civil servants and party colleagues. Unable to win support from the fickle public, Brown has had the misfortune of being at the helm at a time of the worst economic recession in recent years. As a final straw, yesterday Brown was heard to call Mrs. Duffy, a pensioner and a life-long labour supporter, bigoted. It is very likely that if the Lim Dems are to support Labour and form a coalition government, they will demand that Gordon Brown step down as Prime Minister.

The Conservatives are not very popular in Scotland and the Conservative Party is seen as an extension of the English aristocracy in a region which still bristles at the thought of its subjugation by Edward I, the English King known as the hammer of Scots, and a series of subsequent defeats and insults at the hands of the English. If the Conservatives form government after the upcoming May 2010 elections, support for Scottish independence is very likely to shoot up. Currently it runs at around 31%.

One of the reasons why Scotland never went all out for independence was because, like Wales and Northern Ireland, it relies heavily on subsidies from the British government, which receives a huge chunk of its revenue from the Square Mile or the City, as the financial district of London is referred to. Of late, the City has not been doing very well. Buffeted by the financial crisis and the enormous animosity towards bankers, which has caused politicians to come up with higher taxes for the rich, there has been a fall in revenues raised from the City. Each of the three leading political parties has a take on the financial crisis and how to resolve it. There isn’t much difference between the Tory and Labour positions. Both parties are pragmatic enough to realise that banking and bankers are necessary evils. Until the UK identifies and develops another cash cow, bankers can’t be dispensed with. I am not referring to high street bankers. I am talking of the kind who generate bubbles, record huge paper profits and pay themselves ridiculous bonuses. Around 40% of that obscene bonus goes to the government by way of income tax.

Lim Dems, newly introduced to the big league, plan to break all rules. Even though they don’t have a plan B to generate revenue, they are planning to be extra-harsh on bankers. Lib Dem proposals prohibit banks from paying bonuses over 2,500 pounds in cash. Any bonus over this tidy sum must be paid in shares, not redeemable before five years. Directors of banks cannot be paid any bonus. Banks will be required to publish the names of all staff who have salaries and bonuses greater than £200,000 pounds. All these proposals will doubtless go down well in the current economic climate, but do the Lib Dems have a real alternative plan for filling in the tax black hole? I don’t think so. Bankers are very likely to vote with their feet and move elsewhere if some of these proposals get implemented after the elections.

If the fall in tax revenues continues, the UK just wouldn’t be able to afford subsidies at their current levels for Scotland, Wales and Northern Ireland. In the absence of such subsidies, support for Scottish independence will increase. The Scottish National Party has all along been saying that Scotland will do very well on its own, citing Norway as an example. The SNP’s assertions are debatable, but will carry greater weight as the flow of money is cut. Within England, there is a greater clamour to reduce the subsidy paid to Scotland using revenue from the City and spend it on deprived parts of England such as the East Midlands. In other words, if Scotland wants to break-free, England may not try to hold it back.

In my opinion, the financial crisis is the biggest threat to the UK and a Conservative government supported by the Lib Dems and forced to implement some of the Lib Dem’s agenda, may be forced to preside over its break-up. Of course, all this bickering, quarrelling and fighting is carried on with frigid politeness, a stiff upper lip and a remarkable absence of any form of violence, which is shocking for someone from the Indian Sub-Continent.

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