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When Scotland becomes an independent country, it will need to have in place all the governmental institutions required to run that country. Some of these institutions are already in place, fully devolved, and those will continue to operate with little change. Other institutions are partially devolved, and currently operate alongside UK-wide institutions; they will need to be expanded to take on the functions that the UK will no longer be providing. A third set of institutions - those that are fully reserved - currently run at an entirely UK level, and will need to be created in Scotland from scratch.
Fully devolved institutions
The three institutions that are fully devolved are education, the health service, and the law.
- Education is unlikely to change with independence.
- The NHS in Scotland may need to adjust its supply chains, and to review the bilateral agreements regarding cross-border treatment that have been made with health services in other parts of the UK.
- Legal frameworks will continue unchanged, because Scots law has been preserved within the Union; there will however need to be a "UK Withdrawal Bill", analogous to the "EU Withdrawal Bill", to transfer into Scots law UK laws covering reserved areas. This last requirement stands in contrast to the needs of Wales, which does not have a distinct legal framework, and so would have to decide, if it became independent, whether to transfer the existing English Common Law framework or to create a new one.
Partially devolved institutions
Institutions that are partially devolved include Revenue Scotland, which currently administers only two taxes (Land and Buildings Transaction Tax and Scottish Landfill Tax), and Social Security Scotland, which administers the dozen or so benefits that were devolved following the 2014 referendum. Revenue Scotland in particular will need to be greatly expanded, reformed or reconstructed before it can handle the major taxes (Income Tax, National Insurance contributions, VAT) that are currently administered by the UK.
Fully reserved institutions
Areas of government for which there is no specifically Scottish equivalent range from the very large - military infrastructure, foreign diplomatic networks, a central bank - down to the comparatively minor, such as the DVLA (the last Scottish DVLA office was closed in 2013). These institutions will need to be built more or less from the ground up, and before that can be done the policies that determine their remit will need to have been debated and established: what kind of military stance Scotland is to adopt, where the high-priority foreign embassies will be located, whether Scotland will have its own currency. In cases where these activities are presently carried out in Scotland (albeit under UK control), it may be possible to eliminate some effort by transferring staff or buildings.
There will be a period of time – probably two to three years – between the decision to become independent and formal Independence Day. During that period, while Scotland and the remaining United Kingdom (rUK) are conducting negotiations over the separation, Scotland will also be building the institutions that will enable it to function as an independent state. Since the UK will still be responsible during the transition for running the reserved functions on Scotland's behalf, a cautious approach would be for the new Scottish institutions to work alongside their UK counterparts, verifying that they can replicate the functions of these institutions from Independence Day onwards. This may include Revenue Scotland testing its newly acquired tax-collection software against HMRC's existing software, for example.
If more time were required, Scotland could perhaps negotiate a shared-services arrangement, under which Scotland would pay the rUK for services until Scotland could launch its own. The Sustainable Growth Commission's report advocates a payment of £1 billion per year from Scotland to the rUK for such services; the plan also recommends Scotland paying the rUK £1.3 billion per year to administer foreign aid as a shared service. This plan is opposed by organisations such as Common Weal on the grounds that it would be more politically sound to ensure that all required institutions were operational by Independence Day – but the prospect of the Scottish and rUK Governments working together on projects of mutual interest would nonetheless be welcome.
Independence offers Scotland the opportunity of adopting policies that either diverge substantially from those of the rUK, or are completely new. This may require fresh institutions and government departments to be set up. Both Scotland and the UK have done this recently, creating (for example) the Scottish National Investment Bank and the Department for Exiting the European Union. This gives a degree of confidence that Scotland will have the competence to create the institutions it will require as a newly independent country.
- Welsh Independence Commission, "Towards an Independent Wales", September 2020. https://www.independencecommission.wales/ Ch 3. Accessed 03/11/2020.
- DVLA, "DVLA Local Office Closures", December 2013. https://www.gov.uk/government/news/dvla-local-office-closures Accessed 03/11/2020.
- Sustainable Growth Commission, "Scotland – the new case for optimism", May 2018. https://www.sustainablegrowthcommission.scot/ Part B, Section B4.38, p. 28. Accessed 03/11/2020.
- C. Dalzell, "A Silver Chain", Common Weal, June 2018. https://commonweal.scot/policy-library/silver-chain-critique-sustainable-growth-commissions-monetary-policy Accessed 03/11/2020.