New Report – An independent Scotland’s Customs and Borders

Ben Wray

Customs operations, degraded by the UK Government, could be key role in an independent Scotland’s tax collection and defence strategy

A NEW Common Weal report argues that an independent Scotland could benefit from increased revenue by introducing a “smart borders” approach, with the prospects of a ‘hard border’ between Scotland and England “totally overblown”.

The report, ‘An Independent Scotland’s Customs and borders: principles and approaches’, can be read in full here.

Authored by Bill Austin and Peter Henderson, who both have over 30 years’ experience in HM Customs & Excise (merged in 2005 with Inland Revenue into HMRC) and have since worked as Customs consultants to governments across the world, the report is a contribution to The White Paper Project, the first draft of which was published earlier this week.

The report examines a number of European examples, including between EU and non-EU countries, of borders arrangements and finds no precedent for a ‘hard border’ being a realistic possibility, describing it as “a shrill and nonsensical idea”, but adding: “if the rest of UK were ever to propose such a thing they would have to set it up on their side of the border and all of the cost for establishing it would fall on them.”

The report looks at the example of the 1,010 mile Norway-Sweden border as a much more realistic precedent: both are in the Schengen travel area so have no hard border immigration controls, but Sweden is in the EU whereas Norway isn’t and therefore they have their own Customs arrangements. This border operates efficiently and effectively.

The authors argue that “there is no clear reason, and no one has yet to offer one, as to why something similar cannot work for Scotland and the rest of UK.” The common travel area in this respect would be the UK Common Travel Area, rather than Schengen, which countries inside and outside the EU are currently part of (Ireland and the UK being in the EU; Jersey, Guernsey and Alderney being outside).

Beyond borders negotiations, other key points in the report include:

  • The UK has systematically degraded its Customs operations since 2005 as it has over-prioritised immigration. This has, especially in Scotland, left coastal territory open to smuggling, with a large ‘shadow economy’ meaning the UK misses out on up to £40bn in lost tax revenues.
  • The report proposes a new Customs & Excise Division for an independent Scotland as part of Revenue Scotland, which would play a major role in closing the tax gap and boosting revenues, as well as protecting society from the harmful effects of illegally traded goods.
  • An independent Scotland would operate a system of ‘smart borders’: borders operations taking place at the most convenient and effective place, rather than simply at the border point. France operates 90% of its Customs through this inland control system and it is widely considered to be the most effective approach in the 21st Century.
  • Customs would work with Defence and police services in ensuring Scotland’s borders are protected through a National Defence Academy, which would co-ordinate efforts of the different services. This is an approach to defence which emphasises the real threats to Scotland’s national sovereignty, e.g. by protecting the sovereignty of Scotland’s coast-line, an area that is currently ignored by the UK Government which has no permanents Customs boat operations in Scottish waters.

Commenting on the report, Robin McAlpine, Common Weal Director, stated:

“One of the few arguments that unionists now deploy is that there will have to be razor-wire at Gretna with every truck stopped at the border. This report is an important rebuttal to this. By using smart borders and remaining within the UK Common Travel Area, which the Republic of Ireland is also a member of, Scotland can set itself up for smooth transit of goods and people. Pro-union campaigners will continue to put forward their scare stories but on the assumption that Westminster won’t start a full-blown trade war with Scotland, they don’t stack up.”

“Whereas the UK has almost entirely devoted itself over the past decade to the question of policing immigration, an approach which returned Customs front and centre is likely to see a big boost in revenues.” Ben Wray

Ben Wray, Head of Policy at Common Weal, said:

“Not only does this report show by way of the existing precedents that a ‘hard border’ as described by No campaigners is almost inconceivable, but it also shows how a ‘smart’ approach to borders that is not fuelled by a fear of immigration could be advantageous to Scotland.

“Whereas the UK has almost entirely devoted itself over the past decade to the question of policing immigration, an approach which returned Customs front and centre is likely to see a big boost in revenues.

“That’s because of the huge amount of uncollected tax, counted in the many billions across the UK, which comes from not properly regulating and collecting tax on the movement of goods. Scotland has a serious problem in smuggling due to its large coast-line that is a revenue and a security issue. This is being ignored by the UK Government.

“Tailoring an approach to borders which meets Scotland’s needs is an opportunity, not a danger, which comes with independence.”