London-based Dan McCurry is chair of the Labour Party Economic Society. Here he argues that fiscal autonomy for Scotland could be delivered within the union as part of an incremental process to enable Scots to assess the real impact of dividing the UK.

Labour can resist a Scottish referendum while supporting incremental steps towards independence. This would place the SNP in a position that would test the true level of support for independence. 

The first step is fiscal autonomy. The problem for Scotland is that this would end the Barnet Formula and bring about a 10% reduction in revenues. On the face of it you would expect the Scots to howl in objection, but much of the debate in Scotland is not about money but about identity and the need to run one’s own affairs.

Fiscal autonomy therefore acts as a test of the commitment to that goal. If the Scottish people clearly indicated their desire to chart such a course, then Westminster would have to support them. It would be an act of tyranny to oppose.

Fiscal autonomy does not close borders or restrict freedoms, it is simply a necessary step in the process of independence. Foreign affairs, membership of the EU and military commitments can all be on a later agenda.  So too can radical policies such as a Scottish currency, which could provide an economic advantage through a lower currency valuation.  Every one of these incremental steps could be reversed if the Scottish people changed their mind in a future election.

The problem with a binary referendum is that it is divisive and commits the country to unknown and irreversible outcomes, as witnessed by the Brexit vote. 

Nicola Sturgeon persistently calls for a referendum but not full fiscal autonomy, a curious position which demands analysis. If she was serious about the country rather than just the politics then autonomy would be her goal. But her call for a referendum is resisted by Westminster, which allows her to occupy a position of national champion against foreign oppression. The question is whether she is motivated by the defence of Scotland or the advancement of her own position.  

Keir Starmer could make fiscal autonomy dependent on the electoral success of the SNP while at the same time calling for Scotland to remain within the union. This would place the SNP in a position where they would have to choose whether to adopt the policy of fiscal independence and the consequent 10% drop in revenues and then argue for it to the electorate. 

Scottish Labour could passionately campaign for remaining within the union and Keir Starmer could be fully supportive of this position. If Scottish Labour fail to gain traction in the election, then they would have to accept the wishes of the people to take that first incremental step and end the subsidy of the union. 

The Labour Party Economic Society is holding an online event with Jonathan Portes on 23 July: Immigration policy at a time of mass unemployment.