The SNP can have its referendum – if it agrees the terms of a divorce first

It’s a democratic right. The Scottish people have spoken. And the will of the electorate shouldn’t be ignored by a Government in Westminster they didn’t vote for.

Over the next year we will hear an endless series of arguments from the Scottish Nationalists about why there should be a replay of the 2014 referendum on breaking away from the United Kingdom. And we will hear just as much from the Johnson government about how there’s no mandate, it isn’t necessary, and there are more important things to worry about.

The argument looks set to run and run, while investment and confidence will drain out of a country with an uncertain future.

But hold on - there is a simple way out of the impasse. Westminster and Edinburgh should strike a deal. The SNP could have its referendum, but only if the party signs up to a separation that is fair to the rest of Britain.

Such as? It will take on its share of the national debt; it will have no say in the UK’s single market; it can use sterling but will have no role in its management; all subsidies will come to an immediate end; and all UK assets would belong to the UK government.

Stripped of the spin from the Nationalists, there could then be a fair vote, on realistic terms - and the matter would be settled once and for all.

With our departure from the European Union completed, and with a pandemic to recover from, most of us could be forgiven for thinking yet another round of constitutional arguments were the last thing anyone needed right now. But, hey, here’s Nicola Sturgeon to tell us differently.

Re-elected last week, and only just short of an overall majority in the Scottish Parliament, the First Minister is already claiming she has a mandate for a IndyRef2 as it is known.

Sure, Boris Johnson can refuse that. It is a matter for Westminster, not Edinburgh. And yet if he does, the sense of grievance will only grow. And the SNP’s "neverendum" campaign will undermine confidence in what has traditionally been one of the more prosperous parts of the UK.

Will companies want to invest in a country where they don’t know what currency they will be using, what markets they will have access to and where the shock of losing UK subsidies threatens a deflationary spiral that would make the Greek collapse of the 2010s look like a mild downturn by comparison?

It doesn’t sound very likely. The result? Scotland will relentlessly underperform, dragging down the whole of the country.

In fact, the key to ending the impasse is to do a deal with the SNP. Scotland can have a vote if the party accepts what a settlement will look like in the event of separation. Instead of magically pretending that it can still use sterling, that the Bank of England will still support its banks, and that there will be no hard border, it would have to accept that there will be consequences to splitting up the Union. Like what?

Here are three principles that should be at the heart of a deal.

First, debt. Scotland should agree to take on a share of the UK’s total outstanding national debt, including state and public sector pensions which are often conveniently hidden from the calculations, on a per capita basis. It would also have to take onto its own account all the gilts held by the Bank of England.

Some of those numbers might be a little scary - the Institute for Fiscal Studies recently calculated Scotland’s deficit could hit 24pc of GDP - but there it is. The UK should also have security over Scottish government assets, in the event of a default - hardly impossible given the scale of its deficits.

First Minister Nicola Sturgeon has already called for another Scottish independence referendum claiming it was 'the will of the country' Credit: Andrew Milligan/Pool/Getty Images

Next, the currency. The SNP would have to stop pretending it could simply use the pound as before. An independent Scotland could, of course, join the euro, or launch its own currency, or shadow sterling.

But it couldn’t expect to have any joint management over the Bank of England (there’s a clue in the name), nor could it expect to have any form of quantitative easing in sterling to meet its budget deficits. Financially, it would be part of the eurozone, or on its own.

Finally, markets. Scotland could join the EU, in which case it would have to accept a hard border with the rest of the UK, complete with customs checks. Or else it could join the UK’s single market, but with no say in its rule-making.

Or, alternatively, it could do neither, and make its own way in the global market, as many small economies do perfectly successfully. But it couldn’t pretend that it could have access to both the UK and the EU’s single markets, or that it could magic away the barriers to trade that independence would create.

Brexit has already shown that doesn’t work. On top of that, Scotland would have to agree that all subsidies from the UK would come to an immediate end and that all UK assets outside Scotland would remain the property of the rest of the country.

As Michel Barnier - who, come to think of it, might make an excellent negotiator for Westminster, especially given that he seems to be at a loose end - pointed out endlessly during our departure from the EU, the UK couldn’t cherry-pick which bits of membership it wanted, nor could it expect to get a better deal outside that Union than it enjoyed as a member.

The same is true of Scotland if it chooses to leave the UK. If the SNP is willing to concede those points, then there could be a referendum.

The Scottish people could make a realistic choice, stripped of the illusions spun by the Nationalists. And a vote might finally be held that would put the whole argument to rest - this time for a couple of generations at least.