Indyref: If Scotland votes No what happens next?

How ‘devo-max’ guarantees will work if country returns a No vote in the referendum.

The independence manifesto from the SNP may be called Scotland’s Future but it is very quiet about what the future holds if Scotland votes No. On the other hand the three main unionist parties have committed to devolving more powers if they win the referendum.

Devo-max may not be on the ballot paper but a No vote increasingly looks like a vote for an arrangement that could conceivably be given that name.

First Holyrood will definitely get more powers after a No vote courtesy of the Scotland Act passed in 2012 but coming into force in stages through to 2016. No matter the referendum result, next spring landfill tax and stamp duty will be replaced with similar levies set, raised and spent in Scotland.

Holyrood will also gain new borrowing powers to pay for big infrastructure projects like the new Forth bridge.

At the same time the wheels will be set in motion for a specific Scottish rate of income tax. From April 2016 the Treasury will set income tax in Scotland at 10p in the pound across all bands. It’ll be up to Holyrood to top that up to the same rate as the rest of the UK or vary it.

The Scottish Parliament has had the power to alter income tax by up to 3p on the basic rate since it opened in 1999 but has never used it. Going further on income tax devolution is something all three main unionist parties agree on in their plans for boosting Holyrood’s legislative muscle further after a No vote.

The Tory proposal is the most radical giving Holyrood almost a free hand on all income tax with only the level of the tax-free personal allowance set by the Treasury in London.

Labour cooked up something more limited in their Red Paper on further devolution. Holyrood would only be able to vary higher tax bands, allowing the Scottish Government to reinstate the 50p tax rate if they wanted to. However, the Labour proposals were widely criticised as half-baked when they were unveiled and were only pulled together after titanic internal struggles between the party’s MPs and MSPs.

If Labour can’t agree among themselves on what happens next it’s hard to see how they could agree with anyone else. But that’s what many Lib Dems want to happen.

Scottish Secretary Alistair Carmichael hopes to get all parties, including the SNP, round the table within a month of winning the referendum at a “Conference for a New Scotland”. This conference would follow the convention that led to devolution in 1997 and the commission that preceded the most recent Scotland Act.

The idea is to bring the main players together in a spirit of co-operation and agree on a way forward, likely to include a commitment by all parties that whoever wins the next general election a new Scotland Act will feature in their first Queen’s Speech, something Ed Miliband has already promised if Labour triumph in 2015.

However, Carmichael is heavily tipped to be axed in favour of Jo Swinson in a Lib Dem reshuffle next month so it’s possible the Conference for a New Scotland idea could go with him.

Despite the parties’ differing views, there is growing consensus that some sort of constitutional convention looking at the UK’s entire set up is likely to be established after the referendum.

The independence poll has thrown Britain’s archaic and piecemeal constitutional framework into the spotlight like never before. Scottish peers Lord Foulkes for Labour and Lord Purvis for the Lib Dems have set up an all-party parliamentary group at Westminster to lobby for change and their ideas covering everything from the House of Lords to the voting system have largely been well received.

Two things are almost certain to emerge from that.

The first is establishing the Scottish Parliament permanently in law. The leaders of the Scottish parties Johann Lamont, Ruth Davidson and Willie Rennie signed a pledge earlier this summer to deliver more powers for Holyrood.

Trouble is it’s not up to them. Co-operation from the SNP would be required given they have a majority in Holyrood until 2016 at least, but Westminster retains ultimate authority over the constitution, so any further devolution will be delivered in London in the first instance.

Westminster, in theory at least, could shut the Scottish Parliament if MPs so wished. That’s intolerable in light of the independence debate so it’s likely the idea first mooted by Gordon Brown (albeit only after he’d left office and no longer had the power to implement it) to give Holyrood a firm legal footing ensuring that it can never be undone will be in the next Scotland Act. That would be a hugely significant and symbolic step.

The other elephant in the room that all parties will have to acknowledge is the future of the Barnett Formula.

Joel Barnett was the Chief Secretary to the Treasury who had to implement austerity back in the 1970s when the UK economy was on its knees. He was the Danny Alexander of his day. But he earned his place in history by drawing up a formula to carve up funding between the constituent parts of the UK.

It means that if spending is cut in England on schools for example then there’s a consequent cut in the Scottish budget. Or indeed if the government pumps money into the NHS, as Labour did after 1997, there’s more cash for Scotland too.

Barnett only envisaged the formula as a temporary measure. It’s still in place a generation later. And it’s skewed towards Scotland.

Because money is distributed according to population share, and the ratios are out of date, rather than according to need Scotland appears to get more than England or Wales.

Currently the Barnett Formula works for Scotland, which is why the SNP like to warn that after a No vote it could be scrapped. Of course after a Yes vote it will definitely be scrapped.

The Prime Minister has said that reviewing Barnett is “not on the horizon” a statement that bizarrely led Nicola Sturgeon to claim he’d let the cat out of the bag on plans to slash funding by £4 billion.

Certainly no-one is publicly and clearly advocating scrapping Barnett. At least no-one with the power to do so. But there are significant hints that it will change.

Just last month Former First Minister Jack McConnell said he thought it would “wither on the vine” while in an interview with this newspaper Nick Clegg failed to rule out changing it. The Lib Dems advocate a needs-based approach.

And that will matter particularly after 2015 because Westminster will wield the axe on public spending again.

Whoever wins the next general election will have to continue with austerity. Ed Balls has signed up to the tight spending plans already sketched out by George Osborne. And that means less money for Scotland too.

Of course, the unionist parties claim that if Scotland goes independent its financial position will be even worse, pointing to the Institute of Fiscal Studies research that showed a separate Scotland would need to make an extra £6 billion of spending cuts or equivalent tax increases to balance the books.

If it is a No vote the size of the victory will affect what happens next. A big majority for the status quo and the unionist parties may find other priorities.

A tight result and there will be an urgency to act, while the Yes camp will start thinking about how soon they can have another go. In Quebec, Canada a second referendum took place just 15 years after the first.

We could all be here again in a few years time.