Commission: Federal 'home rule' would safeguard future of UK
Report recommends constitutional shake-up with more powers handed to devolved governments.
The UK constitutional arrangement is "unsustainable" and should be replaced by a federal system, according to a commission led by a veteran MP.
A Declaration of Federal Union would give Scotland, Wales and Northern Ireland more decision-making powers, the commission led by former Liberal Democrat leader Sir Menzies Campbell concluded.
The Scottish Lib Dems asked Sir Menzies to devise a system of "home rule" for Scotland as an alternative to independence, but his final report expands the theme to "home rule all round" the UK.
The commission recognised that there has been little appetite for home rule for England, but insists that devolution and complaints about Scottish MPs voting on purely English matters - the so-called West Lothian Question - has led to a growing awareness of the need for a shake-up of the system.
Sir Menzies said it was "nonsense" to believe Scottish independence could remedy inequalities across the UK.
"I don't think the present constitutional arrangement is sustainable," Sir Menzies said at the report's launch.
"We've got the West Lothian Question, but we've also got the West Belfast Question and the West Wales Question.
"As these three components acquire more power, then I think the constitutional settlement will come under very severe pressure, and federalism is the way to relieve that pressure otherwise the break-up becomes much more likely."
The report stated: "The idea of Scots voting alone and unilaterally to change the nature of the union is a constitutional nonsense.
"A rejection of independence will enable Scotland to continue down the track towards a modern, pluralist and federal relationship with the other parts of the United Kingdom."
It added: "The new relationship might be presaged by a Declaration of Federal Union which would be more significant than drafting a federal constitution.
"The declaration could go as far as to impose a duty on government at all levels to work for the elimination of poverty and of Beveridge's other 'giants' - squalor, ignorance, want, idleness and disease.
"It would be a modern British equivalent to the American Declaration of Independence or the French Declaration of the Rights of Man - or indeed of our own Declaration of Arbroath or Magna Carta."
The commission stated that the proposed federal relationship "amounts to nothing less than a remodelling of the United Kingdom for the modern age".
It recommended giving Scotland home rule over income tax, bands and rates; inheritance tax; capital gains tax; aggregates levy and air passenger duty. North Sea oil revenues and welfare and pension regulations should be treated as "federal" matters and controlled by Westminster.
"Even nationalists now accept that an independent Scotland would still rely on the rest of the UK for many things," the report states.
"One of the strengths of federalism over independence is that it gives the people of Scotland an equal and continuing voice in UK decisions, whereas independence removes the Scottish voice from the UK and from influence over these key decisions."