Which brings me to my other point:
No way would the UK government punish Newfoundland for opting for joining the Union. Sure, Whitehall may have supported N&L joining Canada during the referendum campaign in 1948, but if Newfoundland expresses clearly that they prefer Britain over Canada ITTL, then I doubt that any British civil servants would weep for too long. Indeed, there could be benefits for the UK from Newfoundland - after all, it would mean an access to Newfoundland's fisheries.
I would normally make a snarky response about connecting the British civil service with
Yes, Minister, but I'll channel my inner Canadian-ness for once and not expand on that angle any further.
As I see it, "punish" is too strong of a word to describe the UK's relationship in Newfoundland even if the referendum results were not what they wanted. As I see it, starting from the mid-20th century onwards I see a lot of difficulties. Even with the UK constantly undermining the pro-integration position and all that, I share a lot of
@David T 's concerns. Not only is there a lack of precedent for such integration, but I also don't see much benefit from the UK taking on such an economic burden - and the UK would be keen to make that known, considering that one of the main arguments the UK had for "disposing" of Newfoundland was their belief that Newfoundland was not economically viable as an independent state and that the influx of income from war work was only temporary, ephemeral. In effect, according to this view, the Iceland route to prosperity (or rather, a much worse version of corruption and patronage politics that stalled any attempt at genuine reform, forcing the country to rely on its primary products, and any attempted reform was basically attempted Russian-style - hence the collapse of the Icelandic economy in 2008) is one that would not be viable in Newfoundland. However, the existing British state - its administrative apparatus, its bureaucratic politics, its politicians, its overwhelming inertia - could be enough of an integration that would probably be the closest one can get to punishment - the easiest explanation being that due to the lack of a viable model of integration of a former colony (and on top of that a former Dominion) into the UK, the only options available would essentially be the existing model that everyone is familiar with, made even easier by the relative lack in Newfoundland of local government apart from a few incorporated municipalities. Furthermore, despite all the advances in communications and technology, Newfoundland is still too far away and too difficult to govern from Whitehall and Westminster, so the existing arrangements used for other areas of the UK would have to work and be stretched to its limits.
Take, for example, the perpetuation of the Commission of Government in a permanent capacity, thus denying Newfoundlanders the chance of making any meaningful change except through Westminster. It sounds harsh, but at that time - Northern Ireland excepted (and even that was a sui generis solution for an age-old problem that at that time was still festering) - the UK never really had the chance to execute what would later happen in the 1990s with the advent of devolution of Scotland and Wales, as well as renewing regional governance in Northern Ireland through the Good Friday Agreement. The UK of the 1940s and 1950s was still a centralized unitary state, with power emanating from the center, with some allowance for administrative devolution for certain issues which needed special attention. Scotland has its own distinct set of institutions retained from the
Act of Union, 1707, including its own educational and legal systems, and for a long time this was administered via the Scottish Office, which was another part of the Whitehall bureaucracy much like how a regional development agency in Canada would work. Same thing in Wales (or, at that time, Wales and Monmouthshire, due to a quirk in the law that led some to believe that Monmouthshire was actually a part of England despite its Welsh-speaking majority), which had its Welsh Office for Wales-specific issues. The Commission of Government, given a new coat of paint and a potential redesignation as the Newfoundland Office, would be no different in this case as an intermediate agency between the central government and the particular region, still mired with financial issues and with a stagnant economy with no hope of recovery. Even then, Newfoundland's fisheries were already well on the decline, and that's if overfishing is taken into account, both IOTL through the incursion of foreign ships and generous quotas on the Canadian government's behalf. Now, I don't know about nor am I aware of Britain's fisheries policy around this time, but I'm going to take a reasonable assumption that compared with what Newfoundlanders had experienced up to that point, as well as what IOTL the Canadians allowed, Britain's fisheries policy would be more restrictive - even if in the UK proper that would not seem to be the case. So you have a majority of the populace engaged in an unprofitable industry, having refused all other viable options proposed by the Commission, and now with the advent of fishery quotas that would have as much effect as the OTL cod moratorium, you have an early foretaste of what would come to Scotland, the north of England, and Wales a few decades later with the coal mines and related industries. So now what does the government do? Surely they all can't be on the dole, and the effect of having the military nearby can only be stretched so far. That would be the job of the Newfoundland Office (read: the Commission of Government), who would not be amused by such developments. So the deterrence of integration for any future attempts by the colonies would be in part based on the realities of extending what was actually going on in the UK to the Island itself - what would be perceived as bad treatment or punishment is just basically a logical extension of the British government as it always was even during the boom times, combined with the retention of the Commission of Government, as many colonies which embraced independence did when they modified the existing colonial-era structures to account for the new independent status. Newfoundland would be no different on that score, and its place in the hierarchy of the UK would be that of a peripheral area with, basically, nothing much going on. If the UK experiences economic trouble, the effects would be magnified in Newfoundland, as an area largely reliant on one industry on the decline. In those cases, as with the cod moratorium IOTL, the only realistic option would be emigration - and furthermore emigration to Canada,
not the UK. Compared with what the UK would have on offer when it itself is in economic distress and is more concerned with Job No.# 1, the bright lights of Halifax, Montréal (even with its own troubles), Toronto, and even out West with the oil fields would be more tempting. Even Boston, a plane flight over into the one area of the US with a regional culture similar to "home", would also do - Boston media would be just as readily available in Newfoundland as in the Maritimes, and thus whenever a Boston sports team strikes a victory, you'd hear the celebrations coming out of St. John's or Corner Brook. And there would be nothing that Whitehall could do to stop it.
Which brings me over to the Common Travel Area and Newfoundland's exclusion. Now, from what I can surmise, the Common Travel Area can only work here because the UK, Ireland, and the Crown Dependencies are relatively very close to each other, so much so that it would seem like taking the plane or a ferry would be like driving down the street, as well as a very specific set of historical circumstances arising from the formation of the Irish Free State. In keeping the land border reasonably open, even with the Troubles in Northern Ireland and its controls and restrictions on movement by all parties involved, the UK was basically trying to implement with Ireland and the Crown Dependencies what always has existed in Great Britain itself, with the open border between England, Scotland, and Wales. It's this insular nature that allowed the UK to claim a special status in being able to control its borders and thus allowed it to not sign onto the Schengen Area, and hence when Britain retained wartime-era immigration controls between Ireland and the UK for a period pending negotiation on the status of the border (which was achieved in the '50s, I think), the Ulster Unionists protested heavily. Newfoundland is different in this conception of the Common Travel Area - while Newfoundlanders could become British citizens (or, to be more precise, CUKCs, using the terminology of the
British Nationality Act, 1948) or, in the case of the Aboriginal peoples of Labrador, British protected persons (a sui generis adaptation of a category of British subject-ship normally reserved for protectorates, Indian princely states, and similar entities, but here adapted to make it congruent with the status of Native Americans and Aboriginal Canadians at that time, stuck in their reserves and reservations and subject to assimilationism) - there isn't that historical connection that enables the Common Travel Area to work as there is in the rest of the UK. Not only that, but a British Newfoundland would be surrounded by boundaries with Canada, with France (cf. Saint Pierre-et-Miquelon), and with Denmark (cf. Greenland). (Even if ITTL the UK joins the EEC, I still don't see the UK signing onto Schengen, which means alternate arrangements would be needed when it comes to the latter two countries exclusively referring to those two territories.)
Newfoundland would thus approach British nationality law coming from an ex-colonial context, where the arrangements under historical British nationality law were much different than in the UK itself, and itself a testament to the fluidity of term "British subject" (later, Commonwealth citizen). In particular, one would have to look at it from the standpoint of the
British Nationality Act, 1948, and the brief period of time that Newfoundland remained apart of the UK, as well as the simple fact that Newfoundland is too far away from the rest of the Common Travel Area to make that arrangement workable. The end result is that, to simplify things and make it easier, Newfoundland becomes its own travel area and migration zone, separate from the Common Travel Area (much like how the Overseas Territories are IOTL excluded from the Common Travel Area but are their own travel areas/migration zones); while British immigration, customs, and nationality law apply to Newfoundland as with the rest of the UK, and its border stations manned by British agents, the reality is that despite being part of the UK, Newfoundland works best as a separate zone, which not only makes it easier to keep track of migration flows but also (as per OTL) allows some control with regards to regulating Newfoundland's environment and preventing invasive species from destroying that environment. So, as with the inspection stations operated by Agriculture and Agri-Food Canada IOTL, no plants, raw fruit, or anything containing even a speck of foreign soil will be allowed, and even one's vehicle will be sent through the car wash as a precaution. Something like the agricultural inspection stations would never be allowed if Newfoundland remained part of the Common Travel Area, but because of the separate migration zone such additional measures are allowed. Having Newfoundland as a separate travel zone would make it easier to accommodate for the specific nature of migration coming to Newfoundland, which would not be primarily from Europe but from the rest of North America; in this case British immigration law would have to be flexible enough to allow for this variations specific to Newfoundland. Therefore, as far as British visas are concerned, one would need to specify if s/he is travelling to Newfoundland or is transiting through Newfoundland to one's destination. There are, however, downsides to this, which one would certainly be aware of and would learn to adjust. (Note - much of the latter is based on a cursory reading of Wikipedia, so bear with me on this!) The main factor of integrating Newfoundland into the UK, as improbable as it sounds, is in fact timing.
If Newfoundland is hastily integrated before that point in 1949 when the full effects of the law are implemented, it would be easy to hand out CUKC status like candy as the vast majority of the population would acquire that status;
after 1949, integration is no sure-fire guarantee of acquiring CUKC status - thus allowing for, as an example, the relegation of the Inuit to BPP status, and other such patchwork arrangements. Because of this uncertainty over acquisition of British nationality even if one meets all the requirements, one would need to pick through the 1948 Act with a fine-tuned comb to find something that could work. Now, remember that throughout all this, most Newfoundlanders would be British citizens, with (starting from 1971) the right of abode in the UK, even if emigration due to a stagnant economy to North America is more commonplace. However, much like the later angst over Commonwealth immigration from the Global South, not too many people in Whitehall would be keen on seeing a mass migration of Newfoundlanders (with all the prejudices) to the Mother Country from such a basket case. In that sense, having a separate migration zone also acts as a deterrent against too many people taking up the opportunity to migrate to the UK proper. (For example, from a non-British perspective, the separate migration zone would function much in the same fashion as the special treatment of the Caribbean Netherlands currently, or the special treatment of Norfolk Island with regards to the rest of Australia prior to 2016, with the caveat of being full British citizens, or the special visa waiver program for Guam and the CNMI.) Furthermore, much like what Britain imposed on Northern Ireland prior to the '50s as a result of wartime policy, as well as recognition that the only ways to get to the UK proper from Newfoundland would either be by air or by sea, Britain would also impose immigration controls on Newfoundlanders, who would need to prove their British nationality in front of an immigration officer.
Now, I know there will be those who will say "that's not how Britain normally does things!", or "the UK never did that with anyone else around that time", or something similar. The thing to keep in mind is that if Newfoundland however implausibly becomes part of the UK, it will be treated as a special case due to its contemporary problems and historical context, as well as British prejudices and attitudes towards the Island, and thus would be the only potential case of integrating an economic basket case. By showcasing the UK as it really is, including the separate migration zone for Newfoundland for practical reasons, it would serve as a deterrent and a warning for other British colonies not to follow the same path as Newfoundland took. It would also be contemporary with the whole push under Attlee's Government and subsequent Governments towards decolonization, towards winding down Britain's overseas presence and focus more on problems at home which need attention - in that case, Newfoundland is just a temporary setback that will be corrected later on. It could very well be a possibility that things could change in the '70s and '80s which would bring Newfoundland in line with the rest of the UK (save for the retention of the separate travel area and migration zone, because it makes more sense due to geographical and practical reasons - all that would need to be done here would be to make its existence less onerous), but the reality would be that since the UK would see no benefits from accepting Newfoundland as part of it (and everyone in the government and civil service would know this), the primary way for Britain to come to terms with adding Newfoundland would be to carry on as if nothing happened, and thus making it clear to Newfoundland that they are not wanted. It wouldn't be punishment, per sé - that's too strong of a word and ascribing too much to the government - it would just be an acknowledgement of fact grounded in Newfoundland's specific context, especially with the incapability of the former Dominion's own politicians to rectify any of Newfoundland's problems but just made things even worse. There would be no easy way for Newfoundland in the UK at this point in time.
Now, compared with that, Newfoundland's OTL track as Canada's newest provinces seems like landing on a bed of roses, eh?