Scotland within the United Kingdom

Earl of Caithness Excerpts

Monday 13th October 2014 Lords Chamber

[Lord Wallace of Tankerness]

My Lords, I am sure that the different strands of costs will be published by the Scottish Government as well as such costs incurred by the United Kingdom Government. It would be very damaging indeed for us to continue to have these debates as they were very divisive. Those of us who live in Scotland know just how divisive they were. As the Secretary of State said in his Statement, it should no longer be about the 55% or the 45%, it should be about the 100%, which is what we are committed to address.

[The Earl of Caithness (Con)]

My Lords, the Statement makes reference to “working for 100% of people in Scotland”. Does my noble and learned friend agree that all the legislation to date has been for 100% of Scotland, including the Scotland Act 2012, and that Scotland has received more than its fair share under the existing arrangements?

[Lord Wallace of Tankerness]

I anticipated my noble friend’s question. We should not talk any longer about the divisiveness of 55% and 45% and should focus on ensuring that we deliver as best we can for the 100%.

Scotland: Independence

Earl of Caithness Excerpts

Tuesday 24th June 2014 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, despite all our discussions, both on previous occasions and today, I do not believe that we are any closer to realising the full impact that will occur in this country—and by that I mean the whole of the United Kingdom—and Europe, if there is a yes vote for separation. We have not fully analysed it, and I do not think it is possible to fully analyse it at the moment.

A number of problems have been raised that could occur in this debate. In fact the noble Lord, Lord Soley, prompts me to ask my noble and learned friend now: what is the legal situation should there be a narrow vote for yes to independence and then an immediate backtracking in Scotland and the removal of the SNP from power? Is there a provision where there could be a second referendum or is it a fait accompli that once there is a yes vote on the 18 September, that is it for ever and a day. I would be grateful if he could clarify that.

I am also grateful to my noble friend Lord Lang for his excellent report and for highlighting just what a difficult and bumpy road there is ahead of us in the event of a possible yes vote. My noble friend reminded us that today is the anniversary of the Battle of Bannockburn, which he said was primarily a Scots versus English battle. I remind the House that a lot of Scots fought on the English side. There was Comyn, the de Umfravilles, Macnabs and MacDowells. There were Highland clans fighting for the English. It was as much about a settlement of who should be the King of Scotland as between Scotland and England. My ancestors were involved in that battle and in the Battle of Flodden that my noble friend mentioned. At least we helped to win one of the battles we took part in. The point of that was to remind the House that Scotland was as divided then as it is now. As my noble friend Lord Lang said in his speech, the union in 1707 brought the peace and harmony that both countries really wanted.

There has been a mass of paperwork and many good government publications, but the fact remains that we in Scotland—in fact, we in the UK—do not know the full implications of what will happen and the effect of the independence vote. Only 14% of people in Scotland know what the current arrangements are between Holyrood and Westminster. Compound that with the Scotland Act 2012 and there is a huge information problem that the Government must try to address. In addition to the book that will arrive in everybody’s home about the independence vote, would my noble and learned friend consider whether there could be a small pamphlet explaining the powers of Westminster and of Holyrood now and what they will be? The fact is that under the 2012 Act the Scottish Government are allowed more tax-raising powers by secondary legislation without primary legislation—but not many people realise that.

There will inevitably be questions that are unanswered because the negotiations have to take place after a yes vote if there is one. We must recall that that is in marked contrast to the situation with regard to Europe, where it seems to be the policy that all the negotiations should happen before the referendum takes place. We would be much better served in Scotland had such a situation happened so that we had a clearer view of the likely implications, and the division of assets and liabilities. One would then be in a better position to put the cross on the paper.

I follow the noble Lord, Lord Kerr of Kinlochard, in regard to Europe. What does my noble and learned friend think the timescale might be if there is a yes vote? Could there be a negotiation for Scotland to become a member of the EU by the time separation day happens? If there is not time—I do not believe there is—England will find itself with a foreign country that is not part of the EU on its northern border. The effect of that on the north of England will be dramatic, as it will be on the south of Scotland. An artificial line that has occurred through history would have to be manned at all its border posts. How many roads would be closed so that that may be satisfactorily managed to avoid fraud? Let us recall that 23 million vehicles cross in both directions each year between Scotland and England. Some 15 million tonnes of freight move in each direction and there are 7 million rail passenger journeys. If there are to be border controls, that will impede the natural flow of trade within an area that at the moment is all united. It is therefore no wonder that the polls in the border areas show a higher percentage of people wanting to have a no vote and to stay in the United Kingdom than elsewhere in Scotland.

Will my noble and learned friend comment also on the draft Scottish independence Bill published on 16 June? Are the Government going to do a critique of it and are they satisfied on its legal accuracy?

There has been quite a movement of powers to Scotland following devolution, mainly with the Scotland Act 2012. All the major parties are saying now that there should be a further transfer of powers from Westminster to Holyrood if there is a no vote on 18 September. That has caused considerable upset in parts of England, from Cornwall to Northumberland. There is no doubt that there will have to be a constitutional convention to try to work out a better way in which the union can operate, because we are past the point of no return now. The Scots have driven us to this situation. Although I am in favour of transferring more tax-raising powers from Westminster to Holyrood, on this occasion it is time to make haste slowly, because this is a matter which, if it is not done correctly, could break up the United Kingdom in other ways that we have not envisaged at the moment. For that reason I support that part of the report of my noble friend Lord Lang in which he says that there ought to be a constitutional convention as soon as 18 September is past.

Scotland: Independence Referendum

Earl of Caithness Excerpts

Thursday 30th January 2014 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, unlike my noble friend Lady Goldie, I am not 100% Scot. I certainly have Scottish blood in me but I also have quite a lot of Norwegian blood in me from the old days, as well as English, Welsh and Irish blood. I am not alone in that. Many in the United Kingdom have that combination. That is one of our strengths, being part of the United Kingdom, and it does not worry me. I passionately support Scotland when it comes to sport. If Scotland is playing England, I support Scotland, but if England is playing another country, I tend to support England.

The noble Lord, Lord Steel, said that his guru, Jo Grimond, did not like the word “devolution”. I do not like the word “independence”. Independence in Scotland has a certain ring about it that is quite attractive. If I ask people in Caithness, “Do you want independence?”, they hesitate. If I say, “Do you want separation?”, the answer is no. We are losing the argument by using the wrong word. We must make it absolutely clear that this is total and complete separation. It is the nuclear option; it is the end of the United Kingdom for ever. The consequences are horrific but we have not really touched on them today. In fact, I think that we have very little comprehension of how the markets and the rest of the world will react should Scotland vote for complete separation, because that is what it means. That is one of the messages that we have failed to get over.

Let us just go back to currency, because it is a key issue. It is no good the Government saying that it is not likely that we will have a sterling area. Come on, my Lords, let us be absolutely clear: there is going to be no sterling area. There must be no doubt. The more doubt that is sown in the minds of those who are going to vote in September, the more chance there is of there being a yes vote. The Government have to be absolutely clear. Should they decide that there might be a sterling area, can my noble and learned friend on the Front Bench confirm that the rest of us in the United Kingdom will get a referendum on whether we want it? It is no good the Scots saying, “We want a sterling area”. If the Government say, “Yes, well, in all the circumstances we will have a sterling area”, it will be absolutely right that the people in the rest of the UK decide whether they want to allow that to happen and whether they want to join that sterling area.

If there is to be no sterling area, Scotland has to have its own currency. It has to have its own central bank and it has to be credible. As the noble Lord, Lord Kerr, rightly pointed out, if Scotland wants to become a member of the EU, it has to be its own sovereign state. It has to have a track record. I think that it was the noble Lord, Lord Brennan, who pointed out that there will be a ghastly intermediate area between a country being part of the United Kingdom and it becoming a separate country. That will have huge implications for the rest of the UK, which will have to keep the whole ship steady.

As has rightly been said, if Scotland is accepted into Europe, it not only has to have its own currency but it has to be part of the Schengen agreement. That will automatically put border controls on the boundary between Scotland and England, and that will have an effect on tourism. The noble Baroness, Lady Liddell, was absolutely right to say that tourism is hugely important. When people come to the UK, they are thrilled to be able to arrive in London, come up to Edinburgh and then travel on to the far north. However, they will not be able to do that quite so easily. The Americans are not great travellers at the best of times. If life is made difficult for them, tourism in Scotland will suffer, although it will not suffer so much in the rest of the UK.

What will happen if Scotland is refused entry into Europe, as is highly likely? There will be a country to the north of us which is totally separate from the rest of the UK; it will not be part of Europe and it will have its own currency. There will be huge implications which we have not thought through and have not yet assessed. That is potentially dangerous. Should Scotland become part of the EU, I do not think that that will affect the rest of the UK very much. At the moment we have 29 votes on a qualified majority basis and we will continue to have 29 votes because we will then have a population of about the same size as that of Italy. Scotland will have about seven votes—about the same as Finland. It looks likely that the top four countries will remain with 29 votes, although Germany should probably have a few more. However, I do not think that that would have severe implications for the rest of the UK.

I need my noble and learned friend on the Front Bench to quash another myth. Yesterday, it was put to me, “Don’t worry, Malcolm. We’re going to try independence but, if it fails, we’ll always come back into the UK”. No, my Lords. Will my noble and learned friend make it absolutely clear that once Scotland says yes, that is it? There can be no situation in which Scotland can come in through the back door.

The union of the past 300 years has led to peace, prosperity, wealth and influence for all of us in these sceptred isles. It is a wonderful opportunity that we have grabbed, and every country has grabbed it. The Northern Irish, the Welsh, the Scots and the English have always put people into the mix to make this country great. All that is threatened and there will be huge ramifications for the rest of the United Kingdom. My noble friend Lord Lang, when introducing the debate, said that, whatever happens, we have to have new constitutional arrangements. I totally support him on that. We need to work very hard in the future to make a stronger and better union for the next 300 years.

The Economic Implications for the United Kingdom of Scottish Independence

Earl of Caithness Excerpts

Wednesday 26th June 2013 Lords Chamber

[The Earl of Caithness]

My Lords, I was not fortunate enough to be a member of the committee chaired by my noble friend Lord MacGregor, but I thank it very much for its work and its very readable report.

I will follow on from what the noble Lord, Lord Shipley, said, right at the end. Independence is a misnomer for what is proposed. There is no way that Scotland is going to become an independent country. It could become a separate country and exist as one— although to what extent that is possible and how successful it would be is not yet known—but it would certainly not become an independent country. If it wants a sterling area, it will be subject to the Bank of England, and if it is to have its own currency—which I will come on to—and wants to join Europe, it will be subject to all the rules and regulations of Europe. Even if it stays out of Europe, it will be in the same position as Norway, with most of its laws having to abide by those decided in Europe, over which it would have no input.

With the situation as it is at the moment, I believe that we are in potential danger of sleepwalking into a disaster, because there is a stand-off between Edinburgh and Westminster. Mr Salmond has set out his stall very clearly, saying:

“The plan is to do what is appropriate and in the best interests of Scotland”.

He wants to negotiate on a number of issues and the UK Government have said that they will not. That worries me, because we do not have the information to make a decision, and the longer that goes on, the more chance there is of a yes vote. In the event of a yes vote, it will certainly be no velvet divorce—it will be a very nasty situation. I do not think that a no vote is by any means certain, given the latest opinion polls. I have detected a feeling that separation is better than the status quo, but they do not know what separation is. At a time when the SNP has made a number of changes of position on fundamental issues as it struggles to find a coherent set of positions prior to the vote, the opinion polls are not really moving to reflect that. There has certainly been little change in people’s perception about the economy but Mr Salmond’s plans for corporation tax have been condemned as,

“an excruciatingly awful piece of work”.

Perhaps that is not surprising since Mr Salmond not only signed a letter in support of Mr Goodwin when he was RBS chief executive and bidding for ABN AMRO, but signed it, “Yours, Scotland”.

Let us please have some answers from the Government. What will be the position with regard to the Scottish banks—RBS and HBOS—considering that they were bailed out by the UK taxpayer? Can my noble and learned friend give a definitive statement that there will be no formal sterling area? The Chancellor, my right honourable friend Mr Osborne, has hinted that he does not think it is in the interests of either Scotland or the UK, but there needs to be a stronger statement than that. Mr Salmond has, on a number of occasions, made his demand for a sterling area a prerequisite for a settlement on the disposition of assets and liabilities. We need to be absolutely clear whether the Government will negotiate on a sterling area or not. Of course, if there is no formal sterling area, Scotland could retain sterling, but all analysis has shown that this would be bad for the country and it would probably be better for it to opt for its own currency. If it does so—indeed, it might be sensible to do so—it will have to have all the necessary financial institutions, including its own central bank. If it wants to join the EU, it will have to have its own currency up and working for at least two years to meet the requirements imposed for new EU membership.

It is well known that a separate Scotland would want to join the EU. Can my noble friend say whether it will be a net contributor or beneficiary of the EU budget, and, if so, by how much? Can my noble friend confirm that the UK’s abatement will stay with the rest of the UK and not with Scotland? These are some of the fundamental questions.

To me, the most critical question is how one settles the matter of assets and liabilities. Will the assets—in particular, oil and gas—be apportioned on a geographical basis, as recommended in the report? What would be the situation should Orkney and Shetland decisively vote no to a separate Scotland and negotiate with the Scottish Government to have a separation? How would that affect the geographical assets?

As for liabilities, it is crucial that we know what the plans are for the public sector debt. Will it be apportioned on a population basis, as suggested in paragraphs 86 to 89 of the report? Paragraph 87 states that by 2016 the public sector debt would go up to £185 billion, based on current figures, if you add pensions and other such costs. Indeed, the public sector debt will increase, so the figure will be somewhere between £185 billion and £213 billion, in round figures. Whatever the figure, it is a colossal sum of money, and Scotland does not have that amount of money.

How will it be financed? Will the Government accept an IOU, and, if so, on what terms? If there are no appropriate guarantees and securities, it would be similar to losing 10% of your economy while retaining all your debt. That is a hugely worrying situation. Not only do we, who are going to vote on separation in September next year, need to know that information; more importantly, the markets need to know it. If the markets do not know it and begin to sense that there might be a yes vote, I fear very much that speculators will cause havoc in the markets with the pound sterling. The Government will then be in an infinitely more difficult situation in which to negotiate any deal with the Scottish Government. That scenario is extremely worrying and can be avoided.

I thought that the letter accompanying the Government’s reply to the report was contradictory. On the one hand, the Chief Secretary says that he wants as much information as possible and that all of us in Scotland who are going to vote should know all the facts. He then goes on to say that he is not making any plans for Scottish separation in the UK and is not going to negotiate. That is a totally contradictory position and, I say to my noble friend on the Front Bench, a very unhelpful one.

Scotland Act 1998 (Modification of Schedule 5) Order 2013

Earl of Caithness Excerpts

Wednesday 16th January 2013 Lords Chamber

[Lord Empey]

My Lords, the noble Earl is concerned that people only met at a later stage in separate rooms. People in negotiations that I have been involved in have been in separate nations, separate continents and different places before we actually got together, so we are well versed in “proximity talks”, which I think was the phraseology that was invented to cover those circumstances.

We seem in this country, of late, to have developed referendumitis, because we are looking at a whole series of them now. Indeed, later this week, we may be offered a menu for further referenda. Not wishing to be outdone by the noble Lord, Lord Cormack, the sole English contributor to this debate, I felt it appropriate for my part of the world to make a few comments, because, as noble Lords have said throughout the debate, all of us would be affected one way or the other. However, the most important thing is that we are a union with component parts, and there is no doubt in my mind that the people of Scotland have a right to choose. The job of this Parliament is to ensure that the choice is fair and that the options are put to them clearly, as has been said many times before.

I will just deal with the order, because noble Lords will all have great sympathy with much of what the noble Lord, Lord Forsyth of Drumlean, has said today. However, I think that the noble Lord, Lord McConnell of Glenscorrodale, who is not in his place at the moment, put his finger on it. Whether we like it or not and whether this Parliament has had enough time to debate it or not—and I think it has not—the fact is that the Prime Minister and the First Minister have shaken hands. Quite frankly, any departure from that at this stage would have cataclysmic results on the implications and how that would be spun in the circumstances. It is done, and whether we like it or not, we have to work with it.

I will also deal with the point of breakdown. When we had our referendum—nearly 15 years ago, believe it or not—I had the task of being co-ordinator for the Ulster Unionist Party’s “yes” campaign. Not only were communities divided but so were families—husbands, wives, sons and daughters—and some of those scars have not yet healed. Let us be under no illusions but that the tone in which the debate is conducted is going to very important for the long-term relationships. People keep telling us today of the implications of the miners’ strike and the differences that arose there, and I know that both communities and individuals remained very divided.

Questions of this nature are extremely divisive, and constitutional questions, certainly where I come from, are exceptionally divisive. What we are witnessing at home at the moment is terribly sad. Sadly, Mr Gerry Adams of Sinn Fein, in his new year message, as reinforced in an article yesterday, is now trying to promote a referendum in Northern Ireland. Under the Belfast agreement, the only question, effectively, is, “Do you wish to be part of a united Ireland?”. Putting that particular, most divisive, issue front and centre as your main campaign for the next few years running up to 2016—the 100th anniversary of the rebellion in Dublin—is irresponsible to say the least in the present circumstances. When we should be talking about our economy and trying to get young people into work, I would have thought that talking about a referendum is the last place anybody wants to be. I deeply regret that.

With regard to complacency, I strongly endorse what the noble Baroness, Lady Liddell, has just said. If you have a 50% turnout, 33% can be 66%. You will get differential turnouts; I have seen it happen. If one side of the argument feels, “Ach, well it will be all right on the night”, but the diehards on whatever side of the argument come out, the percentages in an opinion poll are almost an irrelevance. It is who turns out on the day that matters.

I share the concerns about intelligibility and all these sorts of things. These arguments go over people’s heads. We have had three terms used in this debate already: “country”, “state” and “nation”. If you go and ask somebody for a definition, we all slip in and out of that language in our own parlance. As an Ulsterman looking across the channel at Scotland, to me, Scotland is a country. It has to be a country; if it were not, it would be part of the amorphous landmass of Great Britain. If it is not a country, why does it have its own law, traditions and different languages? Why does it have a history of attitudes, religion and a pioneering spirit and all that goes with that? Of course it is a country. I also think it is an independent country, because it has all those things, which define a country. However, if we get into an argument with somebody in the street about whether a country and a state are two different things, and if we have to go to the door arguing and trying to explain the difference between those things, I fear we are in some difficulty.

All I can say, with the experience that we have had, is that this will be divisive. We have to try to keep the best humour possible, as the noble Lord, Lord Cormack, said, but not underestimating the downsides and implications—and try to keep the argument as simple as possible. I sincerely hope that the people of Scotland will choose to remain within the union, because it would have huge implications for us if they did not. It is their decision, and I respect that, but the playing field has to be level, with nobody manipulating it, and the question asked has to be a genuine question that makes it clear that they are seceding from the United Kingdom. Anything less than that will leave an argument. There are still people in Northern Ireland today who do not accept the referendum result that we had, even though it was won with 71.5%. Because of our cross-community issues, people say, “Oh, well not enough of this group voted or of that group”. I can think of nothing worse or more corrosive than an argument over the process. I sincerely wish the people of Scotland well, but sincerely hope that the Government do not allow anybody to wipe their eye in the months ahead.

[The Earl of Caithness]

My Lords, as the noble Lord, Lord Empey, has said, words are important, and I come back to this word “independent”, or “independence”. I agree with my noble friend Lord Forsyth—on the hypothetical question that the Scottish Government would like to pose, I would very much like to vote yes because Scotland is, to me, an independent country now within part of the UK. I have been banging on about the use of the words “separate” and “separatism” rather than “independence”, and must ask my noble friend why the Government have used “independence” in the order. Proposed new Section 5A, under Article 3 of the order, refers to,

“the independence of Scotland from the rest of the United Kingdom”.

That only encourages the Scottish Government to continue using “independence” rather than “separation”. Why are the Government using that wording rather than saying, “Separate from the rest of the United Kingdom”? That would make what we are all talking about and what the Scottish Government actually mean much clearer.

I also echo what the noble Lord, Lord Pearson of Rannoch, said. I have been longing to ask the question, “Why have we got this order now?”. My noble friend Lord Forsyth said that the Electoral Commission has told him it needs 12 weeks to study the question and formulate its reply. That is in only three weeks’ time, but so much of this debate has been about what the Electoral Commission might have said or might not say. Why have we brought it forward this time? It has been a huge disservice to Parliament, and we have not had the sort of debate that we could have had. It leads one to ask the question put by the noble Lord, Lord Browne. If the Electoral Commission says, “No, that is a leading question”, what are the legal remedies if the Scottish Government persist with their proposed question?