The Economic Implications for the United Kingdom of Scottish Independence

Lord Rowe-Beddoe Excerpts

Wednesday 26th June 2013 Lords Chamber

[Lord Rowe-Beddoe]

My Lords, as a Welshman I have more than a passing interest in matters devolutionary. I was therefore most pleased to learn of this inquiry, which was the first subject undertaken by your Lordships’ Economic Affairs Committee at the time of my appointment.

Unlike some of the headlines that greeted our report, which suggested criticism of the UK Government’s position, in reality we did not call for or indeed suggest detailed pre-referendum negotiations. We asked both the United Kingdom Government and the Scottish Government to define clearly their respective positions on the vital matters that we have raised. By so doing, it was our wish to inform the people of Scotland and provide for them proper understanding of both the probable and possible economic consequences resulting from a 2014 referendum. Whether plans are being made for an outcome for one side or the other is not the concern, though many of your Lordships, perhaps, may well say that they are.

The Government have helpfully grouped our conclusions and recommendations into 17 sections, in which the Chief Secretary to the Treasury, in his response, “notes” our findings in eight sections, while “agrees” with our findings in nine sections. That is a better batting average than previous committees on which I have had the privilege to serve. I recall a question that was raised during the Chancellor’s Statement on the Barnett formula. I sat on your Lordships’ Select Committee on the Barnett formula, chaired by the noble Lord, Lord Richard, who is not in his place. The noble Lord, Lord Lawson, was also a member of that committee. We made many recommendations, but to my recollection, not one of them was accepted by the Government at that time. Of course, your Lordships can understand why, and why now even more so the question of the Barnett formula is kicked into the 2016 grass.

However, as the noble Lord, Lord MacGregor, mentioned, the Government have started the publication of “Scotland analysis”—documents dealing with devolution and its implications; currency and monetary policy; and, in May, referred to by the noble Lord, Lord McFall, the financial services and banking. They are most helpful documents, but they will serve the concerns that your Lordships’ committee has raised only if they provide proper understanding of the issues and are given wider publicity, discourse and debate. More documents are promised—two or three, I believe—and that is to be welcomed. However, I remain deeply concerned that both Westminster and Edinburgh are not being as open as they should be to inform both peoples—each side of the border—in addressing our recommendations, very importantly, on “the red lines”.

I should like to focus for a minute or two on two topics: business and the economy, and defence-related jobs. As the noble Lord, Lord McFall, mentioned, CBI Scotland remains greatly concerned with matters that it brought forward just four weeks ago. Its questions concerned anything from the meaning of a hard border between the nations, to the overseas markets in which Scottish businesses will receive consular support and how; Royal Mail, or its Scottish successor, continuing to be subject to the universal service obligation; and the transitional arrangements that are envisaged for diplomatic representation at the European Union prior to entry, the World Bank, the World Trade Organisation and so on. Its last paper lists many issues which exercised the membership. I think some noble Lords said that 60% were very unsure. All of these are, of course, exacerbated in this rather infamous phrase now “the climate of fear” that is clearly engendered—a phrase used, as your Lordships know, by one of our witnesses. Also, your Lordships’ committee gained the impression of a conspiracy of silence, by our failure—really it was a big failure—to receive evidence from many Scottish companies which we had asked, with, thankfully, four most notable exceptions which helped to inform our discussions in this area. This is not acceptable to the people and to the business enterprise of Scotland. They need and we—the rest of the United Kingdom—need good solid information. I say again in support of Westminster that this does not mean pre-referendum negotiations, but that is very different from the red lines.

In regard to defence and related employment, I am delighted that the noble Lord, Lord West, is in his place, for without him we would be most uninformed. As the House has already heard from our chairman, the noble Lord, Lord MacGregor, no Ministry of Defence official or Minister was prepared to talk to us. Currently, as we were informed, there are 11,000 regular Armed Forces and 4,000 Ministry of Defence personnel at some 50 sites in Scotland. By 2020, the number of regular Armed Forces is planned to rise to 12,500. In addition, as was pointed out to us, there are thousands of skilled jobs in Scotland as a result of Ministry of Defence capital spending. How will a separated Government of Scotland address that?

I was rather taken this week with a paragraph in an editorial in the New Statesman, which said that, with Mr Salmond pledged to preserve so many features of the British state—the monarchy, the pound, the welfare system and NATO membership—independence looks increasingly like a solution in search of a problem. But—and it is a big “but”—the peoples of both Scotland and the rest of the United Kingdom must not allow complacency to influence our and their approach to this most historical and significant event. Whatever the polls may say now, I remind your Lordships that in 1995 Quebec voted “no” to separation from Canada by the slenderest of margins—50.58%—despite polls showing just 12 months earlier margins of 60:40 against.