Currency in Scotland after 2014

Anas Sarwar Excerpts

Wednesday 12th February 2014 Westminster Hall

[Ian Murray]

Mrs Riordan, I apologise again for wasting another intervention through the nationalists not telling us what plan B would be. Let me tell them what the currency will be in England and Wales. It will be the pound sterling. That is what they will keep.

[Anas Sarwar (Glasgow Central) (Lab)]

The former deputy leader of the SNP, Jim Sillars, said that the SNP’s currency union plans were “stupidity on stilts”. After listening to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), does my hon. Friend think that Mr Sillars might have been speaking about him?

[Ian Murray]

My hon. Friend is absolutely right: it is stupidity on stilts. Economist after economist, academic after academic, politician after politician and business after business has said that the SNP’s currency union plans are completely barking on stilts.

--- Later in debate ---

[Anas Sarwar (Glasgow Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I thank my hon. Friend the Member for Edinburgh South (Ian Murray) for securing the debate and for his powerful and passionate speech. I also thank the hon. Member for Dundee East (Stewart Hosie), who in stating the successful trade statistics between Scotland and the rest of the UK made the case for Scotland to be part of the United Kingdom, not independent.

The currency that Scots would use after separation goes to the heart of the independence debate and cuts to the core deception in the SNP’s argument. There can be few more important issues than the currency in our pocket, the money that our businesses trade in, the cost of borrowing money or, indeed, how much money individuals, businesses and the country have to spend. It is not just a matter of what we spend in shops; it is about what people’s pensions and benefits are paid in, what businesses across the common UK market trade in, and what we borrow more of to buy a house or a car.

The proposals on currency put forward by the nationalists are rooted in assertion and baseless opinion, and in a determination to bluff and bluster their way to 18 September, when every credible expert on the issue has exposed the flaws in their currency union proposals. They used to be very clear about what sterling meant to them. We all remember when Alex Salmond said that

“sterling has been a millstone around Scotland’s neck”

or that it

“is costing Scotland jobs and prosperity.”

However, now that those arguments do not suit the cause, they have been conveniently dropped and he says:

“Retaining the pound under independence is something I believe is in Scotland’s interests”.

The nationalists have made those shameless U-turns and about-faces because they are determined to win the vote on 18 September.

[Jonathan Edwards]

My party shares with the SNP many of those criticisms. They are not about currency but monetary policy: the way that the Bank of England’s monetary policy has been directed towards pushing the financial sector in the south-east of England, rather than promoting the manufacturing-based economies of Wales and Scotland.

[Anas Sarwar]

The hon. Gentleman fails to realise in making that criticism of how the Bank of England has operated and the effect on Scotland and Wales that the nationalists’ currency union plans after independence would have exactly the same effect. Decisions about the interests of the people of Scotland would still be taken in this place; the choice is whether we should have a voice here at the same time. The hon. Gentleman is undermining that voice.

[Mr Bain]

Scotland’s First Minister wants to frame the debate as him against the elite, but perhaps I can share the views that a voter in my constituency expressed to me in Edgefauld road in Springburn on Saturday afternoon. She said, “If you get the details about the currency wrong, it is ordinary working people like me who suffer the biggest hit.” Is not that right? Is not that what happened in Ireland when living standards declined by 20% between 2007 and 2011, and is not my hon. Friend right to campaign in favour of the pound?

[Anas Sarwar]

I could not have put it better. Yes, this has an impact on business and big institutions, but the price will always be paid by the poorest and most vulnerable people. I and my Labour colleagues stand shoulder to shoulder with those people throughout the United Kingdom. The nationalists will throw everything into this debate—every assertion, opinion, myth, allegation, contention and baseless claim—so that they can win on 18 September. They do not have any recognition of reality; they are much more the Walter Mittys of Scottish politics. The only thing that they have been clear on is the willingness to hand over control of monetary policy to another country; in the words of the Governor of the Bank of England, they would “cede sovereignty”.

It is important to look at the first letter sent in May 1997 by the then Chancellor, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he made the Bank of England independent. In paragraphs four and five of that letter, the point is made that

“The Bank is there to fulfil the objectives of the UK Government, as set out by the UK Government and not as determined by the Bank.”

So the Bank is there to support the economic policy of the UK, and after Scottish independence, it will be there to support the economic policy of the rest of the UK, not that of the Scottish Government. The Bank of England would go by the political will of the Chancellor of the Exchequer—whether the current Chancellor or the future Chancellor, the current shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls). The Bank will follow that remit and not the remit of the current Scottish Government or, indeed, a future Scottish Government.

What does that mean for Scots? If someone has a mortgage, their interest rate will be controlled by the central bank of a foreign country, with no input or influence from Scots, no accountability and no say on inflationary targets or the cost of money supply. Likewise, if someone has a car loan, a credit card or an hire purchase agreement for a new suite or a new washing machine, all those things will be controlled by a foreign Government, with Scots having no say or influence, and with no accountability.

[Margot James (Stourbridge) (Con)]

I thank the hon. Gentleman for giving way. He is making a very passionate speech. In addition to the points that he is making, there are the lessons from the European currency union and the debate within that union about the central bank having pre-budget approval of all the budgets proposed by member states. Can he envisage that applying to Scotland as well if those plans should unfold?

[Anas Sarwar]

I thank the hon. Lady for that intervention. What I envisage is Scots making a confident and passionate no vote on 18 September and working together with our friends and colleagues in the UK to create the right kind of economy that works for everyone right across the UK.

The reality is that the cost of borrowing money would be in the hands of an institution over which the people of Scotland would have no say—none. If a Scottish business wanted to invest, the cost of borrowing that money would be controlled not by the Scottish Government but by the Government of Scotland’s biggest competitor and trading market. That is like British Airways setting the trading conditions and pricing policy of Virgin Atlantic. There would only be one winner in such an arrangement.

Is it any wonder that business organisations are horrified at these proposals? It is not that long ago that the SNP would churn out press release after press release attacking the UK Government, UK politicians or the Monetary Policy Committee, saying that the interest rates being set were not suitable for Scotland. What on earth does the SNP think would happen after independence?

The reality is that what the SNP is offering Scotland is neither right nor fair for Scots. That is the real democratic deficit on offer in this election. The other reality, and the reason why the SNP does not want to outline plan B, is that it knows that its entire White Paper is based on the assertion that sterling is kept. If sterling is lost, the entire White Paper comes into disrepute.

[Mrs Linda Riordan (in the Chair)]

Order. Before I call the last Member to speak, I remind her that I will call the shadow Minister to speak at 3.40 pm.