Scotland’s Place in the UK

Iain McKenzie Excerpts

Thursday 6th February 2014 Commons Chamber

[Graeme Morrice]

I welcome the right hon. Gentleman’s intervention and fully understand that there are major cultural links between the people of Scotland and the people of Northern Ireland. Indeed, I have many friends and relatives from Northern Ireland.

The single market within the UK affords significant economic, trade and employment opportunities to people on both sides of the border, and our membership of the European Union, through the United Kingdom, provides a vast marketplace for Scottish exporters. Together, we have a place at the top table of the European Council of Ministers, we are one of the G8 forum of the world’s largest economies and we are a permanent member of the United Nations Security Council, all of which allows us to wield unprecedented influence on the European and global stages. As a member of NATO, we have collectively benefited since the war from international security and defence co-operation on a grand scale.

When it comes to the economy, Scotland has a very important relationship with the rest of the United Kingdom. Scotland benefits from access to a market comprising tens of millions of people within a single jurisdiction. Scots are employed by firms based in the rest of the UK, and people in the rest of the UK benefit from employment opportunities with Scottish-based companies. Indeed, Scotland’s exports to the rest of the UK are worth double its exports to the rest of the world.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does my hon. Friend agree that upon independence the border would become a barrier to business with the rest of the UK?

[Graeme Morrice]

I am grateful to my hon. Friend for that intervention. On day one of independence, were Scots to vote for it, the rest of the United Kingdom would remain within the European Union but Scotland would not, so it clearly would not benefit from the EU single market, to the great detriment of Scottish business and Scotland overall.

Mr Deputy Speaker—[Interruption.] Welcome, Madam Deputy Speaker; it is great to see a Scot in the Chair this afternoon. [Interruption.] And a woman, my hon. Friend the Member for East Lothian (Fiona O'Donnell) reminds me.

In addition to the shared opportunities, the pooling of resources across the UK allows risk as well as reward to be spread, as seen most notably in the bail-out of the Scottish-based banks during the financial crisis, when the UK, led by a Scot, injected an amount of capital into the banks well in excess of the Scottish Government’s total budget. The pooling of resources also allows for distribution on the basis of social need across the welfare state. Were Scotland outwith the UK, that would place a major question mark over its ability to continue to fund benefits at current levels and to meet state and public sector pension commitments.

Of course, Scotland has its own devolved Parliament, with significantly more powers to come as a result of the Calman commission and the Scotland Act 2012. It can therefore be argued that Scotland has the best of both worlds: local decision making, but under the financial umbrella of the UK Barnett formula, giving Scots more funding per capita than anywhere else in the UK.

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[Mr Iain McKenzie (Inverclyde) (Lab)]

I will endeavour to be as brief as possible, because I know that other Members are still waiting to contribute to the debate.

I believe that Scotland’s place in the UK is about being part of one of the largest economies in Europe and the sixth largest in the world. I believe that separation from the rest of the UK would give Scottish businesses an unnecessary barrier to trading with our biggest market. We know, without doubt, that the rest of the UK is Scotland’s biggest market. Independence would turn our border into a barrier for existing and future trade. What sense would that make? The open border between Scotland and the UK brings significant economic, trade and employment opportunities. As part of the UK, Scotland has access to a single market of approximately 70 million people.

In addition to shared opportunities, the pooling of resources across the UK allows risk to be shared, something seen most recently by the bail-out of the banks by the UK Treasury. The UK Treasury used £37 billion to bail out Scottish-based banks during the world financial crisis, saving more than 400 RBS jobs in Inverclyde. The evidence is that, economically and socially, the Scottish people are better off being part of a Union that pools risks and rewards. There is, of course, also significant UK public sector employment in Scotland. Two thirds of all civil servants in Scotland work for the UK Government. UK defence contracts are also essential to Scottish industry. The Ministry of Defence has some 700 direct contracts in Scotland, supporting thousands of jobs. We also have cross-border private sector trading. Ease of doing business and contract tendering are essential for bringing success to Scottish firms in a wider UK market. Clearly, Scotland has an important economic relationship with the rest of the UK, benefiting from access to a single market comprising tens of millions of people.

The facts speak for themselves: Scottish business buys and sells more products and services within the UK than any other country in the world. In 2010, 70% of Scotland’s exported goods went to other parts of the UK and 70% of imports are estimated to have come from the UK. That clearly demonstrates that Scotland’s economic performance is stronger because it is part of a larger integrated UK economy. Exit the UK and our border becomes a barrier: a barrier that will impede and restrict ease of trade.

Even where free trade agreements exist alongside controlled borders, neighbouring countries with similar economies are affected by the presence of that border. Analysis finds, for example, that trade between the US and Canada is thought to be 44% lower than it could be as a result of the border between them. It is not just business that will be disadvantaged. Labour migration between Scotland and the rest of the UK is also estimated to be as much as 75% higher in an integrated UK, allowing the sharing of skills and knowledge. Leave the UK, and we create an unnecessary barrier to trade with the rest of the UK. That is why Labour’s vision for Scotland is about working across borders. Our vision for Scotland is being part of bigger, not what independence offers—part of smaller.