Currency in Scotland after 2014

Jonathan Edwards Excerpts

Wednesday 12th February 2014 Westminster Hall

[Ian Murray]

I will make some progress, then I will give way. I was talking about the euro. Let us reflect on what is happening now with the euro area: it is seeking very significant steps to expand the sharing of risks and pooling of resources to create a more homogenous currency union to make it work properly—exactly what the UK in its current state now provides for the pound sterling.

I know that the First Minister said that we should ignore experts, but John Cridland, the director general of the CBI, emphasised last week:

“As the Governor highlighted, successful currency unions need strong fiscal agreements and a banking union, with common supervisory standards and resolution mechanisms. The negative effects”—

this point is critical—

“of not having these structures in place have been starkly illustrated by the Eurozone crisis.”

There is a very positive case for staying with the United Kingdom as part of this currency debate and I would like to run through three points that are particularly relevant to the currency and the economy.

First, Scotland benefits from being part of the UK economy, which is the third largest economy in Europe and the sixth largest in the world. Being part of the larger, more diverse UK economy brings strength, stability and security, not only to Scotland’s finances, but to those of the United Kingdom.

Secondly, being part of the UK offers us protection from financial shocks. During the financial crisis, banks based in Scotland took advantage of the protection offered to UK banks. Since 2007, the UK has committed £1.2 trillion to bailing out the banks. At its peak, the Edinburgh-based Royal Bank of Scotland received £254 billion in support from the UK Government. That pooling and sharing is critical.

Thirdly, the rest of the UK is Scotland’s biggest trading partner. Scottish businesses buy and sell more products and services from the rest of the UK than every other country in the world combined. In 2010, 70% of Scotland’s exported goods and services went to England, Wales and Northern Ireland, accounting for a massive 35% of Scottish GDP. Likewise, 70% of Scotland’s imports are estimated to come from the rest of the United Kingdom.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Turning that argument on its head, based on the very ill-thought-out and ill-judged comments of the Chancellor of the Exchequer overnight, what assessment has been made by the no campaign, the Treasury and the Labour party of the impact on Welsh jobs should Scotland not be allowed to use sterling as currency? [Interruption.]

[Ian Murray]

I did not quite catch the end of what the hon. Gentleman said about Welsh jobs—[Interruption.] The impact on Welsh jobs would be the impact described by my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe). Losing Scotland from a single currency in the United Kingdom is very dangerous indeed—[Interruption.]

--- 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.