Currency in Scotland after 2014

Linda Riordan Excerpts

Wednesday 12th February 2014 Westminster Hall

[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.]

[Mrs Linda Riordan (in the Chair)]

Order.

[Guy Opperman (Hexham) (Con)]

Will the hon. Gentleman give way?

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[Ian Murray]

I apologise to everyone in the debate. I allowed the hon. Member for the Western Isles to intervene to tell us what the SNP’s plan B is, and he chuntered on about something to do with holidays that I could barely hear because his colleagues were chuntering over him. I have no idea what he said. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order. The hon. Gentleman must be heard. The other hon. Members will get the same respect under my chairmanship.

[Ian Murray]

Thank you, Mrs Riordan. I will give the nationalists one more opportunity if they want to intervene to tell us what the SNP’s plan B would be should people vote yes for an independent Scotland and there is no currency union. No?

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[Ian Murray]

I will not give way again to the hon. Gentleman, because he refused to answer my last question. To summarise, losing the pound would result in a higher cost of living, with higher mortgage repayments, higher credit card and store card bills, and more costly car loans. Scotland would start out as a separate state with no credit rating, or one that had been hugely damaged by threats of default. There would be fewer jobs, because of the cost of changing money every time Scottish firms bought or sold from our biggest customer, which is the rest of the United Kingdom. There would be deeper cuts or higher taxes because the Scottish Government would pay more to borrow money, which would result in more debt and lower public spending. There would be risks to benefits and pensions as payments were converted from sterling to a different currency.

There would be risks to the economy. Without the back-up of the rest of the UK, Scottish banks would have gone under during the financial crisis, and families and businesses across the country would have lost everything. Scotland would have an unproven and weak currency with a poor credit rating and high borrowing costs. The SNP’s proposition may be summed up as this: we should go from a proven and respected single currency backed by a strong lender of last resort as part of the United Kingdom to a promise from Alex Salmond that he is simply not in a position to deliver. That is not good enough for the Scottish people or Scottish business.

I can say this afternoon without doubt, argument or contradiction that the currency of Scotland post 2014 will be the pound, but only if we stay in the United Kingdom. It is now clear that the most positive case that we can make for the Union is the pound in our pockets. We must do all we can, today and for the next seven months, to protect it for future generations.

[Mrs Linda Riordan (in the Chair)]

Order. The wind-ups will begin at 3.40 pm, and several hon. Members have indicated that they wish to speak. I would like all those who wish to speak to be able to do so, so I intend to impose an initial time limit of five minutes.

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[Pete Wishart (Perth and North Perthshire) (SNP)]

On a point of order, Mrs Riordan. Is it entirely fair that, in a debate as important as this one, 95% of the time is given to one side and we are now restricted to five minutes? How could that possibly be fair? Can you look into that so that we get more time to put the other side of the case so that the people who are watching this get the opportunity to hear it?

[Mrs Linda Riordan (in the Chair)]

The Member in charge of the debate gets as long as they want for their first speech, and then the time allotted is down to the number of Members who wish to speak. Rather a lot of Members wish to speak in this debate.

[Guy Opperman]

I speak as a Brit, a mongrel Englishman, a lover of Scotland and an MP whose constituency borders Scotland. Were there to be Scottish independence, I have no doubt that tourism and trade would continue, but it would be naive not to accept that trade on a cross-border basis would unquestionably be affected. That is not some Conservative Member of Parliament speaking; that is the opinion of the chambers of commerce, local authorities and business groups I have spoken to on both sides of the border.

Some of the key questions have been raised by the hon. Member for Edinburgh South, but I have some others. On what basis would Scotland get to keep the pound? Would it be used informally, just as some Latin American countries, Greece and Montenegro use other currencies? Why should the Bank of England take notice of Scotland in setting monetary policy? Why should the Governor travel to Edinburgh and be interrogated by Scottish MPs in such an event? After independence, surely the Governor would owe his appointment entirely to a rest-of-UK appointment system? At that stage, would the First Minister come to London seeking an audience to negotiate? The arguments that have been put forward are, respectfully speaking, a farce.

I also suggest that, when one goes through Mark Carney’s speech and looks at the currency options, it would seem that the SNP proposes to keep the pound as part of a formal sterling currency union agreed with the rest of the UK. However, the SNP seems not to have contemplated the fact that that would involve giving up huge amounts, as Mark Carney made very clear, as well as requiring the agreement of all other parties. The SNP seeks independence but would require and accept greater control by a third party.

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[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.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Thank you very much for calling me to speak, Mrs Riordan. It is a pleasure to have the opportunity to speak in this debate. I expected more Members to put their names forward to speak in this debate, and I would have liked to have seen more Members from the Scottish National party. I know that they have complained about lack of time, but this is the third debate on Scottish issues in the last week in which the SNP has not put many speakers forward. I have been in this place since 2005—[Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order.

[Katy Clark]

I am very grateful to you, Mrs Riordan. As I was saying, I have been a Member since 2005 and I am very aware that, frankly, it is often far easier for a member of one of the minority parties to be called to speak than someone from one of the larger parties, because of the way that the rules in this place operate.

[Fiona O'Donnell]

On a point of order, Mrs Riordan, I am very sorry to interrupt the flow of the debate, but it would be helpful if you could clarify something. The hon. Member for Perth and North Perthshire (Pete Wishart) has made serious allegations about the conduct of this debate. Could you clarify whether any hon. Members from the SNP asked to speak in it? Have they been prevented from speaking in it? Have they ever even requested a debate on the issue of the currency in Scotland?

[Mrs Linda Riordan (in the Chair)]

That is not a point of order. I call Katy Clark to speak.

[Katy Clark]

Thank you, Mrs Riordan. As I say, I agree with the hon. Member for Dundee East (Stewart Hosie): I would have liked a longer, more detailed debate. I hope that this is just one of a series of debates in this House on these kinds of issues.

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[Katy Clark]

Indeed, and we had a debate last Thursday on Scotland’s place in the Union. Those were the kind of events that we should use to explore these issues.

There is a great deal of debate on the subject in Scotland, but the decision taken there in September will have massive implications for the whole United Kingdom. I regret that in the two and a half years that we have been having this debate in Scotland, the quality of debate has not been higher. I hope that getting more people involved in the discussion, and getting more information and facts on the table, will improve the debate’s quality. I hope that today the UK Government will give their perspective on some of the questions, because that is part of what is required to continue the debate, which should be taking place here, in the Scottish Parliament, and communities up and down Scotland.

One of the most important decisions that an independent Scotland would take, if we voted for independence in September, would be on the currency, so I strongly congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on his choice of subject for debate, but currency is only one of the many economic issues that will be central to people’s decision making. To be honest, I never believed that I would see a referendum on Scottish independence in my political lifetime. It was not something that many people in Scotland argued for, historically. It is really only as a result of the electoral success of the Scottish National party—we can perhaps discuss the reasons for that on another occasion—that we are in this position. I also honestly do not believe that colleagues from the Scottish National party in this room ever believed that they would have a referendum on independence in their political lifetime.

Many people in Scotland are in the same position: when we go from door to door and speak to people, many genuinely have not finally made their mind up on the issue—particularly, I think, because of the economic turbulence that we have been living through in the past few years. It will not be simply an emotional choice that people make in September. Historically, many people who are sympathetic to independence have made that choice on emotional grounds, and grounds to do with identity and culture, but in the coming months, economic issues will be central to people’s decision-making processes.

I welcome the debate and some of the statements that have come forward in the past few weeks from people at UK level. I am a member of the Select Committee on Business, Innovation and Skills; we had the Secretary of State for Business, Innovation and Skills before us last week, and he gave some of his views on the issue. We still need to get a lot more information to make decisions.

I have always looked at things from an economic point of view, and considered decisions on the basis of how I think we can improve the democratic accountability of our economy. I have always considered how we can take economic decisions that are more central to how we run our economy in the interests of ordinary people, rather than elites. That will be central as we go forward.

[Mrs Linda Riordan (in the Chair)]

Order.