Scotland: Independence Referendum

Lord MacGregor of Pulham Market Excerpts

Thursday 30th January 2014 Lords Chamber

[Lord MacGregor of Pulham Market (Con)]

My Lords, I, too, thank my noble friend Lord Lang for an excellent introduction to this debate. In fact, he said so much of what I had wanted to say that I hope not to repeat it, but it was an excellent contribution.

I intend to be as brief as I can be on the issues and to consider them under three headings. The first is the economic implications. The Select Committee on Economic Affairs in the House of Lords produced a report on The Economic Implications for the United Kingdom of Scottish Independence in April 2013. We did so because we believed then that all the issues of an economic nature were not being put before the British people, including the Scots. We believed that voters in Scotland deserved the best evidence-based assessment of all the economic issues before they exercised their votes.

Since then, we have come a long way. We have had various government reports on various economic issues and, of course, we have had the Scottish Government’s paper, Scotland’s Future. In all that paper’s 648 pages, it lists many of the goodies that could come Scotland’s way and makes many commitments and promises, but it gives no price tag. It reminds me of the Labour Party’s 1987 election manifesto where it made many spending commitments—until we added up the bill for the taxpayer. I happened to be Chief Secretary to the Treasury at the time, so I remember it very well. As a consequence, Labour lost the election heavily. I say that by way of comment on the Scottish Government’s paper, because it does not address many of the real issues but simply says, “This will be so and that will be so”, with no argument.

On the economy, we are a still a long way from getting the issues properly assessed by the public at large. There is the big issue of the loss of access to the single market, which we went into in great detail. The Barnett formula will no longer apply, which I welcome because I have long thought that it is well out of date—it was meant to be temporary anyway and should have gone a long time ago. However, it will be compensated for as far as Scotland is concerned by the revenue from North Sea oil—that was one of the analyses that we made. On the other hand, the revenue from North Sea oil is highly volatile and is not permanent, so it cannot be depended on in the same way as Scotland originally depended on the Barnett formula. The costs of financial regulation, regulators and many other separate institutions will have to be taken into account. The sharing of the UK’s public debt, including PFI, public sector pensions and many other liabilities is crucial. I was struck by one figure that we came across which showed that the total support extended to RBS during the financial and economic crisis was the equivalent of 211% of Scotland’s GDP. Scotland simply could not sustain that sort of support and one questions whether some of the banks would have to move their headquarters elsewhere because of that.

Defence is a particularly important issue—I shall leave it to others to talk about aspects of that—because it has huge implications for the rest of the UK’s citizens and taxpayers. The cost to the rest of the UK of the proposals from Scotland on defence could be huge, and that will have to be a major issue in any negotiations that take place.

I turn to the EU. At first, Scotland indicated that it would join the eurozone and then said that it would not. It then indicated that there would be no technical problems with being a member of the EU and now it acknowledges that membership will have to be renegotiated. In particular, as I understand it, one of the commitments required of new members is that they will have to join the eurozone, so there is a big issue there. Of course, there is absolutely no guarantee that Scotland’s membership will be accepted, because a single vote from any other member state could exercise a veto. There will be many who will be very worried about the implications for them, so that is a big issue for Scottish voters.

The proposal for Scotland to use sterling as its currency and all the issues that that involves—lender of last resort and all the Bank of England issues—have been widely exposed overnight by the new Governor of the Bank of England’s excellent speech in Scotland. It means that I do not have to comment too much on it, but what he has said is highly timely and salutary, and will certainly require a lot of further follow-up.

One concern that our Select Committee had was that these issues were not being put fully before the British people—as I said a moment ago. However, we wanted to go further, so that not just the issues were put forward but the red lines of negotiation were established before the vote took place. That is fundamentally important, because those red lines and some of the issues that I have talked about—defence implications, currency and all the rest—should be spelt out beforehand so that voters understand what will follow in the negotiations. It is no good just waiting and saying that these are all issues for the negotiations because we do not know what the outcome of the negotiations will be, and I think that the outcome in many cases will not exactly be very popular to a Scottish voter at the end of the day. It is very important that the red lines are established at the beginning and, yesterday, the governor made a very good start.

So much for the economic implications; I want to say a word about the political implications. Ironically, for the Conservative Party in the rest of the UK—if I have to put it that way—we benefit from a vote for yes, because we have only one single Scottish MP in the House of Commons. None the less, a vote for yes is an outcome that I profoundly hope will not happen. Of the political implications I want to mention just one. I have seen the Answer given to yesterday’s Oral Question relating to the position of Scottish MPs in Westminster if there is a yes vote and whether they would still be eligible to sit in this Parliament after the date of Scottish independence in 2016. Obviously, that could happen, because the general election will be in 2015, the Scottish vote will precede that and then, in 2016, if it is a yes vote, there will be an independent Scotland. It is no good to say, “Just wait and see what happens”. The Advocate-General for Scotland replied yesterday that it would be a matter for negotiation. I do not think that it is; it is absolutely clear that we cannot have Scottish MPs with no constituencies, no constituency interests and no wider interests in the Westminster Parliament if Scotland votes yes and becomes independent. That should be established and worked out now and not left to a negotiation.

Finally, on the wider issues, I am a Scot, born, brought up and educated in Scotland; I have many Scottish ties still. I have of course been an MP for an English constituency for many years. I often thought that the two reasons why I was selected for adoption there were, first, that I had a lovely wife and, secondly, that there were many Scots in Norfolk, many of farming backgrounds. Due to this, I profoundly believe that, although I do not have a vote, all parts of the United Kingdom will continue to gain as a result of being part of the wider kingdom. One key implication of Scotland leaving the UK is that all parts of the United Kingdom, not just Scotland, would be the poorer, and that is why I profoundly hope that it will not happen.