Scotland: Independence Referendum

Lord Wallace of Tankerness Excerpts

Thursday 30th January 2014 Lords Chamber

[The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)]

My Lords, in sharing the view of the noble Lord, Lord McAvoy, I can safely say that we have had an excellent debate here today, which has benefited from having extra time. I particularly thank my noble friend Lord Lang of Monkton for introducing the debate with a first-class speech which, given that the contributions of all the speakers have emphasised how wide-ranging the subject is and how there is so much to be said, not only captured the breadth of the arguments but did so with considerable focus as well. He set our debate off absolutely on the right tone by raising a number of important issues.

At the outset, too, I congratulate my noble friend Lady Goldie on her maiden speech. She and I were first elected together to the Scottish Parliament when it was established in 1999, along with other noble Lords who are in the Chamber such as the noble Lord, Lord McConnell, and my noble friend Lord Steel. We did parry on occasions. I think that I appeared before her a number of times on the justice committee, where she established a reputation not just for competence—that would understate it—but for being a formidable parliamentarian. Indeed, when she announced that she was standing down from the leadership of the Scottish Conservative Party, one newspaper commentary that I have found said:

“A primary function of a party leader is to lead in the eyes of the voters who have not supported it. Annabel Goldie was good at that—open, inclusive, positive and giving as good as she got, the people understood her—trusted her”.

I think that is a very fair summation of the contribution she has made to Scottish political and civic life. I know that she continues to represent her constituents in the Scottish Parliament, but we all look forward to the contributions that she will make to our debates in this Chamber.

One of the features of this debate has been that Members who have taken part have come from right across the United Kingdom: from Scotland, Wales, Northern Ireland and England. I cannot answer every point that has been raised because there have been so many, but every speech made a valuable contribution to the debate.

I was having the same thought as my noble friend Lord Cormack, who said that he hopes this debate will be read in Scotland. I was thinking that so often in this debate we hear people say that we do not have enough facts. I think the Hansard of this debate will give a considerable number of facts and emphasise many areas. The noble Lord, Lord Kerr of Kinlochard, spoke about the complexities that are involved, and we heard important contributions from noble Lords who have considerable expertise in their own fields of medicine, research, sport, law and defence. Excellent contributions were made that set out some of the facts, consequences and complexity.

My noble friend Lord Caithness asked whether independence is for ever, and the noble Lord, Lord Maxton, answered that question. Yes, people can see from this debate that independence is for ever. As the noble Lord, Lord Brennan, said, there is no going back. It will be a decisive result, and if people vote yes for independence, that is that.

There is one very small matter. I am not saying it is a fact that will change the outcome of the referendum, but the information was passed to me, so I thought I should share it with your Lordships. My noble friend Lord Steel and the noble Baroness, Lady Liddell, referred to the First Minister’s visit to the Ryder Cup and the expenditure of £54,000. I have been informed that when he was First Minister the noble Lord, Lord McConnell, and one member of staff attended the Ryder Cup outside Dublin at the cost of £131.20. Scotland got better value from the noble Lord.

Features of the debate have been the sense of heritage and the sense of family. My noble friend Lord Forsyth gave us a very good perspective on heritage. He said we are one nation forged over the centuries. Other noble Lords who talked about history included my noble friend Lord Cavendish of Furness and the noble Lord, Lord Bilimoria, but noble Lords also talked about the idea of family and, sadly, noble Lords also talked in terms of a family that faces possible divorce, all the trauma that goes along with that and how we want to try to avoid it. That emphasised that the people who belong on this island not only have a shared heritage but have so much in terms of shared family. When my noble friend Lord Caithness was describing his bloodline, I thought that he was the absolute embodiment of Britishness, with all the various parts of the United Kingdom from which he can claim ancestry.

Another feature was the passion that the noble Lord, Lord Soley, mentioned. Noble Lords said how important it is to them that we remain part of a United Kingdom. Some 800,000 people born in Scotland now live in other parts of the United Kingdom and about 500,000 people born in England, Wales and Northern Ireland now live in Scotland. One speech mentioned the 30,000 people who travel in and out of Scotland each day to work. My noble friend Lord Moynihan talked about the Olympic family and how proud we all felt at the success of the British Olympic team in 2012. When he was speaking, I was reminded of the point made by my noble friend Lord Cavendish: when you split a £50 note, each part is not worth £25. Equally, one could say that if you had split the boat of Katherine Grainger and Anna Watkins, who won the double sculls, neither of them would have been in a gold-medal position. That emphasises how much we achieve when working together. We are truly greater than the sum of our parts.

I recognise that what we are debating today has implications for other parts of the United Kingdom and for our parliamentary arrangements. My noble friend Lord Trimble talked about its impact in Northern Ireland. I will perhaps say later that if you try to disintegrate public bodies and institutions that have been brought together and have evolved over a long period, it has costs, even for the part of the United Kingdom that would not have opted to lose Scotland. I also take the point of the noble Lord, Lord Gordon, that whatever the outcome on 18 September, even if it is a no vote, there may well be relationships that have to be worked at to bring about some harmony again, so that we can continue to go forward as a truly United Kingdom.

However the legal position is that, without Scotland, the United Kingdom would continue, albeit, I fear, as has been said by a number of your Lordships—my noble friends Lord Lang, Lord MacGregor and Lord Lamont of Lerwick, and the noble Lord, Lord Parekh—as a diminished United Kingdom. It would be a United Kingdom from which we had lost something very valuable. We have had very clear legal opinion, referred to by my noble friend Lord Crickhowell, from Professors Crawford and Boyle, that England, Wales and Northern Ireland would be a continuing state. Internationally, the continuing United Kingdom would retain its membership of organisations and bilateral treaties. Domestically, each one of the United Kingdom’s public bodies and institutions would continue to function.

That cannot be said of an independent Scotland. An independent Scotland would be an entirely new state. As the noble Lord, Lord Robertson, said, it would be a separate state. I sometimes wonder why a party that wants independence objects to the idea that it might be a new state; I thought that was the whole point of what they were trying to do. Scotland’s future would be based on a series of protracted negotiations with different states and organisations, as well as other parts of the United Kingdom. Which currency would Scotland use? How would Scotland join the European Union, as referred to by the noble Lord, Lord Kerr? Would it have to join the euro or Schengen? These are questions that the Scottish Government have singularly failed to answer. They would require detailed negotiations to pull out of a union of which Scotland has been an integral part for more than 300 years and to establish a new set of international relationships.

However, it is important to stress the positive. As the noble Lord, Lord Bilimoria, said, we have at the moment the best of both worlds. We have a system of devolution that delivers for Scotland. Where it makes sense, key decisions of state are reserved to the United Kingdom and its Parliament to take on behalf of all citizens across the United Kingdom. Equally important decisions are made by the Scottish Parliament in Scotland on issues including education, healthcare and policing. The noble Lords, Lord Robertson and Lord McConnell, and my noble friend Lord Purvis, have indicated that devolution is working. I take the point made by my noble friend Lord Lang in his introductory speech, that somewhere we seem to have lost sight of the Scotland Act 2012. The point is that the position is not static. There is no such thing as the status quo because, in 2015, there will be taxation powers on landfill tax and land-based stamp duty; and in 2016 there will be an important development on the 10p rate of income tax. It is not standing still; since day one it has evolved and developed. That 2012 legislation substantially increases the Scottish Parliament’s power and was proceeded upon on the basis of evidence, consensus and consideration.

At the start of 2013, the United Kingdom Government said that we would set out the facts about Scotland’s place in the United Kingdom: its contributions and the benefits we receive as a result. We have done so. The Scotland analysis papers, details of which I circulated to noble Lords last week, have set out in great detail important issues such as currency, research, defence and, most recently, borders and citizenship. They make a positive case for Scotland being part of the United Kingdom. I do not believe that the Scottish Government have in any way challenged this analysis. Their White Paper last November was their opportunity to make their case. It is widely recognised that they distinctly failed to do so. None of the key issues such as currency, EU membership and, crucially, the terms of EU membership and economic stability, will go away—but none of them was adequately addressed. It was an exercise in assertion and wishful thinking. My noble friend Lord Lang said that it used its length to hide its emptiness. I noted that, in the passage he quoted, my noble friend Lord Steel talked about the principle of continuing efficiency. I have looked that up on Google, and cannot find that principle enunciated anywhere else. It is asserted, and we are all supposed to salute it.

These issues matter because they affect people’s everyday lives—jobs, mortgages and the cost of the food we buy in the supermarkets. This is not an esoteric constitutional debate. It is not a question of nationalist sentiment. It matters to people and their day-to-day lives.

I will pick up on some specific points made by noble Lords. A number of your Lordships made particular reference to the speech the Governor of the Bank of England made yesterday in Edinburgh. He highlighted the principal difficulties of entering a currency union: the loss of national sovereignty, the practical risks of financial instability and having to provide fiscal support to bail out another country. As the Chancellor has previously said, the current arrangement of a full, monetary, fiscal and political union brings economic benefits to all parts of the United Kingdom. That is why we have seen the Chancellor, my right honourable friend the Chief Secretary, former Chancellors of the Exchequer, the shadow Chancellor and the First Minister of Wales—and in this debate the noble Lord, Lord Empey, from Northern Ireland and my noble friend Lord Bourne of Aberystwyth, from Wales—say that in the event of independence, a currency union is highly unlikely to be agreed, and that in those circumstances the Scottish Government need a plan B.

Currency unions do not work without close political and fiscal integration; surely we have learnt that lesson from the euro if nothing else. Scottish independence would create the opposite. Indeed, the objective is to have disintegration. The Scottish Government maintain that they can run an economy differently and better, but that would lead to fuller divergence. To Nicola Sturgeon and others, who claim that,

“the pound is as much Scotland’s as it is the rest of the UK’s”,

let us be clear that a vote to leave the United Kingdom is a vote to leave its institutions, such as the Bank of England, and to leave the UK pound. That is part of the choice that people in Scotland are being asked to make on 18 September.

My noble friends Lord Lamont of Lerwick and Lord Shipley also mentioned the debt issue. The Treasury has set out clearly that the continuing UK Government will in all circumstances honour the contractual terms of debt issued by the UK. We did so because we thought it was responsible to underpin the UK’s credibility with the international financial markets. As my noble friend Lord Shipley indicated, an independent Scotland would be likely to face higher debt interest payments than the rest of the UK, as the National Institute of Economic and Social Research has shown, and would have to rely on a narrower tax base to support its public services and ageing population.

A number of noble Lords who contributed to the debate talked about the European Union. The noble Lord, Lord Kerr of Kinlochard, described, from his vast experience, a potential scenario as to how we might get from A to B, which I will be interested to reread. It would not be appropriate to make any commitments or comments on it except that it takes a while to get one’s mind around the thought that my right honourable friend Mr David Cameron might represent Alex Salmond at the EU Council table. I would be interested to know what the First Minister of Scotland thinks about that. However, the point the noble Lord, Lord Kerr, made was about the complexity of that situation and of the terms of membership. The noble Lord explained why the rebate could not just be split up and a bit allocated to Scotland. There is also the issue of Schengen and the currency. When the Scottish Government talk about the common travel areas as their preferred position on Schengen, that would clearly be a matter for negotiation. They also have to make up their mind. They cannot claim on the one hand that they want a radically different immigration policy from the rest of the United Kingdom, and on the other still maintain that they can have a common travel area. The two do not go hand in hand. They have to square with the Scottish people about which it will be.

The question of the disintegration of the United Kingdom came through in a number of speeches. We are talking about institutions and public bodies that have developed over many years—over generations—and which were not established for the purpose of being broken up. Therefore, when you start to try to unravel them, there are a lot of difficult problems. The noble Lord, Lord Kakkar, mentioned the General Medical Council and all the issues that would flow from that. I think that many of the regulatory bodies in the health service have appeals that go to the Privy Council. The Scottish Government may say, “We can keep it”, but I am not sure that they have thought it through, as they sometimes dismiss the Privy Council as a body to which they would ever wish to appeal.

There are also the issues of the coming together of the higher education research councils and the integration of defence. As my noble friend Lord Selkirk of Douglas said, you cannot just pluck out assets and personnel from a highly integrated armed services.

The noble Lord, Lord Brennan, also underlined the importance of and some of the difficulties with the number of treaties and negotiations that would have to take place. It is worth reminding the House that, in the so-called velvet divorce between the Czech Republic and Slovakia, there were 31 overarching treaties and around 2,000 sub-agreements between the two countries. While it is referred to as the velvet divorce, many important issues were unresolved for a number of years. So there is a whole host of issues that would have to be dealt with.

There is the fact that our trade is so bound up together. Scotland’s manufacturing receives so much of its raw materials from England. In one of our Scottish analysis papers, we show the border effect. When you put up a barrier, albeit between countries that have a long history together and share a common language, there is a border effect, as was shown in the difference in trade between two provinces of Canada and between Canada and the United States. Public bodies such as the BBC, the DVLA, the National Lottery and the Heritage Lottery Fund have all been established on a UK basis. You only need to start thinking of some of the implications. We will publish the next Scottish analysis paper in the series in which we will look at some of those institutions. It is clear that unpicking them is very difficult indeed. To put it into some kind of context, every Administration that I can remember have had private and public grief about IT systems. If you think about having to create new IT systems across the board for so many things, it underlines the difficulties.

The noble Lord, Lord Nickson, expressed a concern that is part of the so-called border effect. You would have difficulties at the outset but, over time, there would be further divergence. That, too, would mean that we would lose much of the advantage that we have as part of the United Kingdom.

The noble and learned Lord, Lord Hope of Craighead, talked of the importance of the legal system and the fact that, in civil matters, the House of Lords and now the Supreme Court has been the final appeal court. So many of these issues deal with commercial legal matters, in which it has been important to have consistency of interpretation north and south of the border. I remember—no doubt the noble Lord, Lord McConnell, will remember, too—that when there was a proposal to move from the House of Lords to the Supreme Court, when we were in coalition government together, we had to think about what should happen and whether Scotland should continue to seek to take civil cases to the Supreme Court. The representations we got from business were about the importance of having that Supreme Court to give consistency of interpretation across the United Kingdom. That was very important indeed.

The noble Lord, Lord McAvoy, referred to the importance of the defence industry in Scotland. A number of those who have contributed have talked about the defence footprint in Scotland, and the number of armed and civilian personnel related to defence. When you look at how much is spent on defence, it is not that Scotland’s defence is a tenth of the total; the entire expenditure on defence in the United Kingdom goes to ensure the security of us all. You cannot start to disintegrate it—it matters to us all. That was particularly true of the case mentioned by my noble friend Lady Neville-Jones, about our security being underpinned by a strong network of international alliances and relationships and how much Scotland benefits from the millions of pounds of investment in the United Kingdom’s cybersecurity.

On the Armed Forces, a point made by my noble friend Lord Selkirk was that you cannot just tell people that they have to leave and give up their careers in the British Army to go and join the Scottish Army—or, for that matter, in the Royal Navy or the Royal Air Force. There are two sides to that. It has been very ill thought-out in terms of what the Scottish Government have proposed, but the positive side is that we do very well as a United Kingdom, with Scotland as part of it, by having our defence secured on that UK-wide basis.

Before moving on to further devolution, the noble Lord, Lord Hennessy, mentioned contingency planning. He knows that the Government have consistently made the point that it would be wrong to start contingency planning ahead of any vote, for the very good reason that we are the Government of the whole United Kingdom. If Ministers within government start splitting up and arguing against each other, that is when you start to unpick the fabric of the United Kingdom.

The noble Lords, Lord Sutherland, Lord Lyell and Lord Kakkar, and the noble and learned Lord, Lord Cullen, also mentioned the importance of research. I do not need to elaborate on what they said about the value of having a United Kingdom in that regard.

Many of your Lordships talked about further devolution, further constitutional change and the opportunity for constitutional renewal. I will not list everyone who made that point but I think there was an emerging consensus that this is something we need to look at in the light of a no vote. One of the things that came through was that devolution does not stop at Cardiff, Edinburgh or Belfast; there is an important issue about it being taken down to local government as well. The First Minister of Wales raised with the Prime Minister the idea of a constitutional convention. The Prime Minister indicated that there would need to be an open, involved and comprehensive conversation about the kind of union we want to see, and that, 15 years after the process of devolution started, we should consider the best way to go about doing so. However, he went on to say that he believed a better time to do that would be once the referendum debate had come to a conclusion as we must first focus on the case of keeping Scotland in the union.

The noble Lord, Lord Parekh, made important points about trying not to be negative. I have tried to show that there is a positive side to arguments that might otherwise be seen as being negative. However, it is also important that those who are arguing for such a fundamental change to the status quo should face and answer some of the key issues that are put to them. I do not believe that is being negative.

We have a proud tradition. To pick up some of the points that have been made, we have walked in freedom under the law and have taken democratic government to many parts of the world. This country led the way in the abolition of slavery. We established a National Health Service and were leaders in public service broadcasting. We have achieved so many things together. I believe that that, together with economic integration, is a very positive argument to put forward.

My noble friend Lady Goldie said that she could be Scottish and she could be British and proud of both. We have heard contributions from noble Lords who are Welsh but feel very British too, from those who are Northern Irish English but feel very British too, and from people from other parts who feel that way too. The noble Baroness, Lady Quin, made an important point about people coming to the United Kingdom—not to Scotland, Wales, Northern Ireland or England but to the United Kingdom. It is important that we retain the integrity of the United Kingdom. It is not something to give up lightly. I hope that on 18 September, people in Scotland will vote to remain part of our United Kingdom. I believe that, far from being negative, a no vote is probably the most positive thing that can happen to the United Kingdom later this year.