Currency in Scotland after 2014

Debate between Margot James and Anas Sarwar

Wednesday 12th February 2014 Westminster Hall

[Anas Sarwar]

I could not have put it better. Yes, this has an impact on business and big institutions, but the price will always be paid by the poorest and most vulnerable people. I and my Labour colleagues stand shoulder to shoulder with those people throughout the United Kingdom. The nationalists will throw everything into this debate—every assertion, opinion, myth, allegation, contention and baseless claim—so that they can win on 18 September. They do not have any recognition of reality; they are much more the Walter Mittys of Scottish politics. The only thing that they have been clear on is the willingness to hand over control of monetary policy to another country; in the words of the Governor of the Bank of England, they would “cede sovereignty”.

It is important to look at the first letter sent in May 1997 by the then Chancellor, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he made the Bank of England independent. In paragraphs four and five of that letter, the point is made that

“The Bank is there to fulfil the objectives of the UK Government, as set out by the UK Government and not as determined by the Bank.”

So the Bank is there to support the economic policy of the UK, and after Scottish independence, it will be there to support the economic policy of the rest of the UK, not that of the Scottish Government. The Bank of England would go by the political will of the Chancellor of the Exchequer—whether the current Chancellor or the future Chancellor, the current shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls). The Bank will follow that remit and not the remit of the current Scottish Government or, indeed, a future Scottish Government.

What does that mean for Scots? If someone has a mortgage, their interest rate will be controlled by the central bank of a foreign country, with no input or influence from Scots, no accountability and no say on inflationary targets or the cost of money supply. Likewise, if someone has a car loan, a credit card or an hire purchase agreement for a new suite or a new washing machine, all those things will be controlled by a foreign Government, with Scots having no say or influence, and with no accountability.

[Margot James (Stourbridge) (Con)]

I thank the hon. Gentleman for giving way. He is making a very passionate speech. In addition to the points that he is making, there are the lessons from the European currency union and the debate within that union about the central bank having pre-budget approval of all the budgets proposed by member states. Can he envisage that applying to Scotland as well if those plans should unfold?

[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.