Scotland’s Place in the UK

Michael Connarty Excerpts

Thursday 6th February 2014 Commons Chamber

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I wear a badge in this House and in Scotland that has on it the saltire and the rose. It states: “Labour: A UK voice for Scotland.” That is the reality of Scotland’s place in the UK. With all due respect to those on the Government Benches, we have the ability to get rid of the coalition Government and the things they are doing, and vote in a Labour Government. That is the duty of the 41 Scottish Labour Members of Parliament, which we have because we are in the United Kingdom. We get to choose for everyone.

For me as the Member who represents 75% of Tam Dalyell’s old constituency of West Lothian, it is the answer to the West Lothian question. He wondered why he could talk about Blackburn in England but not Blackburn in Scotland, but I can talk about Blackburn in both countries in this Chamber, because the policies of this Parliament affect people in England and in Scotland—in both Blackburns.

I am seeking a permanent place in the UK, but one that is changing. It is about Scotland in an economically safer place: the UK’s economic resilience is a thing that Scotland has. Think of what happened when £44.7 billion of UK taxes were used to save RBS, plus £20 billion for HBOS and £20 billion for Lloyds TSB, which has places in Scotland. The resilience of the UK economy was the reason we could survive that, and Scotland would not have survived it without being part of the UK.

With quantitative easing, how much money was printed by the Bank of England to save the economy of Scotland, keep interest rates down, and save companies and households in Scotland? I do not like the austerity policies introduced for the people of the UK, but I understand why we need to save the economy of Scotland in a UK environment. Today, RBS announced in The Guardian that if there is independence it will switch its headquarters from Edinburgh. It has sensibly realised the problem that will exist if Scotland is cut off from the rest of the UK.

The other thing that Scotland gets as part of the UK is fiscal independence. For reasons of good socialist practice, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), the much criticised former Chancellor, kept us out of the euro and the eurozone. He kept us out of the stability and growth pact and away from the budgets that are now being written for the eurozone countries through the two pack and the six pack that we would have faced. I have sat on the European Scrutiny Committee for 15 years—the Chairman for a lot longer—and we have heard President Barroso say that Scotland will have to reapply to the EU and that it will get back in only if it signs up to the euro. That is why it is dangerous to leave the UK and that fiscal independence, and try to renegotiate another pact. There is no question but that Scotland will get back into the EU, but only if it signs up to the eurozone fiscal disciplines.

What does that mean? A recent paper states what happened to Croatia, the latest entrant to the EU. Its budget will be 5.4% in deficit in 2013, 6.5% in 2014, and 6.2% in 2015—but oh no it will not. It has been told that under eurozone rules it must reduce the deficit to 4.6% in 2013, 3.5% in 2015, and 2.7% in 2016. It will have to slash almost 3% off its budget. Consider what happened to Lithuania in those circumstances: a 15% collapse in its economy, a 40% cut in all public sector pay, and now it is struggling. We were there recently during its presidency, and were told that 40% of all transactions now take place under the counter without paying tax. That is the effect of the discipline of the eurozone.

Scotland could, of course, go for the sterling currency union—the latest wheeze—which is a mini copy of the eurozone with the fiscal interests of control in the larger economy. Mark Carney, the Governor of the Bank of England, delivered the home truths in Edinburgh and was quoted in the Financial Times:

“The desire of the Scottish government to remaining in the sterling area would, he stressed, sharply curtail Scotland’s fiscal and financial independence.”

It is quite clear that the bigger country would dictate the policies of the smaller country.

At the moment there are massive subsidies from England and its taxpayers for wind farms. Our renewables are being brought up in the UK, and they are paid for by the UK. Postal services are subsidised in exactly the same manner, and under independence there would need to be either a massive subsidy through the taxpayer, or a massive hike in postal charges. The best thing we can do is remain in the UK and fight for change that benefits Scotland in the UK.