Scotland and the Union

Debate between Mike Weir and Iain Stewart

Thursday 29th November 2012 Commons Chamber

[Iain Stewart]

I cannot give those figures off the top of my head. If the hon. Gentleman is suggesting that Iceland was any better placed to weather the storm than the United Kingdom, that is a slightly revisionist view of history.

Another issue is Scotland’s role in the European Union if it becomes a separate country. There was an interesting debate on that in Westminster Hall last week. In the interests of brevity, I will not rehearse all the arguments. I believe strongly that if Scotland went its own way and wanted to be part of the EU, it would happen on the EU’s terms. Scotland would be sucked into full currency, fiscal and political union, which would not be to its benefit.

[Mr Weir]

rose—

[Iain Stewart]

I will not give way again.

The EU issue makes a mockery of the SNP’s independence policy. It is perfectly logical to argue that if Scotland does not like one economic union and wants to be the master of its own destiny, it should go its own way, but to argue that it should then join an ever-deepening union is utterly illogical.

The fact that we are having a referendum at all is risky as it may be a distraction from what we should be concentrating on. I do not doubt for a minute that it is perfectly within Scotland’s right to have the debate and to have the matter resolved. As a democrat, I fully accept that the Scottish National party won a majority in the last Scottish Parliament elections and that a referendum was part of its manifesto. It is therefore perfectly legitimate to have the debate. But at what cost? The constitutional uncertainty in Canada in the 1980s and 1990s had a severe impact on the economic prosperity of Quebec. The EU admitted that in a report.

UK Constituent Parts (EU)

Debate between Mike Weir and Iain Stewart

Wednesday 21st November 2012 Westminster Hall

[Iain Stewart (Milton Keynes South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Crausby, and I congratulate the hon. Member for Glasgow North (Ann McKechin) on securing the debate. Although it may not be a regular occurrence, I concur with a lot of what she said.

I confess that I have always been puzzled by the Scottish National party’s policy of independence in Europe, or whatever its particular slogan is at the time. Although I profoundly disagree with independence for Scotland, there is logicality in believing that Scotland should be a master of its own destiny: that it should break away from a currency, a monetary and fiscal union, and a political union, and decide matters for herself. I do not agree with that, however. I think that the union has been one of the most successful political, social and economic entities that the world has ever seen, and it would be a tragedy if Scotland split away from it. There is, however, logic in saying, “We want to be masters of our own destiny and decide policies for ourselves.”

What I find illogical is the argument that being in one union is so disadvantageous to Scotland that we should split away, destroying 300 years of shared history and experience, and then rush straight into an even bigger one. That is illogical, and I contend that in such a union, Scotland would have a far weaker influence than it currently has in the United Kingdom.

[Mr Weir]

I do not understand the hon. Gentleman’s argument. The UK is part of the European Union and has surrendered some sovereignty to joint decision making, but that is different from an encompassing political union, which some in the EU want. I presume that he is very much against that, but that is the position in which Scotland finds itself within the EU, and there is nothing illogical in seeking to get out of the United Kingdom in order to join together with other nations in the EU, to a restricted degree.

[Iain Stewart]

I am tempted to go down the path of having a debate on the wider issue of the EU’s direction—I am sure that my hon. Friend the Member for Stone (Mr Cash) would be only too happy to join in—but I think I might exceed my five-minute allowance. The point is that if Scotland became an independent member of the EU—I will come on to why that will not be a straightforward process—it would be joining an ever-deepening union. I do not want the United Kingdom to be part of that, but that is what Scotland would be forced to sign up to. Under the terms of the EU treaties, all new member states are obliged to make the political and legal commitment to join the economic and monetary union, and to adopt the euro as a currency.

[Mr Weir]

That is simply not the case. Under the EU treaties, a nation has to join the exchange rate mechanism II before moving on to the euro. ERM II is voluntary, and in the case of Sweden, it has made it clear that it is not moving towards the euro, although it joined the EU later. Scotland would be in the same position. There is no obligation on Scotland to join the euro.

[Iain Stewart]

I profoundly disagree with that analysis. Sweden is obligated to join the euro once it has satisfied the economic conditions. That is the position, and I disagree profoundly with the hon. Gentleman’s position. He has said nothing that dissuades me from the view that an independent Scotland would be sucked in to a full economic and monetary union, and that would not be in Scotland’s interests.

It is far from certain that Scotland would become an automatic, independent member of the EU. There is no precedent for a current EU member state splitting up into constituent parts, with the part that broke away becoming a separate member. Therefore, we must look at what the treaty on European Union says, and article 4.2 is clear that the EU must respect the fundamental, constitutional and political structures and the territorial integrity of a member state, which has exclusive competence in such matters. The EU cannot therefore recognise a unilateral declaration of independence by part of a member state. Furthermore, according to article 49, the hypothetical new state would need to request membership and attain the unanimous support of the European Council for that request, and have its membership approved through an accession treaty, to be ratified by the Parliaments of all member states.

If one looks at the political reality of other member states in Europe, that is far from a foregone conclusion. Would Spain, for example, agree to it with its issues in Catalonia and the Basque country? Would Belgium, whose constitutional integrity is under question, agree? I do not believe that that process would be automatic. I am not suggesting that Scotland could not become an independent EU member, but I ask at what time and at what cost. Croatia’s accession to the EU has been mentioned, and that has been going on for over 10 years. Slovenia made an objection to that process, and although it was overcome, it took time.

I ask again what the cost to Scotland would be. What uncertainty would be created for business at a fragile time for the global economy? What else would she have to surrender to get membership agreed? I believe that euro membership would be inevitable. What about Scotland’s budget contribution, which is a topical issue? The SNP contends that Scotland has a budget surplus in the United Kingdom. I think that issue is far from settled, but for the purpose of the argument, let us accept that the SNP is correct and that Scotland pays more into the United Kingdom coffers than she receives from it. Does that not mean that Scotland would be forced to pay a much higher contribution to the EU budget? Has that been factored into anyone’s calculations? I do not believe so. What about other issues, such as Schengen and the common fisheries policy? What influence would Scotland have to protect her current freedoms? It is all uncertain.

As the hon. Member for Glasgow North said, the Scottish Government are making it up as they go along. There is no certainty, which I believe we should have. The United Kingdom should remain strong and intact. The debate about our position in the EU is a broader question; personally, I want to get us back to more of a common market, and certainly not into a deeper political and monetary union. However, we are better off fighting this together and not splitting up into component parts, when we would have no certainty and Scotland’s interests would be subsumed into the wider interests of Europe.

Public Sector Pensions

Debate between Mike Weir and Iain Stewart

Thursday 8th December 2011 Commons Chamber

[Iain Stewart]

If the hon. Gentleman forgives me, I was using shorthand. I am well aware that there are different schemes for different professions within the public sector, but in a UK context they are broadly similar between Scotland and England.

Paragraph 5.26 of the Hutton report reads:

“There has been scope for some variations in terms to meet local circumstances, but the resulting pension schemes have essentially been the same as those established by the UK Government. That has, for example, helped to prevent pension terms becoming an obstacle to transfers of staff and skills within a sector of the public service. It seems reasonable to continue with this approach.”

Paragraph 5.27 reads:

“The key design features should be part of a UK-wide policy framework that extends to Scotland, Wales and Northern Ireland, with limited adaptations of other features to meet local circumstances.”

I agree with that but it would be hugely disruptive to try to break apart what has been a unified system up until now.

[Mr Weir]

How does the hon. Gentleman square that with the Minister’s accusation about the Scottish Government not making changes to the pension scheme?

[Iain Stewart]

As I said, in quoting from the Hutton report, local variations can be provided for, and that is exactly what my right hon. Friend the Minister said. There is no inconsistency at all.

Most public sector pension schemes—with the exception, I think, of the local government one—are pay-as-you-go schemes. There is not a separate fund, a pot of money or assets that are invested and then pay out. The current pensions are paid for from current receipts and underwritten more widely by the Government, with the expectation that tomorrow’s pensions will be paid for largely by tomorrow’s contributions. With fiscal autonomy or full separation, however, how would all that be disaggregated? It would lead to an enormous muddle over who was liable to pay for what and over who would be liable for the shortfall in future pension payments accrued under the current system? Were we to move down that road, I would wish to train as an actuary, because a lot of them would make a lot of money from disentangling everything. [Interruption.] Indeed, they earn a good money as it is. But they would earn even more.

Scotland Bill

Debate between Mike Weir and Iain Stewart

Tuesday 21st June 2011 Commons Chamber

[Iain Stewart]

My hon. Friend makes a very good point. We also have to look at the equality of the benefits given by defence spending—the protection that accrues to the whole country. It does not matter so much where the defence equipment originates if we are looking at the overall protection that the armed forces provide.

[Mr Weir]

The hon. Member for Finchley and Golders Green (Mike Freer) makes a valid point as regards defence. The attack on the Barnett formula is based on the fact that Scotland gets more per head, but if we take into account all spending, that is not necessarily the case because of the imbalance in the way that defence spending is allocated—so the figures are important. Where the assets are, for the purposes of this argument, may not be quite so important, but the amount of spending is very important. The economic impact of where the assets are is vital to many communities.

[Iain Stewart]

I am grateful to the hon. Gentleman for his point. May I infer that he is happy to retain the Trident base in Faslane, given the economic benefits that accrue to Argyll and Bute and West Dunbartonshire?

[Mr Weir]

There is little or no economic benefit from the Trident base, and there is an extremely disproportionate —[Interruption.] The point is that bases such as the RAF bases in Morayshire are important not only from a defence point of view but economically, and bases such as the Condor base in my constituency are important economically and also from a defence point of view.

[Iain Stewart]

I challenge the hon. Gentleman’s assumption about the lack, as he sees it, of economic benefits. I also contend that he is making a good case for Scotland's remaining part of the Union, so that the lion’s share of UK defence assets can be based north of the border.

Scotland Bill

Debate between Mike Weir and Iain Stewart

Tuesday 15th March 2011 Commons Chamber

[Mr Weir]

I take it, then, that the hon. Gentleman’s friend would be terrified of taking the Eurostar to France.

[Iain Stewart]

The devolution of tax powers to Normandy or Brittany is slightly outwith the scope of this Bill, so I will not risk the ire of Mr Benton by going down that route.

If there were a different time zone and England were an hour behind Scotland, my friend could board the train in Glasgow before midnight and arrive in England before midnight, so goodness knows what tax status he would incur for that journey. We often hear of the Bermuda triangle, but I do not want to introduce a Beattock triangle.

Scotland Bill

Debate between Mike Weir and Iain Stewart

Thursday 27th January 2011 Commons Chamber

[Iain Stewart (Milton Keynes South) (Con)]

I welcome the opportunity to speak in this debate. Although I represent a seat south of the border, I have a long-standing interest in devolution matters. I not only spent my formative years in Hamilton, but when the original Scotland Bill passed through the House in 1998, I acted as an adviser to the then shadow Front-Bench team, which included my hon. Friend the Member for Epping Forest (Mrs Laing). I have thus gained a probably unhealthy level of detailed knowledge of the Scotland Act 1998, and I hope to draw on it a little in my contribution.

I trust that the House will not object if I draw on a book on the Barnett formula and fiscal autonomy, which I co-authored in 2003 with the eminent Scottish lawyer, Professor Ross Harper. For the avoidance of doubt, let me say that I am not seeking to advertise the book: it is no longer for sale and I received no royalties for it at the time. Let me just say that it was not troubling “Harry Potter” for the No. 1 spot on the best-seller list. Nevertheless, I hope that the research we did for the book will help our deliberations today.

I want to put on record the fact that I was sceptical about devolution at the time of the referendum in 1997. I campaigned and voted against the devolution measures. I am happy to say that many of the doubts I had at that time have not been borne out by events. I believe that the Scottish Parliament reflects the settled will of the Scottish people and that, on the whole, it has been a success. Our job today is to improve and strengthen it, thereby strengthening the Union. The Scottish Parliament is not perfect, however, as there are some deficiencies, but I believe that the Bill goes a long way towards improving them.

I want to focus, as much of the debate has, on the transfer of fiscal powers. It is right that the Scottish Parliament is more accountable for the money it spends—a flip of the old adage, “No taxation without representation”. It is right for the Scottish Parliament to be held accountable to its electors for its own spending decisions. Going back to the 1997 referendum, I was intrigued by the option that did not get much coverage at the time, when the debate centred on the “yes/yes” or the “no/no” campaign. Some people believed in the “no/yes” option—they did not want a Scottish Parliament, but thought that if there was to be one, it should have proper fiscal powers and be held accountable.

I hope that the Bill will improve participation in Scottish Parliament elections. Although the turnout is higher than for local government, it is lower than for elections to this place, in which turnout is in no way at a particularly high level. Part of the reason for that lower turnout is that Members of the Scottish Parliament can make spending decisions without being directly accountable to their taxpayers and electors for them. I strongly support the Bill’s principles in addressing that point.

Speaking as an English Member, I want to put on record the fact that I often hear representations from constituents about why Scotland has free tuition, free prescriptions and so forth, which people do not have in England. I explain that the financial relationship between Scotland and England is much more complicated than the Barnett formula, which people often use as a shorthand to explain the whole fiscal relationship between Scotland and the United Kingdom. The point is nevertheless an important one, because if that concern is left unchecked, the Union will suffer. If people in England think that Scotland is getting an unfair advantage from the financial arrangements, the Union will suffer. As a Unionist, I make no apology for saying that; as a Unionist, I say that the Union suffering is the last thing I want to see. If Scotland wants to increase spending in a particular area, or introduce free care, tuition fees or whatever, the Scottish Parliament will now have to find more of that money, and that is an important point for strengthening the Union.

[Mr Weir]

I am listening carefully to the hon. Gentleman. He talks about the financial responsibility of the Scottish Parliament, but why does he feel that that should be confined to income tax? Does he not agree with Lord Forsyth, a former Tory Secretary of State for Scotland, who said:

“The SNP quite rightly argues that you can’t just limit it to income tax and stamp duty if you want to manage the economy. You can’t play golf with just one club”?

The point is that if the Scottish Parliament is to have responsibility, it must have responsibility not just for varying income tax, but for managing the economy.

[Iain Stewart]

I beg the hon. Gentleman’s patience, as I will turn to those points in a moment.

--- Later in debate ---

[Iain Stewart]

But surely the point is that, if we want to set up new fiscal arrangements between the constituent parts of the United Kingdom, we should not do it on the basis of assumptions. We should do it on the basis of hard facts, and one of the conclusions of the book is that we need to do more hard research and assign revenues and spending on a territorial basis. Such proposals are not in the Bill, but I hope that the Government will take those matters forward.

I shall give the House an example to illustrate why there would be a huge debate about the revenue. Let us take Standard Life, which is headquartered in Edinburgh. If corporation tax were devolved, the company would be domiciled as Scottish, yet it trades throughout the United Kingdom and has many policyholders in England who contribute to its profits. How would we determine which profits were Scottish and which were English? These are huge issues and they would have to be resolved before a full system of fiscal autonomy could be introduced.

[Mr Weir]

Surely that is a problem that affects all companies that operate across national borders, of which, in this globalised world, there are many thousands. Why would that present a particular difficulty for Scotland?

[Iain Stewart]

I believe that it would be a difficulty, and I have seen no evidence from the Scottish National party that properly costs this or assesses what the split would be.