Currency in Scotland after 2014

Fiona O'Donnell Excerpts

Wednesday 12th February 2014 Westminster Hall

[Ian Murray]

My hon. Friend hits the nail on the head. The SNP has ditched its euro credentials and its wish to join the euro in favour of a currency union with the United Kingdom that it is already in. I believe its slogan was “independence in Europe” but it now seems to be “independence in the UK with the pound.” Will it rush to adopt the euro—indeed, will Scotland actually be in the EU—or will it join the only other two countries in the world that tie their currency informally to another? This is a great quiz question: which countries are those? The answer is Panama and El Salvador, which use the dollar. [Interruption.] I can hear the hon. Member for Perth and North Perthshire (Pete Wishart) chuntering, “Greece”, and that is exactly the point that I have been making.

The First Minister and Deputy First Minister of Scotland this morning made the unedifying assertion that Scotland will default on its debt if no currency union is forthcoming. That ill-thought-through, toys-out-of-the-pram threat is a recipe for economic crisis and political conflict. It is reckless and irresponsible, to say the least.

[Fiona O'Donnell (East Lothian) (Lab)]

My hon. Friend is making an amazing speech. Is not that statement—that throwing of the toys out of the pram—proof that the SNP would be incapable of conducting normal relationships with the rest of the UK post independence?

[Ian Murray]

My hon. Friend is absolutely right. A currency union requires some kind of political co-ordination to ensure that the stabilisers make the currency work. What better political stability could we have than being the United Kingdom, with a strong Scottish Parliament as part of that overall economic and political framework?

--- Later in debate ---

[Stewart Hosie (Dundee East) (SNP)]

It is slightly disappointing that we cannot have a longer, more detailed debate on this issue. There is a great deal to say to answer the points that have been raised.

I congratulate the hon. Member for Edinburgh South (Ian Murray) on securing this debate, although from what we have heard so far, it is less of a debate on currency and more of a quick canter through some of the no campaign’s scaremongering. I would like to address one or two of the points that he made. He suggested that the Scottish economy would be run on ginger bottles—that is, old lemonade bottles. What a patronising and insulting way to look at a modern, productive economy.

[Fiona O'Donnell]

Will the hon. Gentleman give way?

[Stewart Hosie]

No. I have only five minutes.

The hon. Member for Edinburgh South suggested that so much money had been put into Scottish banks. I draw his attention to chapter 1, paragraph 1 of the report by the Parliamentary Commission on Banking Standards. The cash cost at peak is reported to be £133 billion—that was £47 billion to Royal Bank of Scotland in return for 82% of the stock, around £25 million into Lloyds, and smaller amounts to the Icelandic and other financial institutions. Where taxpayers are still on the hook is the near £50 billion owed to them from Northern Rock and Bradford and Bingley, which may be many things, but they are not Scottish banks. The notion that the argument was ever about Scottish banks bad, English banks good, must be knocked on the head.

The old chestnut about Scotland in a sterling currency zone being like Greece was also raised. Greece’s problem had nothing to do with being in a currency union and everything to do with appalling productivity. As we know, Scottish productivity is nigh on identical to that of the rest of the UK. That would avoid such problems entirely.

--- Later in debate ---

[Katy Clark]

I am very grateful to you, Mrs Riordan. As I was saying, I have been a Member since 2005 and I am very aware that, frankly, it is often far easier for a member of one of the minority parties to be called to speak than someone from one of the larger parties, because of the way that the rules in this place operate.

[Fiona O'Donnell]

On a point of order, Mrs Riordan, I am very sorry to interrupt the flow of the debate, but it would be helpful if you could clarify something. The hon. Member for Perth and North Perthshire (Pete Wishart) has made serious allegations about the conduct of this debate. Could you clarify whether any hon. Members from the SNP asked to speak in it? Have they been prevented from speaking in it? Have they ever even requested a debate on the issue of the currency in Scotland?

[Mrs Linda Riordan (in the Chair)]

That is not a point of order. I call Katy Clark to speak.

--- Later in debate ---

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to see you in the Chair in this important debate, Mrs Riordan. It has been lively at times, and there has been more heat than light on occasions, but none the less it is about trying to ensure that we have the opportunity to discuss the important issue of currency.

I congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on his superb opening contribution. He laid out clearly and articulately the issues that we have to discuss. We then heard useful contributions from my hon. Friends the Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann), for Inverclyde (Mr McKenzie), for Glasgow Central (Anas Sarwar), and for North Ayrshire and Arran (Katy Clark).

I want to pick up on a couple of points made by my hon. Friend the Member for North Ayrshire and Arran, because she articulated clearly that although many people in Scotland may have an emotional attachment to the idea of Scotland being an independent country, they none the less recognise the importance of the political, social and economic union that has existed over the years, and what an important decision this is for the people of Scotland to make in September. The Scottish National party would sometimes have us believe that everything will stay the same and nothing will change, but at the same time it tries to advance the notion that everything will change. That is not so. Increasingly, people are beginning to see through that false prospectus. A number of hon. Members spelled that out in some detail.

Increasingly, people are beginning to realise that the currency issue is important. For them, it is not just about the macro-economics, because some will, perhaps, not take an interest in that. However, they will take an interest in the money in their pay packets and in their pockets, in their ability to pay their way in the world, and in the impact on their mortgages, credit arrangements, store cards and car loans.

[Fiona O'Donnell]

My hon. Friend is summing up the debate in her usual excellent fashion. Is she struck by the views of young people, who will live with this decision far longer than any of us, particularly the youngsters in Fife who, having heard my hon. Friend the Member for Glasgow Central (Anas Sarwar), voted no yesterday?

[Cathy Jamieson]

My hon. Friend makes a valuable contribution, as always. I recognise that this is of huge importance to young people in Scotland. Obviously, young people aged 16 and 17 are, for the first time, have the vote in an important election. Of course, there are many young people here today in Parliament, including some members of the Scottish Youth Parliament, who are here to lobby on votes for 16-year-olds. I am struck by the intelligent way that young people have approached this debate. When it comes to the independence cause, they have not simply rushed to the barricades, as the SNP may, at one stage, have thought they would. They have thoughtfully debated, considered and put forward the arguments, and will come to their own conclusions, as indeed the rest of the people in Scotland will.

I have to say to the SNP that it is becoming rather tiresome to hear, every time anything is said that is not in agreement with the First Minister or his team, that we are somehow scaremongering. It is right and proper to scrutinise the proposals, including the White Paper and all the policies. [Interruption.] Indeed, the hon. Member for Dundee East (Stewart Hosie) is agreeing with me. He is an intelligent and articulate man who takes a close interest in all Treasury, banking and financial services sector issues; I gently say to him that it is rather odd that despite that, he continues to trot out the SNP line the whole time, without giving that degree of scrutiny to the proposals made by his political party.

On that point, Professor John Kay, former economic adviser to the First Minister and professor of economics at the London School of Economics and Political Science, said:

“If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England, and expect to fail…So Scotland might be driven towards the option of an independent Scottish currency.”

He also said:

“Alex Salmond has said I think rather stupidly that there is no plan B. The trouble with having no plan B is you don’t have any negotiating power if you don’t have a Plan B. So there has to be a Plan B. And Plan B has to be an independent currency.”

We are not getting that honesty in the debate, as far as the people of Scotland are concerned. That is important.