Scottish Independence and the Scottish Economy
Debate between Ian Murray and Angus Brendan MacNeil(1 year, 6 months ago)
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Ian Murray (Edinburgh South) (Lab)
I congratulate the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) and the SNP on bringing this debate to the Chamber. I also pass on my thoughts and best wishes to the hon. Member for Glenrothes (Peter Grant), who signed the motion. He is not with us today because he has lost his father, so our best wishes go to him. [Hon. Members: “Hear, hear.”]
When I learned of and read the motion, I got quite excited, because I thought that I might finally agree with one of my SNP colleagues’ motions. It starts off, rightly, by highlighting the disastrous impacts of this Tory-created economic crisis, but I am sorry to say that it ends in a rather familiar way, with their one-size-fits-all and only answer to any question: independence. I will come to that later, but let me go through the first part of the motion.
To start with the Secretary of State’s contribution, I did not hear an apology for what the Government have just done to the UK economy. The Conservatives once claimed to be the party of economic competence, but they have now created absolute chaos. Let there be no doubt that the Conservatives have crashed the British economy. Their now junked mini-Budget—well, partially junked, because they have kept the scrapping of bankers’ bonuses—which was mini only in its connection with reality, has exacerbated an already burgeoning crisis. That crisis was born from catastrophic decisions made over the past 12 years, including when the current PM was Chancellor.
As the motion outlines, the pound is at a record low, mortgage rates are through the roof and inflation continues to spiral out of control. I know that for many on the Conservative Benches, those are just indicators—numbers on a screen—but they show an economy tanking as a result of their incompetence. This is not just about numbers; it is about the quality of life of millions of people up and down the country. It is about the unimaginable stress caused to families, who were already stumped by how they would make ends meet. They find their mortgage rates shooting up and energy prices rocketing, and they are staring at their supermarket receipts, wondering at how few items they got for such a high cost.
Angus Brendan MacNeil
The hon. Member makes some great points about the catastrophe we are involved in due to being in the UK. On that basis, would he prefer an independent Scotland with a Labour or an SNP Government, or a Scotland inside the UK with a Tory Government? Which is it?
Ian Murray
I prefer Scotland in the UK with a Labour Government. What an absolutely ridiculous and pointless intervention from a ridiculous and pointless Member of Parliament. [Interruption.] Is that unparliamentary, Mr Deputy Speaker? Okay, I apologise. [Interruption.] I just said I apologise.
A family came to my surgery last week to say that their fixed-rate mortgage of 1.79% was expiring. Given the increases in interest rates, they were expecting to pay and had budgeted for 3.5%, but they were quoted more than 6.5% and they simply cannot afford it. What was it all for? To give unfunded tax cuts to the richest. Make no mistake: the Tories crashed the economy from Downing Street and it will be paid for by ordinary people, either through their pay packets or through austerity.
Angus Brendan MacNeil
On a point of order, Mr Deputy Speaker. When we ask a question of a colleague in Parliament who finds it difficult to understand, is it in order that he responds with insults?
Ian Murray
I am glad that the hon. Member has accepted it, from whichever seat he is now sitting in.
As I was saying, what has happened will be paid for by ordinary people either through their pay packets or through austerity, because the Government U-turns and change of Prime Minister cannot undo what has been done to Britain’s reputation. Our institutions have been undermined, our standing on the world stage has been diminished, and our credibility as a place to invest has been damaged. The devastation will last for years, maybe decades. As the right hon. Member for Ross, Skye and Lochaber said in his opening speech—I will quote him as accurately as I can—that comes with “massive, massive costs”. But one of the other massive costs would be the break-up of the United Kingdom, because there is no doubt that this Conservative Government are as big a threat to the Union as any nationalist sitting by my side here.
Who have the Conservative party turned to to put out the fire? The arsonist himself. Let us not forget that even before this abject disaster, the now Prime Minister, as Chancellor, delivered the highest tax burden on working people in 70 years, the highest inflation in 40 years and the highest of any G7 country, the largest fall in living standards since records began in the 1970s, continued low growth and stagnant wages.
We have a Prime Minister who increased the tax for everyone else while he did not think his family should pay it; a Prime Minister who, while every single person in this country suffered under lockdown, was fined for partying in Downing Street; a Prime Minister who left a loophole in the windfall tax so that billions of pounds that could have been put into public services to help people with their energy bills were left on the table; a Prime Minister who lost tens of billions of pounds to covid fraud and shrugged his shoulders; a Prime Minister who was so weak in dealing with the cost of living crisis that he thought that the best and only response was to increase everyone’s national insurance; a Prime Minister who was, as a Member of Parliament, more of a US resident than a UK citizen; a Prime Minister who always puts his party first and the country second; and a Prime Minister without a mandate to govern. As the Leader of the Opposition so aptly put it, in the only competitive election in which the Prime Minister has stood, he was trounced by someone who was in turn beaten by a lettuce.
Ian Murray
The big difference will be having a stable economy. The big difference will be growth. The big difference will be a laser-like focus on child poverty. The big difference will be trade. The big difference will be making this country work. The big difference will be repairing our relationship internationally, including with our EU partners. Those are the big differences. We will have a constitutional settlement fit for the 2020s, instead of ripping Scotland out of the United Kingdom with all the problems that that may cause.
If my attack on the Conservative party has upset SNP Members, wait until they hear the next few pages of my speech. While I am speaking of having no plan, let me turn to the second part of the SNP’s motion, which I certainly disagree with: the prospectus for independence. The much-anticipated paper appeared a few Mondays ago, after years or even decades of no credible economic answers from the yes movement. Unfortunately, even with all these papers, the wait continues.
Let me turn to a few of the big themes. They may seem a little like déjà vu in this House, but we still have no answers. The first, and probably the most obvious and important, is currency. SNP Members have had more views on the currency of an independent Scotland than I have had fish suppers—and I can tell you I have had a few, Mr Deputy Speaker. Their latest wheeze was revealed last week. Immediately after having voted to leave the United Kingdom—in their hypothetical scenario—an independent Scotland would take back control with a radically different economic approach and keep the pound. So the Bank of England and the UK Treasury would still set the fiscal rules; all that would change is that we would have no say whatever over them.
The economic levers that SNP Members continually bleat about would be left in Westminster. Would that just be temporary, though? They say yes, because they would introduce a separate Scottish currency, the Scottish pound. We might ask how long that would take, but they do not tell us. At first, people would pay their mortgage in the same currency in which they borrowed it, but at some point during the lifetime of their mortgage, the currency would probably switch to one that does not currently exist. One thing I know from discussions with my own mortgage provider is that if people borrow in pounds, they will pay back in pounds, regardless of the value of any new currency.
The SNP chair of the Sustainable Growth Commission—a commission that has now been junked and barely mentioned—has said:
“The risk would be that the currency would come into being and then quickly devalue…That would have an effect on people’s income”.
Just listen to that sentence. After the mini-Budget, we know all too well what happens when a currency devalues so quickly. According to the eminent economist Professor MacDonald of Glasgow University, that devaluation could be as much as 30% on day one. That is a 30% reduction in income overnight, but everyone’s borrowing would stay in pounds.
If SNP Members will not listen to economists or experts, perhaps they will listen to someone they know better: the First Minister herself, who said that using the pound is in the long-term interests of Scotland. She said that for years. It has now been junked.
A new country and a new currency would also mean a central bank, but not one like any other central bank that exists in the economies of the world. At first, for an indeterminate period, it would be a central bank operating with another country’s currency. The First Minister claimed at the launch and the press conference that the central bank would be a lender of last resort and would stand by things like the Financial Services Compensation Scheme, which guarantees up to £85,000 in someone’s bank account if a bank goes into liquidation or disappears. So we would have a central bank as a lender of last resort, standing by things like the Financial Services Compensation Scheme in someone else’s currency, but with absolutely no control over monetary policy.
The Scottish Government paper says that a greater emphasis would be placed on fiscal policy to ensure the strength of the economy. Surely that is shorthand for greater austerity. I will come back to that issue later.
Ian Murray
Let me just finish this point, because it is really important and perhaps the hon. Gentleman will be able to answer it. According to the paper, when the new currency is established after an indeterminate period, the planned reserves will total just $14 billion—a fraction of what similar small nations require. In the Scottish Government’s first paper, they drew comparisons with lots of other small European countries, so let us compare some currency reserves. Denmark’s currency reserve is equivalent to $82 billion, Norway’s to $84 billion and Sweden’s to $62 billion, and those are all established currencies with a track record and a borrowing record. Perhaps the hon. Gentleman can tell us how that makes the case for borrowing to create massive reserves.
Angus Brendan MacNeil
The hon. Gentleman has just pointed out the reserves of independent countries, so he can obviously tell us the reserves of Scotland, if it is doing so well in the Union. If Scotland becomes independent, will Labour Members come forward with policies, or will they pretend they are like the Tories and refuse to play? Will he try to get into the House of Lords, or will he want to be a politician in Scotland after independence? What is his position? Under devolution, five parties come forward and present their views to the public. I imagine that that will be the same after independence—or are Labour and the Tories saying, “We’re taking our ball home—we can’t play any more”?
Ian Murray
Mr Deputy Speaker, honestly! We want a sensible debate, but according to the hon. Gentleman I am taking my ball home and going to the House of Lords. I suspect that the reason he is so animated is that his seat might become a Labour seat at the next general election. Let me tell him my prospectus for Scotland: my prospectus is that Scotland stays in the United Kingdom with a UK Labour Government. That is my policy. He seems to forget that this is his motion, not mine: I am replying to an SNP Opposition day debate on a motion tabled by SNP Members in their own terms.
I was talking about the reserves of other countries. The SNP’s approach to creating Scotland’s reserves, which would be a fraction of those of other countries, is to borrow. The SNP’s proposition for independence is to continue to use the pound while setting up its own central bank, being a Scottish lender of last resort and borrowing tens of billions of pounds to create reserves for a new currency. The very foundation of the new state would be built on unfunded, unforecasted borrowing. It is like someone trying to build up their savings by using a credit card. We know it is bonkers, because the UK Government have just demonstrated how bonkers it is, and SNP Members know it.
Ian Murray
I agree with the right hon. Gentleman up to a point, but I wish he would not refer to the UK Government’s largesse or Westminster’s largesse. It is this Conservative Government’s largesse, and if we want to turn the UK around and keep the UK together, we have to replace this rotten lot with a UK Labour Government.
The right hon. Gentleman is right, however: the list of failures of Scottish Government policy is the length of your arm, and I would be here until 7 o’clock this evening if I went through them all. That includes the failures in my own constituency, where it is impossible to get a GP appointment. The Health Secretary tells me there is no problem, although NHS Lothian has said that health services and GP services in my constituency are failing—and I quote that directly from one of its reports.
Let me now turn to the subject of the European Union, because we have heard a lot about that. I remind the House—including my hon. Friend the Member for Chesterfield, who made some great points about the EU—that when the Division bell rang on our efforts to find a way through a deal with the European Union, we would have won on the customs union had the SNP not abstained. And let us not forget that when the Division bell rang on 12 December, after the general election, when the offer on the trade and co-operation agreement was “take it or leave it”, SNP Members voted for no deal. That is their record here: they talk a good game, but they do not deliver when they should be delivering.
Much like the experience of some Conservative Members in recent years, the response from Brussels has not fitted the preconceived fantasy. At the aforementioned press conference, the First Minister rejected the idea that Scotland would join the euro, saying it was
“not the right option for Scotland”.
Nonetheless, she added, Scotland would have no problem with joining the European Union. That is awkward, is it not, because the EU does not seem to agree. The law does not seem to agree. Officials have insisted, and the treaties state, that any country wishing to join the EU would legally have to commit to the euro. I wonder whether any SNP Members can shed any light on the Scottish Government’s position—but let me answer my own question, because I am more likely to get the answer than I would be if the SNP answered it.
The paper says that an independent Scotland would use the pound for an undetermined period, then borrow tens of billions—which may be an inadequate amount—to support a new currency, only to have to legally commit to joining the euro at some point in the future. The SNP has more currency positions in this paper than we have had Prime Ministers since the summer. If the mini-Budget has demonstrated anything, it is that the markets take a dim view of fantasy economics. What an economic catastrophe for Scottish people’s mortgages, borrowing, pensions and wages!
Before SNP Members start jumping up and down, as they have already, saying that some EU countries do not use the euro, let me repeat that every new member of the European Union must legally commit to joining the euro. That is written in an international treaty, which is international law. But here comes the conundrum for the SNP. The paper that has been presented by the First Minister does several things; are she and the SNP saying (a) that they are not willing to abide by the EU rules on the euro? They have already said that they would not join the exchange rate mechanism. They would play their games: they would say they would do it, and would not. Is that the policy, or is it (b)? If it is not joining the euro, they are essentially saying that a separate Scotland would sit outside the rest of the UK and the EU with a different currency.
Ian Murray
That position is surely not in the best interests of Scotland—but I hear someone shout, from a sedentary position, “Got it in one.” So SNP Members want to create a border with our biggest trading partner, and to create a currency border with what they say will become their biggest trading partner, and Scotland will be sitting with a separate currency, a different currency, outwith both. What they are doing—and this is key to the whole argument—is cherry-picking EU rules, which sounds more like Farage “cakeism” than a credible proposition for any country. They want to take all the good things but none of the bad, and they have no way of squaring that circle.
Ian Murray
I said I would give way to my neighbouring colleague, the hon. and learned Member for Edinburgh South West (Joanna Cherry), but she is no longer here—
Ian Murray
She has given up; she has no answers to these questions either.
It is little wonder that the Institute for Fiscal Studies—much quoted by the First Minister in the last few weeks, and rightly, because of the mess this Government have made of the UK economy—has also slammed the SNP’s position. The IFS said:
“It is highly likely an independent Scotland would need to make bigger cuts to public spending or bigger increases to tax in the first decade following independence ”.
The IFS was right about the mini-Budget—indeed, everyone quotes it, including the First Minister—and it is right about this proposition as well. If SNP Members will not listen to the Institute for Fiscal Studies, why will they not listen to their own people on their own side? Robin McAlpine of the Common Weal foundation has been quoted already today, and he is somebody the SNP used to quote vociferously in here. He campaigned for independence alongside the First Minister—and alongside many Members who are now sitting here—in 2014.