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Independence (Currency)

Volume 567: debated on Wednesday 11 September 2013

3. What discussions he has had with his ministerial colleagues and Ministers of the Scottish Government on the continued use of sterling in a separate Scotland. (900185)

Earlier this year, as part of the Scotland analysis programme, we published a paper on currency issues that makes the strong case for Scotland staying in the United Kingdom. There have been no discussions with the Scottish Government about the use of sterling by an independent Scotland.

Does the Secretary of State recognise the democratic deficit that is on offer whereby under nationalist plans Scotland would keep the pound but the rest of the UK would still set our interest rates, our borrowing limits and our spending limits, while at the same time we would lose our influence and our representation? Does he agree that that is not more or less independence, but worse independence?

The hon. Gentleman puts the points very neatly. People do not need to rely on his words or mine; they can listen to experts such as the Cuthberts, who said this week that they would like an independent Scotland to have its own currency and that to stay part of a currency union is no independence. Similarly, Brian Quinn, the highly respected former deputy governor of the Bank of England, observed in his recent report that the idea of a currency union is to replicate all the problems of the eurozone. The nationalists fail to answer all the points from both sides of the argument.

Does my right hon. Friend share my concern that should a separate Scotland become a member state of the EU, a condition of membership will be an obligation to join the euro, with the further risk that that would expose Scotland to being part of a future bail-out of eurozone members? [Interruption.]

Notwithstanding the heckling from the nationalist Benches, which hides the fact that they do not have answers to these very important questions, the point is that they used to be in favour of the euro but now they have back-tracked; they used to be in favour of a separate currency but now they have back-tracked; and they are currently saying that a currency union would be the best starting point. I think Scotland deserves to know what the end point would be.

On sterling, Alex Salmond says he is in and the chair of the yes campaign says he is out; it is a bit like the currency hokey cokey. The serious point is that this morning a report says that if the UK had a formal currency union with an independent Scotland, in the event of another financial crisis London would provide the lender-of-last-resort functions, whereas if Scotland was in the euro it would be Brussels, and if Scotland had its own currency it would probably be the International Monetary Fund in Washington. Is it not true that in the event of separation all roads lead to Scotland having less control over its own financial affairs?

I agree with the hon. Gentleman. The best arrangement for Scotland is to stay part of the United Kingdom, where we get all the benefits of the currency but also the hugely integrated single market, which is enormously to our benefit, and a platform in the world that is great for all our businesses and those they employ.

The Scottish Secretary prayed in aid one of the Treasury’s analysis documents on Scotland in relation to currency. However, given that his own Chancellor is unable to get his economic growth forecasts correct six months to a year out, how can he possibly expect us to believe an analysis that is supposed to forecast the Scottish growth rate for the next 30 years? It is not serious, is it? It is just more “Project Fear” scaremongering designed to talk Scotland down.

I have to admire the front that the hon. Gentleman puts up. He simply does not answer any of the big issues on this. To take an example of forecasting, in our documents we take very sensible, reasonable proposals and look at how they would apply over many years to come—unlike when the Scottish National party forecasts oil revenues, when it takes all the best-case scenarios and then makes up numbers indicating that about £1.5 trillion of resources are available to Scotland. It is more like a tenth of that, but we never hear that from him.