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Volume 580: debated on Wednesday 7 May 2014

The Secretary of State was asked—

Scottish Independence (Border Constituencies)

1. What assessment he has made of the potential effects of Scottish independence on border parliamentary constituencies. (903823)

As a United Kingdom, we all have better job opportunities, employment and mobility. Every day, 30,000 people travel between Scotland and England for work. If Scotland were to leave the United Kingdom, our border constituencies would be the first to feel the effects of the creation of an international border.

Does the Secretary of State agree that one of the challenges of separation would be that our focus would be lost and our energy dissipated by looking at the details of administration and borders, rather than all the opportunities in the world, from Brazil to Indonesia?

That is one of the many downsides a vote for independence would bring. It would be an unnecessary distraction that would indeed remove our focus from the opportunities that being part of the United Kingdom give us to develop Scottish business by looking overseas.

On the question of separation, surely it is understood that divorce can be messy and that in this case it certainly would be messy? What I have been told by businessmen in my area is that they will move out of Scotland if separation takes place.

I think we all know that what matters to business is the bottom line: the profit and loss account and the balance sheet. If businesses felt that independence was going to be good for them, they would be lining up to support it. Since the turn of the new year, we have heard a steady chorus from the business community, who have all been coming out to underline the risks and uncertainty that would come from independence. [Interruption.] These are voices that the hon. Members on the nationalist Benches may wish to drown out with their incessant chatter, but they will not do it.

Anybody who pauses at the top of the hill on the Carter Bar on the A68 is able to reflect on one of the most beautiful views of Scotland and on one of the most beautiful views of England, and reflect on the fact that these two countries have so much in common and so much shared family experience. Does my right hon. Friend share my hope that that will always be the case, rather than it marking the border point between two separate states?

I very much agree with my right hon. Friend. I always think of the United Kingdom as being a family of nations. Of course, like all families, we do have those moments where we have disagreements, and we do occasionally want to do things in a slightly different way, but as a family the ties that bind us are so much greater than the differences that divide us. That is why I believe that Scotland, come 18 September, will choose to remain part of that family of UK nations.

But the people of the borders and the rest of Scotland are being subjected to the self-styled “project fear” campaign, which its own supporters describe as negative, nasty, and threatening, and who also say that the Prime Minister is toxic in Scotland. Why are even the Secretary of State’s own colleagues saying this?

I have to say that it is a bit rich to hear the right hon. Gentleman talking about “project fear” when the First Minister went to Carlisle on St George’s day to deliver a lecture that I can only describe as project ridiculous. The fact of the matter—there is no escaping this for the nationalists—is that for people living in the constituencies on either side of the border, there are real benefits to being part of the United Kingdom. The nationalists want us to walk away from those benefits.

Leading members of the right hon. Gentleman’s own campaign have told people in the borders and the rest of Scotland that they will have to show a passport at the border; drive on the right-hand side of the road; worry about their pensions, when in this place people are being told that they are safe; and that they will not be able to use their own currency, when the media in London are being briefed that that will be safe. Why do his colleagues think that the people of the borders and the rest of Scotland will fall for this demeaning, insulting nonsense?

The question of the borders highlights perfectly how the Scottish nationalists want to have their cake and eat it. On the one hand, they tell us that we could have a common travel area, which works very well with the Republic of Ireland at present. At the same time, they tell us that we will have a widely divergent immigration policy, which the Republic of Ireland does not have. They can have one thing or the other: they cannot have both. That is why their prospectus is flawed.

In places such as Carlisle, many businesses have branches and offices on both sides of the border. Does the Secretary of State agree that if Scotland votes yes there is a real danger that there will be such an additional burden on those businesses that it will have an effect on jobs and economic prosperity on both sides of the border?

Inevitably, an independent Scotland would have a different taxation system, different national insurance provisions and different economic regulations, and that would impose an extra cost on business. The financial services sector, which supports 200,000 jobs in Scotland, has already issued serious warnings about what would happen to its business and how it would organise itself if Scotland became independent.

Housing Benefit

2. What discussions he has had with his ministerial colleagues on the effects of housing benefit changes in Scotland. (903824)

9. What discussions he has had with his ministerial colleagues on the effects of housing benefit changes in Scotland. (903831)

I have had regular discussions with ministerial colleagues about the effect of housing benefit changes in Scotland, and in particular about the application of discretionary housing payments to those affected by the removal of the spare-room subsidy. Those discussions led to the announcement on Friday 2 May that the setting of the limit for such payments could become the responsibility of the Scottish Government.

In February the Scottish Parliament voted in favour of full mitigation of the bedroom tax, but much of that money has not yet reached tenants. Given that there has been a discussion about the discretionary cap, does the Minister agree that the Scottish Government could have acted earlier, and, given that an announcement has now been made, will he do everything in his power to ensure that there is co-operation between Westminster and the Scottish Government so that the money reaches the people who need it?

I entirely agree with the hon. Lady. The Scottish Government already had powers that they could have used to take other steps for the purpose of the mitigation that they said was necessary, but they chose not to do so. The Scottish Parliament forced additional funds to be provided, and we will not stand in the way of the spending of those funds. I shall be meeting the Deputy First Minister of Scotland tomorrow morning, and I shall convey the hon. Lady’s comments to her.

Does the Minister agree with the far-reaching proposals of Scottish Labour’s devolution commission, including the proposal for the devolution of housing benefit? Does he agree that that would be a progressive, logical and practical step that would enhance devolution and the ability to meet Scottish housing needs?

I think that the proposal to devolve the setting of the cap for discretionary housing payments is a positive step, and I welcome the fact that the Labour party has presented proposals. At the end of May, the Scottish Conservative party will present its proposals following the outcome of the work of our own devolution commission.

An important part of dealing with housing benefit is ensuring that there is enough affordable housing. Does my right hon. Friend agree that the lack of suitable affordable housing in Scotland is the result and the responsibility of successive Scottish Governments?

I do agree with my hon. Friend. She will be aware that since 2010 the Scottish Government have had an additional £1.3 billion in funding that they could have used to provide affordable housing in Scotland. We used to hear constantly in the Chamber about the number of shovel-ready projects in Scotland, but we have not seen much shovelling.

The bedroom tax has been a costly fiasco in Scotland. It should never have happened, but I am glad that the Government have at long last agreed to allow the Scottish Government to mitigate its worst impacts. However, the Secretary of State recently boasted that we have a “fantastic” benefits system. Does the Minister think that he was talking about the bedroom tax, or is he also living in a parallel universe?

I certainly do not live in the universe that the SNP inhabits. It has not given us a single detail of how a welfare system would operate in Scotland. Indeed, in the 670 pages of the Scottish Government’s White Paper, there is just one reference to the establishment of such a system. The SNP set up a commission, but we have heard nothing from it, so I am afraid that I shall take no lessons from the hon. Lady.

Does the Minister accept that, now that the Scottish Government have been given the powers for which they asked in relation to discretionary housing payments, there is no reason why they should not first cancel all the bedroom tax for this year, and then write off all the debts that were incurred last year? In order to ensure that no moral hazard is involved, should they not do as the Scottish Affairs Committee has asked, and refund the money that Scottish people paid last year in bedroom tax?

I understand that a statement is to be made about the matter in the Scottish Parliament today, and I am sure that the hon. Gentleman’s colleagues will raise those very points with the Scottish Government.

Energy Bills

3. What assessment he has made of the effects of recent trends in household energy bills on standards of living in Scotland; and if he will make a statement. (903825)

Rising energy bills are a serious concern for consumers in Scotland and across the rest of the UK. We are increasing competition, sustaining vital financial support for vulnerable consumers, and working to ensure suppliers put customers on the cheapest tariff.

I thank the Minister for his answer. Does he agree that with the closing of coal-fired power stations and a doctrine of anti-nuclear power stations north of the border, under independence, with the reliance on renewables, energy costs must increase?

I certainly agree with the hon. Gentleman about the serious loss to the Scottish economy of closing the door on the nuclear industry, which has brought so much benefit to Scotland, and I pay tribute to him for being such a champion of that cause. He is right that energy costs will go up in an independent Scotland, as set out in the Government’s analysis on energy.

Both in Northumberland and in Scotland people are setting up oil-buying clubs to deal with the problem of off-grid energy. Does the Minister agree that the best way to combat energy problems and price rises in off-grid circumstances is to copy this good measure and spread it out across the country?

I absolutely agree with my hon. Friend. Oil clubs are developing in Scotland and the Government are keen to promote and support them. I commend him for highlighting this issue.

11. If the Minister is genuinely concerned about rising costs of energy in Scotland, why is it that Ofgem has yet again delayed the implementation of Project TransmiT, which would finally begin to tackle the discriminatory and expensive transmission charges? Will he press his colleagues to implement it immediately? (903833)

Project TransmiT is one matter on which I am probably in agreement with the hon. Gentleman. The important thing for Scotland is to get the right answer. Yes, it is disappointing that it has taken some time, but the Scotland Office is determined to work towards getting the right answer, and I urge him and his colleagues to continue to press Ofgem on this as well.

Will the Secretary of State explain why, when the Prime Minister said that consumers in Scotland would be £50 better off after cuts to the green levies, hundreds of thousands of Scottish consumers have seen their bills decrease by only £12?

There is no reason why consumers in Scotland should not be seeing this £50 benefit, and the Government will continue to do all we can to make sure that they do.

That is the definition of an inadequate answer, and perhaps goes some way towards explaining why Labour’s policy has gained widespread support across Scotland. In opposing Labour’s energy freeze, the Tory-led Government have had the full support of a surprise friend in the form of the Scottish National party, and it does not stop there: standing up for energy companies, failing to take action on the living wage, proposing tax cuts for those at the top. Does the Minister not agree that Scotland deserves better than this?

What I believe is that we do not take any lectures from Labour on energy issues. Gas bills more than doubled under Labour, electricity bills went up by 50%, the leader of the Labour party was responsible for £179 of additional levies on gas bills and fuel duty went up 12 times. I am proud of this Government’s record on energy and Scotland is doing well under it.

Bank of England

4. What discussions he has had with Ministers in the Scottish Government on the potential role of the Bank of England in the event of Scotland becoming an independent country. (903826)

I have not had any discussions with Ministers in the Scottish Government on the potential role of the Bank of England. If people in Scotland vote to leave the UK, they are voting to leave the UK institutions that support it, such as the Bank of England, which will continue to operate on behalf of the continuing UK.

I thank the Secretary of State for that answer. The majority of my constituents hope very much that Scotland will stay in the Union, but for the avoidance of doubt, will he confirm that in the event of a yes vote, there are no circumstances under which my constituents will underwrite the borrowing and spending plans of an independent Scotland, whichever currency it uses?

I thank my hon. Friend for his support for the continuation of Scotland within the United Kingdom. The position on any currency union or central banking arrangements if Scotland were to vote for independence has been made very clear recently by the Chancellor and the Chief Secretary and also by the shadow Chancellor: there will be no such arrangements.

In the event of an independent Scotland, will the Bank of England’s Monetary Policy Committee take its instructions from the UK Treasury or the Scottish Government?

The Bank of England will continue to take its instructions from the UK Treasury. It is a UK institution and that would not change.

That would be a matter to be determined in the event of Scotland voting to leave the United Kingdom. I very much hope that will not come to pass.

The Bank of England has already sensibly engaged in technical discussions with the Scottish Government. As each day passes and a yes vote on independence becomes more likely, is it not about time this Government abandoned their bellicose scaremongering and also engaged in sensible discussions with the Scottish Government on how these institutions can continue to work, in the best interests of both countries?

Both Governments agreed in the Edinburgh agreement that there would be no question of pre-negotiation. That was a sensible situation and I am astonished that the hon. Gentleman now seeks to walk away from it.

Does the Secretary of State agree that the Bank of England is not an asset to be shared but an institution that belongs to the United Kingdom which Scotland chooses to leave? Does he also agree that it is an extraordinary kind of independence where one wants to hand over control of one’s fiscal and monetary policy to a foreign bank?

My right hon. Friend puts it perfectly. The difference between an asset and an institution is not a difficult one to understand, but the Scottish nationalists do seem to struggle with it.

Currency Union

5. What discussions he has had with Ministers in the Scottish Government on a potential currency union with an independent Scotland. (903827)

I have not had any discussions with the Scottish Government about the prospect of a currency union. The Chancellor, Chief Secretary and shadow Chancellor have all said there will not be a currency union. The only way to keep the UK pound is to stay in the UK.

I thank the Secretary of State for that reply. Having read the fiscal commission’s report, it is clear that it took the advice that I have been giving Scottish National party colleagues here that they would be destroyed if they went into the eurozone, where the stability and growth pact would destroy their economy. If they have no currency union with the UK, exactly what prospects are there for the 8% deficit that Scotland is running at the moment?

The position is very clearly laid out: the difficulties that would be created by the currency union would be difficulties for the whole of the United Kingdom, but particularly for the people of Scotland. If we are to be independent, we need to be independent with all that that means. It is not possible to be half independent.

Is my right hon. Friend aware that Moody’s has stated that if Scotland were to gain its independence it would downgrade Scotland’s credit rating to B? What effect would that have on Scotland’s interest rates?

The comments and report by Moody’s last week have to be taken very seriously and read with some care. Moody’s makes it clear that on its estimation an independent Scotland would be rated two levels below the rating the UK currently enjoys. For the people of Scotland that would mean more expensive store cards, more expensive overdrafts and more expensive mortgages. We are cheaper as part of the United Kingdom.

12. Does the Secretary of State agree that all the currency options that have been put forward for an independent Scotland by the nationalists would actually involve constraints on decision making on fiscal policy? (903834)

Every option that is put forward by the Scottish nationalists is inferior to what we currently have as part of the United Kingdom. That is the unpalatable truth that they do not want to hear, but from which there is no escaping. The people of Scotland know that truth.

The success of the Government’s economic policy is proven by the fact that the number of people claiming unemployment benefit in my constituency reduced by 419 in the past year. Does my right hon. Friend agree that the best way to keep this sustained economic growth is to stay within the UK and with the common currency that we have at the moment?

Indeed. My hon. Friend gives me an opportunity to remind the House that the United Kingdom has the fastest growing economy in the G7, and that Scotland is the second wealthiest part of that economy.

10. The people of Scotland want facts, so will the Secretary of State tell us on what date, if Scotland chooses to separate, will it either have to begin printing its own money or, failing that, start using the pound as a foreign currency? (903832)

The hon. Gentleman invites me to look into the future and make a prediction, which is never an easy prospect—it is an unwise prospect for anyone in politics. The truth of the matter is that all these things are uncertain, and they bring enormous risks in areas where we do very well as a result of being part of the United Kingdom.

To echo the hon. Member for Moray (Angus Robertson), what could be more demeaning and insulting than to lead the Scottish people to believe that there are no risks in independence, and that a currency union is a foregone conclusion?

The only foregone conclusion about a currency union is that it will not happen. It will not happen because that is the advice that has been given by the permanent secretary to the Chancellor of the Exchequer. That advice is not going to change, and the outcome of that advice is not going to change.

The Chancellor’s sermon on the pound was supposed to bring the Scottish people back into fearful line, but as the opinion polls have shown, the Scottish people will not be discouraged by this; instead, they are emboldened and angered. The Scottish people will no longer be told by Westminster. Will the Secretary of State tell us what has happened to the search for the Minister who told the truth? Have they made any progress, or do they perhaps need our help?

Mr Speaker, I am delighted that you were able to fit the hon. Gentleman in; otherwise, we would all have missed his monthly comedy turn. It is quite remarkable that he chooses to ignore the advice given by the permanent secretary to the Chancellor of the Exchequer, setting out why a currency union would be bad for the rest of the United Kingdom and bad for an independent Scotland. Why does the hon. Gentleman want something that would be bad for Scotland?

Last week, 18% of members of Scottish Chambers of Commerce confirmed that they are making plans to move out of Scotland in the event of a yes vote, and 63% believe that an independent currency or the euro would be bad for business. Today we have heard from the British Chambers of Commerce that 85% of their businesses are against independence, and nearly half identified currency concerns as the most important issue for them. What reassurances can the Secretary of State give the House about currency for businesses on both sides of the border?

The only reassurance I can give is that if people in Scotland vote no, they will continue to enjoy the use of the pound and they will continue to have the Bank of England as a lender of last resort. Beyond that, everything is uncertain.

Cross-border Trade and Employment

6. What assessment he has made of the potential effects of Scottish independence on cross-border trade and employment. (903828)

Scotland’s place in the United Kingdom means we have a truly single domestic market, with no barriers to trade and employment across the United Kingdom. Independence would fundamentally change that. The resulting “border effect” would disrupt trade and free movement of workers, reducing real incomes by, it is estimated, around £2,000 per Scottish household per year.

My constituency is home to a large number of national logistics and distribution companies. Is my right hon. Friend aware of the growing concern in that sector that separation could make some cross-border routes less attractive, as they would become international rather than domestic ones?

Indeed, and I hear the same message from a range of business interests. The financial services industry, for example, says that independence would bring extra costs with different taxation and different regulation. The supermarkets have made it very clear that extra costs would fall to Scottish consumers if Scotland were independent.

According to the House of Commons Library, 200,000 UK jobs depend on trade with the Republic of Ireland—double that of Canada and Norway. Ireland used to be part of the UK, but trade between the two has never been higher. The UK is Ireland’s No. 1 trading partner, and among the recently independent nations of the European Union, foreign direct investment rose by 215% in the first four years of independence. For those realities, what scare stories will the Secretary of State use?

It is not a scare story to point out that the White Paper presents a prospectus and a future where there would be barriers and where the mere existence of a border would be an extra cost. If the hon. Gentleman wants to know the truth of the matter, he need look no further than at the situation that exists between Canada and the United States. The hon. Gentleman might not like it, but that is the truth.

What discussions has the Secretary of State had with the Scottish Government regarding the possibility of border controls between an independent Scotland and the rest of the UK, if an independent Scotland had a separate immigration policy?

It is an inescapable fact that if, as the nationalists tell us in the White Paper, Scotland were to have a widely divergent immigration policy, which would be necessary for such of their economic plans as they have been prepared to tell us about, the operation of a common travel area of the sort that currently works well with the Republic of Ireland simply would not operate. You cannot have your cake and eat it on this occasion.

Given the First Minister’s threat to blockade Scottish fishing grounds if he does not get his own way on EU membership and given that licences are held across the United Kingdom, what analysis has the Secretary of State done on the impact on employment in the Scottish fishing industry?

The impact on employment would be serious in some of the most economically fragile communities in Scotland in our coastal and island communities. I have to say that the First Minister’s comment about blockading Scottish waters went beyond the ridiculous, but it makes me wonder whether that is why he seems so desperate to cosy up to Vladimir Putin.