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I beg to move, That the Bill be now read a Second time.
May I say at the outset that I am grateful to the Minister and to the Secretary of State for Scotland for the opportunity to discuss my Bill with them before Second Reading? I am grateful, too, to the many constituents and other people mainly, and perhaps not surprisingly, from Scotland, who have been in touch with me since I intimated my intention to introduce the Bill. Indeed, many aspects of the measure are summed up in an e-mail that I received only this morning from Johann Murrison, in which he said:
"I am a Scot who has been living abroad for sometime and when returning home here there are times when I travel through England. I find it not only irritating that Scottish bank notes are not accepted and refused by retailers but find this overall insulting more so when some appear willing to accept Euros.
The reason being, that when refused in a retail shop which has other onlookers one feels they are being accused of trying to pass counterfeit or illegal money, which is very unsettling and embarrassing.
I fully support your private members bill and feel that resolving this issue is long overdue and the law truly needs to take into account not only this issue but also recognize the history of Scottish Notes".
Inevitably, in pursuing a measure such as this, I learned a number of things about banknotes. First, there are relatively simply marker-type pens available that can easily determine if a banknote is a forgery. Secondly, in the presence of a television camera, Scottish banknotes are universally accepted. Indeed, in retrospect, a Bill requiring TV cameras to turn up every time a Scottish banknote was handed over would achieve the desired effect.
My constituents were instrumental in the Bill's inception. After my position in the ballot for private Members' Bills was announced, I sought their views on what piece of legislation I might introduce. The acceptance or, I should say, non-acceptance of Scottish banknotes was certainly to the fore. It was an issue with which I was personally familiar and a problem, at least anecdotally, that most Scots have experienced. There is also a phenomenon to which my constituency of Dumfriesshire, Clydesdale and Tweeddale bears witnesses. My constituency has as its backbone the M74 corridor linking central Scotland with the north of England. Increasingly, people who are heading back to England, having spent time in Scotland and found themselves in possession of Scottish banknotes, are going to local banks and businesses and asking to have their Scottish notes changed to Bank of England notes, for fear that they will run into difficulty with the use of the Scottish notes back in England. My constituents deal politely with such requests when they can be accommodated, but they are irked by the implicit suggestion that there is something wrong with the Scots notes.
I am listening to my hon. Friend's argument with a great deal of sympathy. He will be aware that there has been much discussion in recent days about quantitative easing. Given the particular position of the Scottish banks, in that they are primarily agents of the United Kingdom Government, will he comment on the likely implications of his measure for quantitative easing? Would it ease it or make it more difficult?
"Make provision about the acceptability of Scottish banknotes throughout the United Kingdom; and for connected purposes."
In my constituency I have noticed complaints from retailers about the number of forged £1 coins that are in circulation. There are millions of them. Whereas in Scotland retailers are used to Scottish banknotes and are therefore able to detect whether they are forged, the appearance of those notes will be rarer south of the border, and will lessen the further south one goes, and the more problematic it will be to detect forgeries. Does my hon. Friend believe that the Bill that he is trying to introduce with the best of intentions might lead to many more forged Scottish notes being circulated round the UK?
I note my hon. Friend's concern. In the course of my speech I will deal in detail with the issues that he raises. Retailers are very much aware of the problem of forged paper notes and regularly use pen devices, for example, which when marked on a note give an indication whether that note is a forgery or not. As I understand it, Bank of England notes, Bank of Scotland notes and other Scots banknotes give the same reaction, so that method operates to identify relatively simply whether a note is a forgery.
I thank the hon. Gentleman for giving way and, when the time comes, I will congratulate him on getting his Bill before us today. Although the so-called magic pens are useful in some circumstances, they are not useful in all, so they do not give the level of assurance about forgery that some people claim for them.
I note what the Minister says, but I am sure she will accept that the point applies equally to Bank of England notes, which are received in such outlets.
Can the hon. Gentleman help me with a bit of history? I am very proud of the different histories of the constituent nations of our country and the fact that we have cultural differences and differences of jurisdiction. Is there any country in the world, other than Scotland, where promissory notes are issued by private banks and are in general circulation? I am not aware of one. Does the hon. Gentleman know the answer to that?
I thank the hon. Gentleman for his intervention. I will give a short potted history of the Scottish banknote in due course. In the United Kingdom, obviously, notes are issued from Northern Ireland.
My hon. Friend's Bill discusses the acceptability of Scottish banknotes throughout the United Kingdom. Does he think that that acceptability would be enhanced if the £150 billion of banknotes being issued by the Government as part of quantitative easing were issued in Scottish banknote form?
That is an interesting proposition, but I am conscious of your earlier comments, Mr. Deputy Speaker.
Before I took those interventions, I was discussing the issue of changing banknotes. At least people who come to outlets in my constituency to change Scottish notes for the Bank of England equivalents do not have the same experience as Mr. Derek MacLachlan of Inverness, whose attempts to make such an exchange at Newcastle airport are highlighted in the Scottish edition of The Sun of
"It's bad enough that some shops in England don't take the notes, but now it's being treated like a foreign currency. It's...exactly the same as Bank of England money—it just looks different."
I could not agree more with Mr. MacLachlan's analysis, which goes right to the heart of the issue. The financial value of Scottish notes is not different. Indeed, Scottish banknotes are a key part of what passes for the Government's vision for the banking sector; I acknowledge that, through the Banking Act 2009, the Government have removed any remaining doubts about their future. Whatever the legal framework of our currency or the meaning of the expression "legal tender", there is absolutely no reason why Scots notes should be questioned unless there are substantive grounds for believing that they are forgeries.
I am coming to an interesting resumé of the meaning of "legal tender" and why that does not strike at the heart of the issue. Basically, what concerns my constituents and other people in Scotland is not the legal definition, but the need for their money to be accepted, not questioned, when they are in a retail outlet. As I shall say in due course, the status of legal tender would not necessarily achieve that objective.
The Bill is not designed to force unwilling retailers to take Scottish banknotes or to impose draconian sanctions on anyone who does not. I am very aware of the regulation that business faces already, and I want less regulation, not more. Unnecessary additional burdens are to be avoided. The Bill simply seeks to put Scottish notes on an equal footing with any other banknote that is accepted.
For the benefit of hon. Members, I shall now provide a little background detail on Scottish banknotes. The first Scottish bank to issue notes was the Bank of Scotland, which has done so almost since its foundation in 1695. At that time, coinage from the Scots mint was scarce, and of uncertain value in any case. Most Scots relied on a mixture of English, French, Dutch and Flemish coins. As we would expect, the lack of adequate currency severely restricted the growth of trade.
The new Scottish banknotes were grasped first by the merchants and then by the population at large, as a solution to the problem. The notes' success was such that, in the words of the Committee of Scottish Clearing Bankers, Scotland became one of the first countries to use paper currency from choice. The National Museum of Scotland says that one of the remarkable things about the country is that, from a very early stage, banknotes had a high degree of acceptability. It says that the Scots became known for preferring their paper money to gold, because it was easier to carry around. It was very different here in England, where paper money took longer to gain widespread acceptance.
Scotland's innovative approach to banknotes went further than just being an early adopter. Vast amounts of ingenuity were connected with making them more difficult to forge. After all, the only punishment that Scots law could mete out to forgers was death and tongue amputation, probably not necessarily in that order. The Royal Bank of Scotland pioneered the use of colour in banknotes, with a blue rectangle displaying the words "One guinea" and the King's head shown in red. Yet colour did not come into widespread use until nearly a century later. The Royal Bank was also the first to use notes in three different colours.
The Scottish economy once had to handle a vast array of different designs of banknote. I know that the Minister feels that the current number, 22, is a vast array, but previously there were even more. Nowadays, many of the former note-issuing banks have been absorbed through mergers and acquisitions, and we are left with just the Bank of Scotland, Royal Bank of Scotland and Clydesdale bank. This year's Banking Act ensures that no further banks can join that list. Between them, the three banks issue a core of 16 note designs in denominations of £5, £10, £20, £50 and £100, with the Royal Bank of Scotland still printing a small number of £1 notes. As with the Bank of England, there are also sometimes additional designs in circulation to allow a transition to take place between an old and a new series of notes.
In addition, some notes have images or words added to them to commemorate an event or person of particular importance to Scotland at that time. Although of a manageable number, the core designs give a true overview of the range of pre-eminent Scottish buildings, landscapes and historical figures. The commemorative editions, meanwhile, are a way of uniting the public behind celebrations of what, as a nation, Scots cherish.
What an interesting proposition. As far as I am aware—I stand to be corrected—there is no limit on what wording, presumably other than obscenities, can appear on banknotes.
This year, for example, Clydesdale bank has brought out a series of notes that reflect the 2009 year of homecoming, which the Governments in Scotland and here in London support, and the fact that it is 250 years since the birth of Robert Burns. We have seen commemorative notes to celebrate such things as the golden jubilee, the 500th anniversary of the Royal College of Surgeons of Edinburgh, and the contribution of the Royal and Ancient golf club at St. Andrews and Jack Nicklaus to Scotland's all-important golfing heritage. The existence of these various core and commemorative designs of notes within the overarching sterling system is a vivid example of how Scottish culture can flourish within the United Kingdom.
On the question of Scottish culture and Scotsmen, does my hon. Friend agree that one innovation that might bring people closer to Government and improve the transparency of Government would be to introduce pictures of serving Prime Ministers on to banknotes, so that whether people have a lot of banknotes or a shortage of banknotes, they focus very firmly on who is in government?
I am not aware of any requirement that an individual appearing on a banknote should be dead or out of office. Indeed, as far as I am aware, Mr. Jack Nicklaus, who appeared on a commemorative note, is very much still alive—although whether he is pleased that his photograph with Sir Fred Goodwin is repeatedly published will be another matter.
All Members will have seen Scottish banknotes, and some will even have used them daily, but few will have considered all the issues that are being aired today. If they have not had cause to ponder them before, they might believe that the deeper significance of Scottish banknotes does not resonate with the public. However, I would tell them that the existence of Scottish banknotes is one of those things that we see before us every day but take for granted. Only when Governments have conspired to do away with them, either through carelessness or small-mindedness, has the attention of the public and the media flashed on to what they stand for. Only then do we realise the historical, cultural and promotional value that the notes have in addition to their monetary value.
For example, this Government hatched proposals that might have done away with Scottish banknotes by making their issue uneconomical for the banks concerned. Those proposals first appeared in a Treasury consultation of July 2005, of which nothing came, and were revived in another consultation in January 2008 as part of the measures proposed for inclusion in what was then the Banking Bill. The Chancellor saw what a public outcry the proposals had provoked, just as Robert Peel's Government had incurred the wrath of Scottish public opinion and of luminaries such as Sir Walter Scott when they threatened Scottish notes more than a century earlier. Like the Peel Administration, this Government were forced into an entirely unexpected U-turn and dropped the threat to Scottish banknotes.
Now the Government have accepted that Scottish notes are here to stay, and indeed enshrined them in the Banking Act 2009. That is the first time that there has been new legislation governing their issue since 1845. I therefore cannot see why the Treasury will not take the final step and ensure that the notes work effectively in all day-to-day transactions, in every part of the United Kingdom.
I can advise my hon. Friend that, as far as I am aware, £3 billion of Scottish banknotes are currently in circulation. The Exchequer Secretary might have more precise figures, particularly in the light of the leap into quantitative easing.
I will not go down that route given your earlier ruling, Mr. Deputy Speaker, but I can confirm that there are currently £3 billion of Scottish notes in circulation. The answer to Mr. Chope is that there is no limit. It is for the issuing banks to answer the demand for money through the provision of banknotes.
When I last spoke to the Exchequer Secretary, she asked me whether there had been any quantitative assessment of exactly how widespread the refusal of Scottish banknotes is. I suppose that such an assessment would take the form of a field test of Scottish notes being offered to a large number of traders of different types throughout England, Wales and Northern Ireland—although, as I said earlier, there must not be a television camera in tow if that is to be objective—or a poll of the public's experience of using Scottish notes.
I have no difficulty in relying on my constituents and the Scottish public at large. I refer, of course, to the personal experience of almost everyone in Scotland to whom I have spoken about the Bill. They have all been in a shop or taxi somewhere in England, Wales or Northern Ireland and presented Scottish banknotes, which have been treated suspiciously or refused. The House will appreciate that when a person offers a banknote and it is treated with suspicion, it causes embarrassment, as the person who e-mailed me this morning reminded us, particularly if it is held aloft and the shop manager is summoned.
The House will further understand that when a note is actually refused, there can be considerable inconvenience. Examples are legion, and the consequences can be worse than leaving a shop empty-handed. I have received several letters and e-mails from members of the public who were left unable to pay for takeaway food or for dining in restaurants, or stuck in rural petrol stations, with no means to pay for the fuel with which they had already filled their cars.
Does my hon. Friend agree that the Bill will be especially welcome in the north of England, where I am a Member of Parliament, and where businesses and tradesmen in, for example, Penrith and Carlisle, regularly do business across the border? The measure will help efficiency of trade, which is so vital at this time.
My hon. Friend is right that no cause should be given to any tradesmen or business to feel that they cannot accept a Scots note. The Bill will provide the reassurance that there is no reason for not accepting such a note. I give way to Andrew Mackinlay.
I thank the hon. Gentleman for his physical gesture of support.
Hon. Members tell me that they have rarely encountered a problem in central London, but that is because Scots notes are used so widely here and it is therefore only to be expected that retailers tend to be more familiar with them. However, in my recent visits to central London retailers and my discussions with taxi drivers, I have been told that, although they accept the notes from customers, other customers are not keen to receive them in their change. That is a variation on my constituency experience of people wanting to change notes before returning to England.
Perhaps one reason for Londoners' greater familiarity with the notes is that certain London-based Scots appear to be much freer spending than the national stereotype suggests. One such individual has spent £1.5 trillion during the recession alone. However, enough of the Chancellor's contribution.
Incidences of Scots notes being refused are a staple of Scottish newspapers. The coverage that the issue gets illustrates the prevalence of the problem and the extent to which the papers' readerships identify with it. I will give hon. Members one of the more colourful examples. An article recounts the plight of a gentleman who visited no fewer than three McDonald's outlets in Wales. He was denied service in every one of those restaurants, merely for seeking to pay with a Scottish note. As the headline writer so eloquently put it, "Burger Off with Your Scottish Banknotes".
It is indeed a Scottish name, and that may have led the gentleman in question to believe that he would be on home turf. Many reasons could be given for not trying to purchase a Big Mac or a double whammy Whopper, but the refusal of currency should not be one.
There have been several reports of other large chains, such as WH Smith, introducing arbitrary restrictions on Scottish notes in certain branches. It is therefore mistaken to believe that the problem is confined to small enterprises, which struggle for the time to put in place proper cash handling procedures or to train their staff. In many cases, the shop management has erected signs stating that Scottish notes are not welcome. It is not always a case of junior members of staff exercising caution when suddenly presented with a note that they do not recognise.
There is something deeper to the problem than the immediate embarrassment and inconvenience caused. As the Leader of the Opposition has said, Scots are proud of their banknotes. It is hard to think of a clearer demonstration of disrespect than treating such notes as if they had come out of a Monopoly box. Despite what the Scottish National party—[Hon. Members: "Where are they?"] Indeed. Despite what the SNP might try to convince this House of, there are few genuine grievances in Scotland about the Union with England. However, the refusal of Scottish banknotes is one such niggle. In ending that practice, my Bill would contribute, albeit modestly, to strengthening the Union. I am sure that all hon. Members present in the Chamber would regard that as a most welcome by-product of such a Bill.
I am afraid that I am not in a position to give my hon. Friend that information, although the Minister may have it to hand. Given the entrepreneurial spirit of the Scots, a Bank of England note is never refused unless there is a genuine reason to suspect forgery. We are always willing to receive the currency of those who wish to trade with us.
Having set out the problem, let me turn in detail to my solution. Legislation could be a catalyst for changes in behaviour. At the heart of the Bill is the concept that Scottish and Bank of England notes are of equal standing and that there is therefore no risk to a business or individual in accepting such a note if they are happy to accept others. If that view became commonplace across the United Kingdom, the issue would be resolved. The Bill would place a UK-wide requirement on providers of goods and services to accept Scottish banknotes if other notes are accepted. I was attracted to that format not only because it would avoid the technical difficulties of giving Scottish banknotes the status of legal tender, but because it would be likely to have much greater practical effect. What matters is being able to use the notes without challenge.
It is surprising to many, as it was to me, to learn that legal tender has no real relevance in day-to-day transactions in shops or with other providers of goods and services. I can advise my hon. Friend Mr. Chope that the Royal Mint helpfully explains "legal tender" as follows:
"Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender. It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free...to accept any form of payment whether legal tender or otherwise according to their wishes."
The position is made even clearer when one realises that paying with more than the "right money", as it might be characterised, is contrary to the rules of legal tender, even if one does not expect any change.
Furthermore, no banknotes whatever are legal tender in Scotland, yet that fact has no adverse effect on the acceptance of Scottish notes, as I have explained, or Bank of England notes. Bank of England notes are legal tender only in England and Wales, yet they are accepted in Scotland with alacrity, because retailers and other businesses in Scotland know what they are and what they are worth. I want to achieve the same for Scottish notes in England. For the sake of completeness, I should also clarify that Scottish banknotes are not legal tender anywhere outside Scotland either. Indeed, although they are allowed to circulate freely in other parts of the United Kingdom, they cannot be disbursed by any bank outside Scotland. The Clydesdale bank, the Bank of Scotland and the Royal Bank of Scotland cannot issue their own notes from their branches in London or elsewhere in England and Wales.
Even if we accept that changing the definition of legal tender would have less practical effect than what I propose in my Bill, it is not the only argument against doing so. The definition that I have read out clearly implies that, for any symbolic effect that giving Scottish banknotes legal tender status would have, in terms of their acceptance, there would be far greater unintended consequences, which would strike at the processes for resolving disputes between debtors and creditors. I should say, however, that some people feel that this area of law would benefit from some reform, but that is a debate for another day. Before leaving this issue, I want to point out that the Law Society of Scotland argues that additional safeguards given to holders of Scottish banknotes in the Banking Act 2009 warrant the notes being granted the status of legal tender, but that is simply the society's view.
The hon. Gentleman has quite rightly taken the House through the narrow definition of legal tender, and he has come to the right conclusion about why that is not the answer to the problem that he seeks to solve. Does he also agree that many goods are paid for in non-legal tender—including debit cards, credit cards, PayPal and travellers cheques—as a matter of routine with no problems of acceptance? Clearly, the area of legal tender is not the place to look for a solution to the problem that he has outlined.
On this occasion, I am in complete agreement with the Minister. "Legal tender" is a phrase that is often bandied about in the press or in discussion, but its meaning is quite different from what people think it is. They think that, if a note or piece of currency is legal tender, there is an obligation to accept it, but that is simply not the case. Many businesses decline to take notes of a certain size or certain cards; they can also decline to take cheques.
The Bill will require all providers of goods and services in the United Kingdom that accept Bank of England notes to accept Scottish banknotes on an equal basis. I believe that that clear, simple requirement would do all that those wishing to make purchases with Scottish notes want it to do. However, it would not do any more than that. In framing the Bill, I have been careful not to make unreasonable demands on any vendor. The way in which the requirement is worded would not, for example, require sellers who currently accept only cheques and card payments to start handling cash, even when presented with a Scottish banknote. Similarly, I recognise that some sellers consider changing a £50 Bank of England note too much of an inconvenience, and they would not be required to accept large-denomination Scottish notes either.
As I have said, I am aware of the regulatory difficulties that small businesses, in particular, face. I appreciate that the current recession is putting extra pressure on those businesses. I have therefore been careful not to open the door to disproportionate sanctions such as court action. Instead, I have chosen to give the Office of Fair Trading the power to investigate complaints of non-compliance with the requirement to accept Scottish notes. The OFT may investigate complaints as it considers necessary, and notify a business of its obligations. If the OFT finds that a vendor has breached the requirement to accept Scottish banknotes more than twice in one year, it has the option to require the business to display notices about the availability of banknotes. These notice-giving provisions have precedent in section 38 of the Consumer Credit Act 2006 and section 33A of the Consumer Credit Act 1974.
These provisions reflect two things. The first is my belief that any regulation should be as minimal as possible. The second is my belief that the vast majority of those sellers who mistreat Scottish banknotes are doing so not through bloody-mindedness but simply through ignorance. Having legislation that makes it clear that Scottish banknotes are equally valid—and of equal value—and ought to be accepted will do much to ensure that sellers accept the notes. Threatening them with draconian penalties is unnecessary.
The House will also see that my Bill allows the suspicion that a note is a forgery to be used as a defence. However, that must be a reasonable suspicion. With the right awareness training, I do not believe that it is unfair to expect sellers outside Scotland to make their staff familiar with the existence of Scottish banknotes.
Will the hon. Gentleman explain—this seems a reasonable juncture to explore it further—what he means by "reasonable suspicion" in this case?
I would say that a reasonable suspicion would be that the note failed the pen test I mentioned earlier or that it did not appear to be substantially as depicted on the excellent poster and handout of the Committee of Scottish Clearing Bankers, which shows the design and security features of all current Scottish banknotes.
Is the hon. Gentleman suggesting that in my constituency in deepest Somerset, where I have to say we see very few Scottish banknotes, every retail outlet would have to put up a poster showing the design of the 22 different Scottish banknotes for the benefit of the odd passing Scottish tourist?
Indeed not, but I am sure that Scottish tourists would be encouraged to visit the hon. Gentleman's constituency more often if they felt that they would be able to use their banknotes without having them unduly scrutinised. It is a relatively simple process to access the guide on banknotes. It can be done easily on the internet and it is readily available. I find it difficult to understand, particularly in these difficult times, why any retailer would not want to accept all the currencies being offered or would not want to take steps to ensure that people working in their premises knew which currencies should or should not be accepted. The hon. Gentleman will have heard my earlier point that, surprisingly, some of the most unsatisfactory examples of non-acceptance have not come from the small retail sector that he refers to, but in large chain stores or takeaway outlets. In my view, they have absolutely no excuse in that regard.
I hope that the Minister will refer in her summing up to the excellent poster and information guide produced by the Scottish clearing banks; they worked extremely hard to give people the level of detail necessary to identify whether a note is valid and to provide a potted history of the figures or buildings that appear on the notes. I refer hon. Members to the Committee of Scottish Clearing Bankers website.
I do not accept that lack of familiarity with a Scottish banknote is a proper basis for deeming such a note to be a forgery. Many Members will have seen the detector pens in use. They are common, as many businesses routinely use them, and they are perfectly reliable. There is no great expense involved in making a simple check before venturing any suggestion of forgery to the person proffering a note.
I hope that I have provided a summary both of the historical aspects of the Scottish banknote and of the current position and the genuine need to address this issue. The Leader of the Opposition said in Glasgow in September 2006:
"Scottish banknotes are every bit as good as those issued by the Bank of England. That's something everyone working in shops or other parts of the service economy anywhere in the UK should know. Yet Scots often have to endure the indignity of having their money examined by suspicious staff south of the border as if it's come straight out of a Monopoly box. Some Scottish fivers and tenners are simply refused. Of course, it's not the end of the world, but it's hard to think of a clearer demonstration of disrespect."
He is right. It is time to put an end to this practice, so I commend the Bill to the House.
You saw me jump up like a sprung coil, Mr. Deputy Speaker. That is because I feel so strongly about the Bill. I support it because, while it has naturally prompted a degree of levity, it deals with a serious issue which, unless addressed with some dispatch by the House, will become a growing problem. But I believe that this issue can be addressed to the satisfaction of every player, reflecting nationhood in relation to the four constituent parts of the United Kingdom. I believe that the Bill can provide security for retailers in particular, while also avoiding embarrassment for the holders of certain banknotes.
I am angry with myself for two reasons: David Mundell, whom I congratulate, has beaten me to it by introducing the Bill; and, had I introduced a comparable Bill, its provisions would have been less narrow. They would not have been confined to Scots banknotes, for reasons that I will share with the House in a few moments.
My interest in the issue relates to one of my earliest memories. When I was a very small child living in Wembley, my grandmother, Catharine, would come down from Scotland. She was a formidable lady, and I am proud to have her genes in me. It could even be said—and I say it in the nicest possible way—that she was quite a cussed woman. On one occasion she produced Scottish banknotes during her journey down to Wembley, only to experience precisely the confrontation that the hon. Gentleman has described, a confrontation that still occurs today.
I want to complete this tale, because it is rather important.
My grandmother faced the indignity of eventually finding someone who offered her 19 shillings for the banknote. She wasn't having that. I recall that the note had a picture of Good King Billy on it. Now, my grandmother really was not one of king Billy's brethren, if you get my drift. She was amused, subsequently, by the fact that she had stood up for King Billy—William III—in telling the person who did not want to take the note that this was her king and his king, and that it really was outrageous. That story has remained with me for all this time, but it has also been an irritant over my nearly 60 years of life. Now I will give way to the Minister.
I thank my hon. Friend. I wonder whether he will tell us which of the genes of that redoubtable woman have survived in him? We could probably guess at a few of them.
One of the things that I learned from my grandmother was always to probe and question. Another was that if I saw a door with "Do Not Enter" written on it, I should open it and go through.
This is a continuing problem, and as I said, it is a growing problem. In the old days, there was much less travel than today. Nowadays, for reasons of business and commerce, people commute between Glasgow and London and Edinburgh and London, and between other parts of the United Kingdom. Earlier today the House discussed the problems of small business. This is a problem for small businesses, which are caused a degree of anxiety because although they may know of the existence of other notes circulating in the United Kingdom, they have to give change to people. The hon. Gentleman gave the example of taxi drivers.
I invite the House to try to be a bit less London-centric. The time will come when someone will indeed turn up in Somerset with one of these banknotes. I sympathise both with the person who has the banknote and with the shopkeeper, who really could do without it, and who will have to put the note aside to be taken to the bank rather than given in change. In such circumstances there is embarrassment and irritation— embarrassment for the person who produces the note, which is probably all that he or she has, and has to try to convince the retailer that it is good money with value, and irritation for the retailer.
There is another issue, of which I have been particularly conscious in the past three or four years. A lot of people currently employed in the retail sector come from other parts of the European Union, and they are desperately anxious not to accept a note that is peculiar and bewildering to them, and on which they have not been briefed—so I fully endorse what the hon. Member for Dumfriesshire, Clydesdale and Tweeddale said about awareness briefing. Such situations can be avoided, as I will illustrate later, but they cause anxiety for employees from overseas—particularly those who work in restaurants and petrol stations—and, of course, for the person offering the note in payment.
I have tackled colleagues on this matter who say, "Well, I have no problem in London." I am surprised they say that, because we can have such problems in London. I accept that trips only between a London airport and Westminster can be easy and without problems, but these difficulties are far more acute out in the suburbs and in other parts of England.
My wife and I spend a lot of our recreation time, when we get it, in County Down in Northern Ireland, where Scottish banknotes circulate extensively and people know about them. There is, I suppose, a cultural reason for that, relating to the close proximity to Scotland. The situation is worse in Northern Ireland, however, which is why if this Bill progresses, I would wish to amend it to include Northern Ireland. Northern Ireland's population is, I think, 1.7 million, and Bank of Ireland notes circulate there, along with the notes of Ulster bank, First Trust bank, Allied Irish bank and the Northern bank—Members will recall the Northern bank robbery, which involved Northern banknotes. When I visit Northern Ireland, therefore, I often have the full range of both the Scottish and the Northern Irish banknotes, and when I return to London I invariably find that I do not have a Bank of England note. The first thing I do is go somewhere where the other notes are accepted, such as the Members' Tea Room, where I ask our good friends, who service us well, if they will change them, or the Members' post office. If I have returned directly to my constituency, I use them at the Dartford toll, where the people are fully briefed about their existence. I need to change them into either coins or Bank of England notes, because this is a real problem. There are also a lot of machines into which banknotes can be fed, and the parking machine at the shopping centre in Bangor in Northern Ireland does not take Bank of England notes. We therefore need standardisation of both acceptability and technology.
I was also interested to hear the hon. Gentleman give the history of this matter. So far as I recall, the widespread use of Bank of England notes is a relatively recent development, dating back to the time of George V. It was therefore interesting to learn that Scotland developed the culture of using paper notes first. It is dancing on the head of a pin to talk about finer points, such as whether they are tender or promissory notes or whatever; we know what we are talking about. Banknotes have a much longer history in Scotland, and Bank of England notes feature more recently in our history.
It is also important to recognise that the banknotes that circulate in the United Kingdom—this applies to all the Scots and Northern Ireland notes—are a revenue earner for both the issuing banks and, to an extent, the local economies, because there is a considerable number of collectors worldwide. We made a similar discovery when Tony Benn broke the mould with regard to stamps, saying that we must have many more issues of postage stamps, even though the Post Office was very conservative on the matter. The banks that issue notes make money by varying the designs from time to time, as there are very enthusiastic banknote collectors worldwide. That is very nice, and it creates awareness of some of the constituent parts of the UK, as well as being a revenue earner for the banks and for Scotland and Northern Ireland. That should be encouraged.
What is the answer? I am not sure that we need to go to the lengths outlined by the hon. Member for Dumfriesshire, Clydesdale and Tweeddale, but I have a suggestion that would, at least, be complementary. I cannot see why the banks that circulate in the United Kingdom, by which I mean the Bank of England—I include it even though I realise that, as a central bank, it has a different status—the Scots banks and the Northern Ireland banks, could not have all their different designs on one side of a standard-size note, which could be variable. That would be good, and the name of the bank could be included. The certification—the promise that is explicit or implied by the note—could be standard and could be on the other side of the note. That would overcome the problem of forgeries, although not totally. However, in that regard we should remember that, from time to time, we have been inconvenienced by having forged Bank of England bank notes in our pockets.
So on one side of the note would be a standard format indicating that it is a note of use in the United Kingdom—the certification, signed by the chief cashier, and so on—and on the other would be Clydesdale, Royal Bank of Scotland, Bank of Scotland, Ulster bank, Northern bank, First Trust bank, Allied Irish bank and so on. The designs could vary from time to time. It is not rocket science. Of course, the euro coinage has a standard side and a variant relating to the various nations. The coins circulate throughout the EU. Never mind what the Minister's brief says—I urge her to say that she will take this thought away.
I do understand the sensitivities associated with this issue. The notes with the biggest circulation in the United Kingdom are, for example, Bank of England notes. Some people are London-centric on this issue, but we are talking about the United Kingdom of Great Britain and Northern Ireland: there are four constituent parts. That is not a nationalist, jingoistic point—it is a matter of fact. Just as an aside, you have probably heard me get irritated on other occasions, Mr. Deputy Speaker, by the name Sport England. It should be "Sport UK", because we are talking about the United Kingdom of Great Britain and Northern Ireland. Let us rejoice in the fact that this is a political, constitutional entity that has at least four constituent parts, three of which have bank notes that identify with England, Scotland and Northern Ireland respectively, and turn it to our advantage.
Indeed, there is tantalising incentive for the Minister. The new bank note could be named after her.
An Eagle—or it could be a Mundell, or a Mundell-Mackinlay, note.
However, it is certainly time that this issue was addressed, and it would be very healthy if such an idea were taken on board. The awareness issue is important, but we can overcome that if we know that there is a common side reflecting the variants of the United Kingdom, and the names of the various issuing banks on the other side.
I commend and support the Bill, and I hope that the Minister will indicate that the Government will reflect on the issues raised by the hon. Gentleman, myself and others.
It is a pleasure to follow Andrew Mackinlay. His suggestion at the end, which I shall come back to—the standardisation of Scottish bank notes with Bank of England and Northern Ireland notes—might, I think, invoke cries of fury north of the border. However, it has a lot to commend it.
I congratulate David Mundell on having the opportunity to introduce his Bill, and on doing so today very lucidly. The intense interest that he suggests supports his Bill north of the border and in the Scottish press is scarcely reflected in the attendance here today by Members of Parliament representing Scottish constituencies, of whom there is not a single one, other than him.
May I advise the hon. Gentleman that, although it is not an event that I would wish to attend, the Scottish Labour party conference is under way in Dundee and in only a few moments' time the Prime Minister is to address that august gathering?
I am grateful for that intervention, and that is a reasonable excuse. I say that because none of my Scottish colleagues is here for a similar reason—it is the Liberal Democrats spring conference in Harrogate this weekend. The hon. Gentleman gives a perfectly fair response to what I had to say.
I hope that I have always been a very strong advocate of the cultural differences that exist within this United Kingdom—I cherish those cultural and historical differences. I have always been at pains to point out the differences in the Scottish jurisdiction, particularly when I have been plying my trade in home affairs and justice over recent years and ensuring that the Government were aware that what applies in the English jurisdiction may not apply in the same way as, and may be completely different from, what applies in the Scottish jurisdiction or, indeed, in the Northern Irish jurisdiction. I am certainly not the sort of London-centred, English imperialist who suggests that everything should be the same; I do not believe that it should.
The existence of Scottish banknotes and the Scottish issuing banks is a historical anomaly in the context of a single United Kingdom, but it is an interesting one that we should not deprecate. It is a fact and it is very unusual. I intervened on the hon. Gentleman to ask whether he could name another country—jurisdiction is not the term I am seeking; I am trying to think of the appropriate word—within which there are nations, that has such a differentiation. I think I am right in saying that apart from Scotland and Northern Ireland, Hong Kong is the only other place where a private bank, rather than a central bank, issues banknotes for general circulation. The position is extremely unusual.
I fully understand the irritation that there must be for people who use these banknotes daily and expect them to be currency across the United Kingdom but find when they come to England or Wales that they have difficulty using them. We should reduce that irritation as far as possible and try to find ways to ensure that such difficulty is not encountered, but it can sometimes be overplayed. I listened carefully to the story that the hon. Member for Dumfriesshire, Clydesdale and Tweeddale told about Mr. MacLachlan of Inverness and his experiences with the Newcastle Travelex. Travelex is a commercial company, not a clearing bank, so why should it provide a service completely free of charge? What possible interest would it have in changing Scottish banknotes for English banknotes without charging any sort of commission? Why should it perform that service? That is a reasonable question to ask.
I understand why a commission would be charged for changing one currency into another, but this is the same currency; both these banknotes are sterling, so there should be no charge. Reference has been made to the time when 19s 6d was given for a Scottish note. It is entirely unacceptable that within one currency a different amount from what was handed over should be given back. I do not accept at all the argument being made.
I am surprised to hear that, because as I said, the company is not a clearing bank and it has no responsibility in this respect; it is providing a commercial service. It seems to me that it can charge what it likes and if the purchaser does not wish to pay for the service, he must go to bank that will provide it.
Is the hon. Gentleman suggesting that some form of commission or levy should be deducted when people come into businesses in my constituency en route back to England and ask for Scots notes to be changed into English notes because they are concerned about taking Scots notes back to England? As I explained in my speech, such requests have become common because people are worried about possible difficulties. The retailers do not charge a commission, and I am sure that the hon. Gentleman is not suggesting that they should do so.
I am glad that those retailers change the notes, and I do not want to be misinterpreted on this point. Travelex's only purpose is to change notes, and the hon. Gentleman's Bill would require it to change notes—albeit of the same denomination—for nothing, and I am not surprised that it politely declines that opportunity, especially in an airport, where it no doubt has other customers to serve. He may deplore that, and I might wish that things were otherwise, but I do not think that a commercial company can be blamed for charging for a service that it provides. That is the essence of a capitalist society.
I hate to labour the point, but surely there is a difference. Travelex charges a commission on foreign exchanges because of the risk of holding foreign currency. Changing Scottish notes carries no risk, so Travelex should reconsider its policy on that matter.
The hon. Gentleman makes a sound argument, which he should put to Travelex. The question is whether the charge is reasonable in all the circumstances, but that is a matter for Travelex. It is a commercial company providing a service, and that is the only point I am making. It has no statutory duty to do so, and it can decide whether to charge for it. The hon. Member for Dumfriesshire, Clydesdale and Tweeddale said that some companies provide the service for free, and I applaud them for their public-spiritedness. It would be good if others followed suit.
I do not want to make it difficult for Scottish notes to be used in England and Wales, because there has been a welcome shift in recent years—or so I understand from talking to Scottish colleagues—especially in London and other major centres. Scottish notes are now more readily accepted. I suspect that the same is true along the border, although I have no evidence for that and my constituency is nowhere near that area. However, I suspect that Scottish bank notes are much more widely acceptable in retail premises south of the border than previously. That should be encouraged. But, and it is a big but, it is a big jump from there to introducing a requirement—I accept that it would be a mild requirement, without draconian measures—that every retail establishment in the whole of the United Kingdom should be happy to accept Scottish notes, in all circumstances, if they are prepared to accept English notes. That has implications for many small businesses in my part of the world, where Scottish notes are very rare.
The hon. Member for Thurrock made an important point, although I did not agree with everything that he said. If Scottish banks are to issue notes, I think—this is a personal opinion—that it is regrettable that they have decided to do so in this commemorative, almost didactic, form. The patterns are designed to promote Scotland or the bank in question, but the variation could cause confusion.
If we were having a debate about a proposal that the Bank of England should no longer produce five patterns for notes but 27, hon. Members on both sides of the House would say, "Don't be ridiculous—that is a recipe for chaos. Why on earth should we expect businesses suddenly to recognise 27 different patterns on notes in circulation across England, Wales, Scotland and Northern Ireland?" If one added the five Northern Ireland banks and their range of notes, there would be a huge proliferation of patterns on notes in common circulation, making it almost impossible for someone who is not familiar with them to recognise what was a valid note and what was not.
The hon. Gentleman has made a perfectly understandable point about confusion and the proliferation of different sorts of notes. As for the figures, there are 22 different Scottish banknotes, and 17 different Northern Ireland banknotes, not counting commemorative editions which, in some cases, can be circulated. That is the number of different notes that we are talking about in this context.
I am grateful to the hon. Lady. To return to the point I was making, when people are familiar with the notes on a daily basis, the notes do not pose a problem. In Scotland, people dealing with Scottish notes would have no problem recognising those that are in common circulation, even if, rather than the Queen of the United Kingdom, they showed the golfer Jack Nicklaus instead. Some people might expect that to be a joke, but it is not—it is a serious proposal that has been thought up in Scotland to celebrate its national sport and the pre-eminence of golf in Scotland. Nevertheless, if I were sitting in a little shop in Kingsbury Episcopi—I cannot do so, because it has closed down—I would not recognise a note featuring Jack Nicklaus as a familiar banknote, so I would have grave doubts. I would hold such a note up to the light and take a look at it, thus causing the offence about which the hon. Member for Dumfriesshire, Clydesdale and Tweeddale is concerned, as it would not immediately tell me that it was a proper promissory note from a clearing bank of the United Kingdom. I would take great care before accepting such a note.
I would not be equipped with the helpful poster issued by the Scottish clearing bank, and while a queue built up, and the next person waited to buy a pint of milk, I would not have easy access to the internet, to check whether it was right. I would be in some difficulty if I was serving in that shop. That is what concerns me, which is why—I certainly do not intend to oppose the Bill—the implications of the measure require careful consideration in Committee. The hon. Member for Thurrock has suggested a solution that would require a great deal of co-operation between the various note-issuing authorities across the UK to come up with a form of commonality. In the long run, if it were acceptable to the Scottish clearing banks, the people of Scotland, the Northern Irish Banks and the people of Northern Ireland, it would be an excellent idea to find some commonality and recognise that a note was a UK banknote that reflected the nations of the UK as well. That would be splendid.
As the hon. Gentleman correctly says, it reflects what already happens with the euro coinage—not the notes. When the euro was being designed, no one suggested that each country should issue its own notes, or that in each country, the €5 note should have a different pattern reflecting the different EU nations that are part of the eurozone. No one would suggest that that was a sensible way of doing business in Europe, and I have my doubts as to whether it is a sensible way of doing business in this country, either.
There are details of the Bill that I am not entirely happy with. It is light on definition. I would have expected at least a clause on definition so that we know what we are talking about. I hope the hon. Member for Dumfriesshire, Clydesdale and Tweeddale will not consider this unnecessarily derogatory, but in some ways the Bill reads more like an early-day motion than a law governing the currency of this country. It does not have sufficient precision in its drafting to be an adequate Act, but I accept that that can be dealt with in Committee. Cross-references to the Banking Bill are needed, apart from anything else.
Indeed. The point that the hon. Gentleman makes is to some extent valid. I sought to keep the Bill as open for discussion as I could. The subject of Northern Ireland notes does not come within the title. I am hoping for a positive response from the Government, with the benefit of their vast resource of draftsmen to assist in taking the Bill forward so that it does not create other difficulties in what we have already identified as a very complicated area.
It is indeed a complicated area. The hon. Gentleman has made a valid point that must be of interest to his constituents and to many other Scottish people who find themselves south of the border with their pockets full of Scottish banknotes issued by banks that we, as English taxpayers, so carefully support. I understand that the issue is important to him. I am simply saying that the Bill is not yet in its final form. It will need careful consideration in Committee. Most importantly, we need to hear what the Minister has to say about it. She may well have more fundamental criticisms, which I shall be interested to hear.
I shall be brief, as we want to hear from those on the Front Benches and give my hon. Friend David Mundell an opportunity to reply, and I believe there is other business.
I congratulate my hon. Friend on introducing the Bill and on a sterling speech. He is right that businesses should not make a distinction between Scottish and other banknotes issued in the United Kingdom. There has, as we know, been much issuing of banknotes, including Scottish banknotes, over recent days. In this week of aggressive easing, it would be very odd if the Government stood in the way of making it easier for businesses to transact business in Scottish notes. Ministers should end the short-changing of and discrimination against the fine people of Scotland, Scottish businesses and Scottish banknotes.
Andrew Mackinlay mentioned doors in a story about his late grandmother, Catharine. Too many Scottish people have for too long faced doors that say, "Do not enter," and the Bill will open those doors. With the Prime Minister—who is, of course, Prime Minister of Scotland as well—this week issuing a licence to print up to £150 billion of money, much of it in Scottish banknotes, the United Kingdom is entering uncharted waters. That is troubling in itself, but perhaps more troubling because the captain on the bridge of the ship is the Prime Minister—Captain Desperado on the bridge, while the country faces the worst money supply and conditions since the 1930s.
I hope that the Prime Minister will keep one of those £50 Scottish notes that he is printing, especially the Clydesdale bank £50 note, which features the great Scottish economist Adam Smith. The problem at the moment is not so much to do with the production of goods and services as with people's having access to credit to purchase them, but as we reflect on that note, we realise that cash is king. It is cash and liquidity in businesses both sides of the border that will help us out of the current economic difficulties.
One of the great banknote mysteries of our age is why Adam Smith appears on the £50 note in Scotland but on the £20 note in the rest of the United Kingdom; I do not know whether that is a reflection of the expensive tastes of the Scottish First Minister. The Scottish National party is notable by its absence here today, irrespective of conferences. This is an important issue for Scotland and I am glad that my hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale has taken time on his busy Friday to make the effort to bring in this Bill.
My hon. Friend might be interested to note that although the First Minister of Scotland says that he shares the view that Scottish notes should be accepted in the rest of the United Kingdom, he is firmly of the view that they should not be accepted in Scotland; he is keen to see the introduction of the euro.
Well, the euro is doing pretty well, isn't it? Perhaps that remark should be followed by an exclamation mark in brackets. I think that introducing the euro would be an error for Scotland and for the United Kingdom as a whole, and I am saddened that the SNP has taken a narrow view and that, rather than trying to help struggling businesses in Scotland—and, indeed, the whole of the country—it is at odds with the stream of public opinion, which is manifest in the many letters to which my hon. Friend referred.
What happens if the quantitative easing, which will include Scottish banknotes, does not work? What if that new supply of money does not improve growth and increase output? It is vital that banks should lend their banknotes, including the new ones about which we have heard today and Scottish banknotes. Whatever the banknotes involved, whether they are printed in Scotland or elsewhere, banks need to lend them. That applies especially now, given that the Prime Minister himself has become the chief cashier. The banknotes that are being printed, including the Scottish ones, need to go into the economy and must not be held back for the future bad debts of banks. Banks should be givers, not just takers, of banknotes, including Scottish banknotes.
I welcome the Bill, which I hope will help businesses on both sides of the border and improve and increase transactions. I hope that it will help provide the liquidity that this nation so needs at the moment.
I congratulate my hon. Friend David Mundell and shadow Secretary of State for Scotland on introducing the Bill and making an extremely powerful speech in its favour. I should declare an interest: I am half Scottish and half English. My mother is from Edinburgh, so my family has some experience of travelling between the two great countries and seeing first hand the frustrations discussed today about the acceptance of banknotes.
My late Scottish grandfather was called William Brown. In fact, Gordon Brown—although, thankfully, not the one who is Prime Minister—is my cousin. The last time I checked, my cousin Gordon Brown was an electrician living in Edinburgh. However, there is the tantalising possibility that I am related to the Prime Minister. That really would be a turn up for the books.
Curiously, Mr. Brown and Prime Minister has, in 12 years in charge of the Treasury, in fact or in practice, done nothing to solve the problems outlined so eloquently by my hon. Friend. These days, the Prime Minister seems desperate to downplay his Scottish background, so it came as no surprise to see the Government's efforts during the recent Banking Bill to jeopardise the future of Scottish and Northern Irish banknotes.
I have seen first hand widespread misconceptions about English and Scottish banknotes, sometimes in the most unlikely of places. In 2001, I was in Baku in Azerbaijan, and was surprised to see an exchange bureau quoting separate exchange rates for Scottish pounds and English pounds. Not only were Scottish pounds accepted there, but perhaps because of the large number of Scottish oilmen in the city one received a better rate for "Shotland funtu" than for "Angliya funtu". It seems strange that notes that are readily accepted in Baku, some 2,500 miles away from Edinburgh, should not be accepted in London, only 332 miles away and in the same country.
The Opposition welcome the Bill, and I again congratulate my hon. Friend on introducing it. That action alone has already done much to raise awareness of the issues surrounding Scottish banknotes. He spoke eloquently for his borders constituents and for all Scotland in his defence of the Bill. He spoke of the difficulties faced and the wounds to national pride sometimes involved, and said that almost everybody from Scotland was affected.
I want to return to my hon. Friend's example of Mr. Derek MacLachlan at Newcastle airport, who was asked to pay a charge of £3 for converting Scottish pounds into English pounds. It struck me that that individual was being punished twice for having come from Scotland: first, he had no confidence that his Scottish pounds would be accepted in Newcastle, which presumably explains why he went to the Travelex office in the first place; and secondly, a foreign exchange bureau, which normally, and perhaps rightly, charges commission on the basis of the risk of holding foreign banknotes, attempted to charge him commission.
My hon. Friend outlined the proud history of Scottish banknotes. He mentioned the risk in ancient times of losing one's tongue, which probably struck fear into various hon. Members in this Chamber. He referred to the importance of the notes in building Scottish identity and the flourishing of Scottish culture, citing the example of the 250th anniversary of the birth of Robert Burns and other details. He also mentioned some alarming signs, including one saying that Scottish banknotes were not accepted. Most importantly, he outlined how his Bill would strengthen the Union on the grounds of equality between the two banknotes.
Andrew Mackinlay spoke with great knowledge, including personal experience from his family past. He also raised the interesting case of Northern Ireland. We, too, would want that to be considered in more detail in Committee. He raised the interesting possibility that this proposal might excite interest from banknote collectors and be a potential revenue earner. We agree with that. I will come to the issue of tourism in due course.
I was a little confused by the speech of Mr. Heath. He said that he was not opposed to the Bill, but appeared to be extremely sceptical about its contents. He seemed to say that it is perfectly reasonable for Scottish banknotes to be rejected in England.
Perhaps the most interesting speech was the one that was not made. My hon. Friend Mark Pritchard pointed to the absence of any Scottish National party Member. We heard about the Scottish Labour and Scottish Lib Dem conferences that are going on this weekend, but if there is some kind of SNP conference, nobody seems to be aware of it.
South of the border, many people are a little perplexed, or sometimes pretend to be, when they come across these banknotes. It is about time that their acceptability in shops, pubs and restaurants was given some legal recognition, because there is no reason for people in England and Wales to have any doubt about them. Besides adding a welcome dash of variety, Scottish notes are backed pound for pound by assets held at the Bank of England. Those assets are held in the form of special notes known as Giants and Titans, each worth £1 million and £100 million respectively. The average shopkeeper might be rather more suspicious of one of those notes than any Scottish note, but it seems that the Bank of England is fortunate enough to be able to print money whenever it wants to do so—rather a lot of it at the moment, with this so-called quantitative easing.
I believe that suspicion about Scottish notes owes more to unfamiliarity than to anything else. I suppose that it could be argued that some smaller outlets would find it harder to spot fakes if they were made to accept Scottish notes. However, that argument shows a lack of willing. Clear images of every banknote design can be found on the website of the Committee of Scottish Clearing Bankers, which even sports banknote tutorials to train staff on how to pick out any forged notes. Unfamiliarity can relatively easily be overcome, and it should be.
As my hon. Friend the shadow Secretary of State for Scotland noted, all good Unionists should support these measures. No one in Scotland, or anywhere else, should be left to feel that their banknotes are somehow second-rate or inferior. Notes can surely operate side by side in the same way as the constituent parts of the UK. The Bill is important also for UK tourism. We need more people to visit both Scotland and England, and it would surely help to remove any doubts that they might have about banknotes. The great variety of notes in the UK also boosts interest in visiting all its constituent parts.
The Bill's provisions would not be overly draconian or burdensome on businesses if they were sensibly enforced, which I believe they would be. Under the criteria set out in clause 2, at first a business will simply receive a letter after three reports of refusal. It will face investigation only if it displays a persistent pattern of behaviour, and rather than take it to court, the Office of Fair Trading will take sensible enforcement measures such as requiring it to display a notice for the benefit of customers.
Legitimate concerns about forgery are also addressed in my hon. Friend's Bill. As I said, it is fairly straightforward for anyone to clarify whether a note is genuine. Under clause 3, a business would still be able to refuse any note that it had reasonable grounds to suspect. The Opposition warmly welcome the Bill. We believe that it could be further improved in Committee, and we hope that it receives the further parliamentary consideration that it so much deserves.
We have had a fascinating debate about a vibrant and lively part of our monetary culture, of which we are all proud. I congratulate David Mundell on his selection in the ballot—which I have never managed in all my years in Parliament, many of which have been spent on the Back Benches—and on getting the Bill to the Floor of the House. It clearly represents the concerns and experiences of his constituents and many others in Scotland, as he vividly demonstrated. We discussed Scottish banknotes in connection with the recent Banking Bill, and I understand how frustrating and potentially embarrassing, inconvenient and annoying it is if someone's money is refused by retailers, even though it is UK money.
The hon. Gentleman made many important points, and his Bill is intended to address the acceptability of Scottish banknotes. I am sceptical that a legislative vehicle is the best way to solve the problems that he outlined, and I remain to be convinced that the Bill, as drafted, would solve the problem. I know that, as he said, he has spoken to my right hon. Friend the Secretary of State for Scotland, who shares his concerns and is also keen to safeguard the long-standing tradition of Scottish banknotes.
I believe that there are some effective ways forward, which I hope to outline to hon. Members, that will begin to put right some of the inconvenience and embarrassment that the hon. Gentleman's constituents experience south of the border when attempting to spend what are, after all, pounds sterling.
The Exchequer Secretary mentions embarrassment. Given that, even as we sit here, the largest number of Scottish banknotes in United Kingdom history is being printed, is it not incumbent on the Treasury to send a Minister to the House, either later today or on Monday, to make an urgent statement about quantitative easing and the billions being spent—
I always like to respond to questions that are put to me in the House, but I hear your comments, Mr. Deputy Speaker. I say only that it is wrong to believe that Scottish—or, indeed, any—banknotes will be printed as a result of the measures that the Bank of England set out yesterday.
I would like to explain the reasons behind the Government's position, especially our scepticism about some of the enforcement methods that the Bill proposes. The issuance of national banknotes is usually a function undertaken by the central bank, which is the Bank of England in the United Kingdom. As Mr. Heath said, with the exception of Hong Kong, the UK is highly unusual in allowing several commercial banks to issue their own banknotes.
I note that the Bill relates only to Scottish notes, but, of course, as my hon. Friend Andrew Mackinlay pointed out, there are also four commercial issuing banks in Northern Ireland. I hope that the hon. Member for Dumfriesshire, Clydesdale and Tweeddale will forgive me if my remarks cover both jurisdictions. I do not think that making a distinction between them is appropriate, as it sets up an unnecessary two-tier system. We may have some positive effects on the practical problems that he outlined if we consider the two jurisdictions together.
This right to issue is set out in the Bank Notes (Scotland) Act 1845, the Bankers (Ireland) Act 1845 and the Bankers (Northern Ireland) Act 1928. Parts of legislation will be repealed and replaced by part 6 of the Banking Act 2009. It modernises and strengthens the regime for note issue, which is more than 160 years old.
Currency, legal tender and banknotes are specifically reserved to the UK Parliament under the Scotland Act 1998, and are excepted matters under the Northern Ireland Act 1998. They are, therefore, matters on which the UK Parliament continues to legislate after devolution.
The Bank Charter Act 1844 prohibited any new banks in England and Wales from issuing banknotes. The 1845 legislation in Scotland and Ireland makes similar provision for banks in those nations. At that time, a total of 21 banks applied to become certified to continue issuing banknotes in Scotland and Ireland. As the hon. Gentleman said, that number has reduced over time through mergers, insolvency, or by banks choosing simply to stop issuing, to a total of seven issuing banks today. As my hon. Friend the Member for Thurrock said, in Scotland they are: the Bank of Scotland, which is a subsidiary of Lloyds Banking Group; Clydesdale bank, which is a subsidiary of National Australia Bank Ltd, and the Royal Bank of Scotland. In Northern Ireland they are: the Bank of Ireland; Allied Irish Banks Group (UK); Northern bank and Ulster bank. I confirm that the Government are committed to maintaining that long-standing tradition of commercial banknote issuance in Scotland and Northern Ireland, and are not seeking to discourage those commercial issuers of banknotes from continuing that practice.
The hon. Member for Somerton and Frome mentioned retailers in Somerset and I note with interest an odd coincidence. The last private bank to issue notes in England and Wales was a Somerset bank—Fox, Fowler & Co., which issued its final notes in 1921. The hon. Gentleman might want to look around some of the shops in his constituency to see whether he comes across a few examples of those banknotes and to contemplate the role that Somerset has played in issuing banknotes in England.
The hon. Member for Dumfriesshire, Clydesdale and Tweeddale is seeking to address genuine issues with his Bill. When we talked before today's debate, he gave me examples of where Scottish notes had been refused. I have heard examples anecdotally from my Scottish colleagues on the Government Benches many times, and the point has been reflected in all the contributions that we have heard this afternoon. The problem manifests itself in many different forms, not all of which are addressed by the Bill. It occurs to me, both from the anecdotal evidence the hon. Gentleman has presented and from the evidence that I have come across, that the problem tends to manifest itself more often in areas where such notes are less common and are seen less frequently. The issue is unfamiliarity with the notes, as the hon. Members for Somerton and Frome and for Hammersmith and Fulham (Mr. Hands), speaking from the Opposition Front Bench, both mentioned.
There are 22 different Scottish banknotes in circulation and their designs—I have pictures of them here—are beautiful, interesting and varied. Many of them are collector's items. One can add to that the 17 different bank notes issued in Northern Ireland. That creates a plethora of notes, which can cause consternation in areas where they are not seen regularly and where people are not familiar with them, even though they are perfectly safe and backed by Bank of England deposits. That unfamiliarity is one of the problems that we must deal with.
If we are trying to deal with unfamiliarity, the web should be the first port of call. However, people have to go on it, but often small traders do not have the time, and certainly not in the shop. If something odd turns up—something with, say, a depiction of Jack Nicklaus on it—one might think that it was not a real note. Indeed, it might give one pause. However, before we resort to the legislative sledgehammer, we should think about whether we can come together to put in place a campaign that would encourage the many retailers in this country to become more familiar with the different banknotes that they may, perfectly safely, take in payment.
Scottish banknotes circulate widely in Scotland and in those areas that are close to the border with Scotland. Also, Scottish banknotes tend to be more readily accepted in other centres of significant interchange of people between England and Scotland, such as airports. Familiarity is clearly one of the keys to improving the problems that the Bill seeks to address.
It is clear from the work that we did on the Banking Act 2009 that there will no longer be any legitimate worries about backing assets that stemmed from the rather old legislation—it is 160 years old—that was brought to bear in backing both Northern Ireland and Scottish banknotes until the passage of that Act. The changes that will come into effect later this year will ensure not only that the backing arrangements for those notes will confirm that they are risk-free and that they have the same backing as Bank of England notes, but that although some might think that those issues are an excuse for not accepting such notes—there might have been a technical reason for arguing that before the passage of the 2009 Act—that will no longer be a legitimate worry. The level of protection involved will be similar to that given to holders of Bank of England notes, and, in the event of an issuing bank failing, those who end up with the notes in their possession can expect to obtain full face value. That should close any loopholes that businesses might have used as an excuse for not accepting Scottish banknotes.
A further difference between Bank of England notes and commercially issued notes relates to the fact that commercial banks have control over certain elements of their own banknotes that might be material to acceptability, and that might differ from the approach taken by the Bank of England. One of those elements is the design of the banknotes, as my hon. Friend the Member for Thurrock said in his extremely thoughtful speech. It is reasonable to assume that the more designs there are in circulation, the less familiar people will be with them. We have looked at the numbers involved, and I note that, while there are 39 Scottish and Northern Irish banknote designs in circulation, there are just five Bank of England notes. One of the Bank of England notes, the Edward Elgar £20 note, is going through a transitional period, and is in the process of being withdrawn, to be replaced by the Adam Smith £20 note.
The Bank of England's policy is to have one current series of banknote design per denomination—two when transitioning from one design to the next—and to withdraw old series from circulation. This has the benefit of minimising confusion among holders of the notes, because there are fewer designs to recognise and remember. It also reduces the risk of counterfeiting, because people become more familiar with the anti-counterfeiting features on the notes, which can often differ from one generation of note to the next.
None of the commercial banks in Scotland or Northern Ireland withdraws its previous series of notes from circulation, which leads to a much greater number of different designs passing around the country at any point in time and with varying anti-counterfeiting features on them. It might therefore be harder for businesses and the public at large to know exactly what a genuine Scottish banknote should look like, just because there are more variations in circulation. People should not be blamed for this; it just goes back to the question of familiarity, which has been recognised as an issue by hon. Members on both sides of the House.
The hon. Member for Dumfriesshire, Clydesdale and Tweeddale referred to the use of a fancy pen. They are good as far as they go, but it is important to stress that the anti-counterfeiting features used within a banknote often vary across issues, series and denominations. For example, the new Adam Smith £20 note includes a holographic strip not featured on its Edward Elgar predecessor. New anti-counterfeiting features are always being developed, but the rate at which they are adopted varies across issuers as they almost always increase the production cost of a note. An unfortunate consequence of this lack of uniformity means that an anti-counterfeiting check carried out by a business for one note—such as the Adam Smith note with the holographic strip—might not be suitable for another note. This problem might also be compounded by the number of different types of notes in circulation at any given time.
There is also the question of denominations. Traditionally, all the Scottish issuing banks have chosen to issue £100 banknotes, which the public might be less willing to accept as payment. In a similar vein, the Bank of England £50 note is not commonly found in circulation, and therefore when people come across them they are often more circumspect about accepting them. All these elements—banknote liabilities and the backing asset regime, the number of different note designs and security features in circulation, the level of educational activity undertaken, and differing policy regarding denominations—might influence the acceptability of Bank of England notes, compared with commercially issued notes.
It is important for us to consider, ahead of a legislative process, the issue—
Let me just finish this point about the technical standards board, because it is really important that I make it.
It is really important to recognise that a great deal can be done to achieve the hon. Gentleman's aims, which we all support, short of introducing draconian legislation. I want to work closely with him and with others—
The debate stood adjourned (
Ordered, That the debate be resumed on