Currency Union

Oral Answers to Questions — Scotland – in the House of Commons at 11:30 am on 7th May 2014.

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Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk 11:30 am, 7th May 2014

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

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk

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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Gemma Doyle Gemma Doyle Shadow Minister (Defence)

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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Michael McCann Michael McCann Labour, East Kilbride, Strathaven and Lesmahagow

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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Menzies Campbell Menzies Campbell Liberal Democrat, North East Fife

To echo 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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.

Photo of Pete Wishart Pete Wishart Shadow SNP Spokesperson (Culture and Sport), Shadow SNP Spokesperson (Constitution)

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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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 the reasons why a currency union would be bad for the rest of the United Kingdom and also bad for an independent Scotland. Why does the hon. Gentleman want something that would be bad for Scotland?

Photo of Gordon Banks Gordon Banks Shadow Minister (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?

Photo of Alistair Carmichael Alistair Carmichael The Secretary of State for Scotland

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.