New Currency (Impact on Businesses)

– in the Scottish Parliament on 30th April 2019.

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Photo of James Kelly James Kelly Labour

2. To ask the Scottish Government what assessment it has carried out on the potential impact on businesses across Scotland of no longer using the pound. (S5T-01624)

Photo of Derek Mackay Derek Mackay Scottish National Party

First, our proposals are to keep the pound in the immediate term. A Scottish National Party Government will take the steps that are necessary to enable the Scottish Parliament to authorise the preparation of a Scottish currency as soon as is practicable after independence.

The sustainable growth commission, which was established by the First Minister in her capacity as SNP leader, produced a detailed report on the financial, economic and regulatory requirements necessary for the transition to an independent currency. It engaged extensively with businesses in developing its recommendations. It recommended the introduction of six tests to guide that transition, one of which is the financial requirements of Scottish residents and businesses. Those tests were backed by the SNP conference on Saturday.

Our position is clear—until a new currency can be safely and securely established in the interests of the economy as a whole, the currency of an independent Scotland should continue to be the pound sterling.

Photo of James Kelly James Kelly Labour

The principal objective of the SNP Government and the Scottish National Party is to achieve an independent Scotland where the pound would be immediately replaced by a new Scottish currency. People’s mortgages, savings and pensions would need to be converted from sterling into a new currency, at a cost of up to 30 per cent. That would have a catastrophic impact on businesses and the economy, so why does the cabinet secretary think that it is credible to adopt a policy of dropping the pound, which would make Scottish families and businesses significantly worse off?

Photo of Derek Mackay Derek Mackay Scottish National Party

As Scotland’s finance secretary, I was on the growth commission and I was in attendance at the party conference that endorsed the policy at the weekend. I was a co-author of the resolution, so I am delighted that it passed. What was passed is an economic strategy that shows the benefits of independence and how we can grow our economy and live in a fairer society.

I am delighted that even James Kelly is scenario planning for Scottish independence; I am delighted by that conversion. It is no wonder, given that all the most recent polls suggest that Scottish independence is more popular now, of course, and is gaining momentum. Incidentally, I think that it is quite healthy for parties to have such party democracy—perhaps the Labour Party would benefit from it as well.

We have set out our position on the currency, which is that we will continue with the pound, and we have set out the tests that will guide our decisions. It will be for an independent Scottish Parliament to decide when the time is right for such a change, based on the right economic position for Scotland.

The six tests are: fiscal sustainability; central bank credibility; the financial requirements of Scottish residents and businesses; sufficiency of foreign exchange and financial reserves; a fit to trade and investment patterns; and correlation with the economic and trade cycle. They are sensible tests to guide such a decision. I will take no lectures or lessons from the Labour Party on fiscal credibility; it cannot even put together an Opposition budget, never mind run a country.

Photo of James Kelly James Kelly Labour

In addition to the disastrous proposals on currency, we know that the effect of the proposals of the SNP cuts commission would be a decade of austerity, piling cuts on to local communities. People and businesses want a Government that will start to deal with issues that matter rather than waste time on promoting another independence referendum. Will the cabinet secretary discard the proposals and focus on delivering a national health service that serves patients instead of leaving them on waiting lists, an education system that gives pupils proper subject choice and a rail system that puts passengers first and gets the trains running on time?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Government is investing more in the NHS, in education and in rail than the Labour Party would have been. When we look at the small advanced economies around the world, what do we see that they have that makes them so successful and that we do not have? The answer is independence. It is with independence that we can grow our economy and have a fairer society.

However, let us talk about the day job and the current economic indicators. There is record low unemployment in Scotland right now, at 3.3 per cent, so we are outperforming the rest of the United Kingdom. On gross domestic product growth and increases in exports, Scotland is outperforming the rest of the United Kingdom. There is more investment in enterprise research and development, as well as productivity improvements. We are getting on with the day job and doing as much as possible with the devolved powers to build a stronger economy, but we could do even more with the powers and levers of independence. That is why we seek those powers for the Parliament—to get the best for our country, rather than be left in the hands of the Tories, who are the biggest threat to Scotland’s economy right now.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Very simply, and for the benefit of those watching at home and those in the chamber, particularly James Kelly, who obviously needs to catch up, will the cabinet secretary confirm that the currency that the people of Scotland would use the day before an independence vote would be the same currency that they would use the day after it, the day after that and the day after that—namely, the pound? [

Interruption

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Photo of Derek Mackay Derek Mackay Scottish National Party

Much to the concern of the unionist Opposition, Bruce Crawford is correct

. The currency will remain the pound upon independence, and that will change only when an independent Scottish Parliament endorses such a change. Our policy is that we will support a change as soon as it can be done safely and securely and in the economic interests of the country. That would be determined by an independent Parliament when the time was right. However, we need the powers of independence to be able to match the best-performing economies around the world. They are independent, and that is what we seek for Scotland.

Photo of Murdo Fraser Murdo Fraser Conservative

It has been only three days since the vote at the SNP conference and already the cabinet secretary is in full retreat from the position that was set out at it. We know that for Scottish business the largest export market for goods and services is the rest of the United Kingdom. What estimate has been made of the extra transaction costs that will apply to Scottish businesses if they have a different currency operating here than operates in their major export market?

Photo of Derek Mackay Derek Mackay Scottish National Party

Murdo Fraser’s weekend viewing was clearly not the SNP conference, which I was at and at which we went through in great detail our position, which I have outlined. It is that, on independence, we will be keeping the pound. Of course we can build our options as an independent country. We have set out the tests that we would apply to any potential change of currency and our preferred position. Importantly, we have also shown how our economic policies would be enhanced if we had the powers of independence. That would grow our economy, deliver greater fairness and empower us to make the right decisions for the people of Scotland. With independence, we would also build financial institutions that would advise the Parliament and the Government of the day, rather than being left to the vagaries of UK economic policy, which is disastrous for the people of Scotland.

Photo of Kenneth Macintosh Kenneth Macintosh Labour

I apologise to Patrick Harvie and Willie Rennie—we do not have quite enough time for them to ask questions, because we have to move on to the next item of business.