Richard Leonard
Richard Leonard
Edinburgh, 30th. August 2019

Thank you for inviting me to speak this morning at this first Scottish Future event and let me from the start nail my colours to the mast .

It is my belief that we live in a world where there are too many national boundaries not too few , that we should be bringing borders down, not putting them up.

Let me say as well that few people would dispute that the creation of a separate Scottish state is possible.

The more relevant question is is the creation of a separate Scottish state preferable?

Would we be better off or worse off – and not just materially at that.

This morning Professor Ronald McDonald and Angus Armstrong have helped illuminate the answer to this central question in one critical area.

Let us be clear.

This is not an exercise in talking Scotland down : far from it.

It is an attempt to introduce into this debate the hard facts of the Scottish economy today and the economic facts of a separate Scottish currency.

And we cannot wilfully ignore those facts.

The SNP’s plan for an independent currency was the recommendation of their Growth Commission which in reality is a cuts commission.

It presents a vision of a future Scotland which we cannot afford and which we do not want.

It proposes another wasted decade with people living, surviving, struggling under the yoke of a shock fiscal deficit reduction plan.

So let me be clear the SNP’s in their own words “clear-sighted analysis of the prospectus for independence” is built on the economics of austerity.

It is built on the economics of austerity at the very time when the intellectual case for austerity is bankrupt , and at the very time when people can see that austerity is not an economic necessity but a political choice.

The SNP’s proposal is for a hard dose of public spending contraction.

Their own Commission proposed a time horizon of a decade.

In April this year the SNP Conference demanded a separate currency “as soon as practicable” based on a five-year time horizon and just last week the SNP’s Deputy Leader said that the drastic deficit reduction plan should be enforced not over five years but in “less than three years”.

This is turbo-charged austerity - greater than the shock treatment inflicted on us by George Osborne in 2010, greater even than the shock treatment inflicted on the Greek economy by the Troika which caused a meltdown from which the Greek economy and the working people of Greece have yet to recover with total unemployment running at 18.5 per cent, youth unemployment at nearly 40 per cent.

And we know that austerity is never evenly distributed.

In fact during this last decade of austerity, not only have the poor got poorer but the rich have got richer, so that in Scotland today the richest one per cent own more personal wealth than the whole of the poorest fifty per cent put together.

Austerity will not tackle social and economic inequality.

It will make it worse.

The SNP’s case is also founded on a prospectus for independence built not on sovereignty regained but more accurately on sovereignty lost.

Sovereignty lost over monetary policy and so interest rate policy, mortgage rate policy, exchange rate policy, inflation policy and money supply policy - all decided by someone else, somewhere else.

And with an un-costed promise to peg Scottish corporation tax to remainder of UK corporation tax levels there is a ceding of sovereignty on the taxation of company profits too .

So these policies for Scotland and the Scottish economy would be set in London, by the Bank of England, and by the Chancellor of the Exchequer of a foreign government at the very point that Scottish democratic representation was withdrawn.

That is not more independence it is less.

In March of this year SNP Finance Minister and a member of the Growth Commission , Kate Forbes, claimed on the BBC that “the currency you use the day before independence will be the same currency you use the day after independence.”

This is simply not true.

Because we will be in the precarious state of running a currency without a central bank.

Moreover our economy and our public finances for three years, five years, ten years, take your pick , would be run by a Government we cannot vote out.

And the SNP’s plan for independence is based on a neo-liberal economic model which relies heavily on foreign direct investment into Scotland on large multinational corporations and labour market “flexicurity.”

So that in work poverty and inequality would remain a feature of Nicola Sturgeon’s independent Scotland.

So we should not be surprised to have learned that the SNP’s Commission consulted twenty business organisations but not one trade union.

In 2014 the SNP said , “Using sterling will provide continuity and certainty for business and individuals, and an independent Scotland will make a substantial contribution to a Sterling Area.

"We will therefore retain the pound in an independent Scotland.”

So what about continuity and certainty now?

In 2017 according to the Scottish Government’s own latest figures, sixty per cent of all of our exports, worth £48.9 billion, went to the Rest of the UK.

That’s more than three times as much as we export to the whole of the European Union.

And we imported £61.7 billion worth of goods and services from the Rest of the UK which represents around 10 per cent of Rest of UK exports.

In other words, we are in a highly advanced state of fiscal but also monetary and economic union with the rest of the UK .

So the price of a separate Scottish state would be significant currency transaction costs created by this plan for a separate Scottish currency, and as a proportion on average six times higher for Scottish based businesses than Rest of UK businesses.

And as we have heard this morning the other major price of the creation of a separate Scottish currency is the requirement to build up hundreds of millions of currency reserves to give this separate currency credibility and to protect it against speculators.

The opportunity cost of this is huge.

Imagine what instead we could invest that money in.

The whole premise of Scottish nationalism - that the UK cannot be changed - I reject.

Another world is possible and another Britain is possible as well.

So it is not an argument for the status quo that I make It is an argument for change.

It is an argument to remain, but it is also an argument to reform.

There is a dividing line which has opened up in Scottish politics between political parties of austerity- the Conservatives but also the SNP on one side, and Labour which is proposing an end to the austerity experiment and £70 billion of new investment in our economic base, our infrastructure and our public services over the next decade on the other.

So that opening up before the people of Scotland is a choice of leave, contract and cut or remain, reform and invest.

Angus Armstrong has this morning presented some compelling arguments for the reform of the UK.

It is not just the political system which is too centralised, it is the economic system too.

And that’s why whether Brexit happens or not, and the Scottish Labour Party takes the view that we should remain in the UK and the European Union.

We need reform anyway.

So decisions on the currency of a separate Scottish state are not remote or abstract.

They are immediate and real to the current debate.

They have economic, social and democratic consequences which are far-reaching It is about whether our children get Assisted Support Needs when they need it.

It’s about whether our public libraries stay open or close.

Whether we can build the homes that our people need.

Whether we can invest in a Green Industrial Revolution to tackle climate change.

It’s about whether we have a National Health Service free and available to all at the point of need, whether we can invest in mental health services.

It is about whether we can tackle child poverty or make it worse, whether we can give our older people dignity in retirement.

These all go to the heart of why we should reject the SNP’s central idea.

It is why we need to reform and remain.

Thank you.
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