James Cartlidge is Director of Share to Buy and a Babergh District Councillor.
Why exactly did Alistair Darling yesterday call for a referendum of England, Wales and Northern Ireland about whether an independent Scotland should be able to keep the pound? His proposal, covered in the Mail and Telegraph, was that – just as was the case with the euro – the British people outside Scotland should be given their say before agreeing to enter a currency union with a separate sovereign nation.
One explanation is that it’s taken him roughly seven weeks to mull over exactly the same argument made here on Conservativehome, by myself, back in February.
More likely, he’s realised what I have always believed and which has been proven since the three main Westminster parties united to oppose a Sterling Zone: the word of as many politicians as you can muster counts for little against the word of any other politician, in the modern cynical age. Alex Salmond can always use the argument ‘you’re bluffing’. And who’s to say he is definitively wrong? Who but other politicians?
Can we be absolutely sure that in the maelstrom of a post-yes vote Salmond triumph, that we would not find our leaders tempted to opt for the easy option of keeping the ‘status quo’? What guarantee do we really have that a deal would not be done perhaps along the lines of ‘trident for the pound’ as hinted at in recent days?
When I wrote back in February, citing like Alistair Darling the precedent of the referendum promised at various stages by the main parties before membership of the Euro could be considered, the most common negative response I received was: ‘we don’t need yet another referendum, the Government just tell the SNP that a Sterling Zone isn’t going to happen’. Well, we’ve tried that, and despite a huge show of unity, the SNP are able to hold the line that it’s all a great bluff – this may seem absurd to some commentators, but do we know that the people of Scotland feel the same? Or do they have a feeling that Alex Salmond, emboldened to maximal charisma by a ‘yes’ vote, might once again be able to pull off the impossible and bring about a Sterling Zone despite the opposition of the other parties?
There is only one cast-iron way to show Salmond that those who oppose a Sterling Zone are not bluffing, and it is also the only way to ensure that such an arrangement could legally never happen and that is to promise a referendum for the rest of the UK on whether it wishes to be part of one. If the Prime Minister stands up in Parliament and says there will be such a plebiscite on such a date, and that the legislation will be passed as rapidly as possible, nobody could say that this was a bluff. It would be as much a fact of democratic reality as the Scottish referendum itself.
What would be the SNP’s arguments if such a referendum was announced? We already know the answer. In response to Alistair Darling’s call for a Sterling Zone vote in the rest of the UK, Alex Salmond’s deputy, Nicola Sturgeon, said that there would be no need for such a referendum in England, Wales and Northern Ireland because the “currency arrangements for the rest of the UK would not be changing”.
Yes, the post-independence pound might look the same and feel the same, and still be the pound, but the risk behind the currency would be very different. This would now be a currency not of one sovereign entity but of two; and it would represent a huge risk, the same risk as the euro has always represented for Germany – the risk of sharing debts with nations whose budgets you do not control and who have shown a historical tendency to spend big when it comes to the state, benefits and so on.
However, once the referendum was called, Sturgeon’s argument would be redundant. So, would the SNP then move back to ‘if you don’t let us keep the pound, we’ll renege on our share of the national debt’? This is interesting. The definition of the word ‘bluff’ is to deceive someone into believing one can or is going to do something. Could the SNP actually renege on Scotland’s share of the debt? Is it going to? Who is really bluffing here? I suspect it’s much easier for pro-union ministers to reject a currency union than it is for a newly independent nation, in one of its first significant economic acts, to default.
If, in response to the argument of pro-Union politicians against a Sterling Zone, the SNP had said ‘but Britain would have nothing to fear in sharing its currency with us, you can trust us to be prudent’, we might at least have thought they were serious about trying to persuade us to consider one. However, when the SNP’s response to the fundamental concerns about any currency union – debt sharing – is to threaten to walk out on sharing debt, they are answering those concerns with affirmation of their credence.
A key point of any referendum concerns timing. Ideally, a Sterling Zone referendum of non-Scotland Britain would be held prior to the Scottish vote. This would enable the Scots to vote for or against independence knowing where they stood – if, as I suspect would be the case, the rest of Britain had voted against a Sterling Zone, the people of Scotland would vote knowing that to leave the UK would be to leave the pound. The SNP would have to be clear about what the new currency would be.
If, alternatively, legislation was passed soon to hold a Sterling Zone referendum in the event of a Scottish vote for independence, this would at least have the strength of confirming to the people of Scotland that a vote to leave would be likely to mean ditching the pound. In other words, it would add somewhat to the economic uncertainty around the case for independence, and presumably impact upon the independence referendum itself.
Ultimately, the only facts we really know are that a referendum is going to happen in Scotland and the independence side could win. We hope that a ‘yes’ vote is unlikely, but complacency is crazy and those who support the Union should do everything in their power to thwart a vote to leave. If that involves calling a referendum for England, Wales and Northern Ireland, so what? Let’s show we aren’t bluffing. Let’s go beyond the politicians and let the people of every street, village, town and shire in every single part of the Union have their say on this most fundamental of issues.