I congratulate the hon. Member for Edinburgh South (Ian Murray) on securing this debate, although from what we have heard so far, it is less of a debate on currency and more of a quick canter through some of

12 Feb 2014 : Column 304WH

the no campaign’s scaremongering. I would like to address one or two of the points that he made. He suggested that the Scottish economy would be run on ginger bottles—that is, old lemonade bottles. What a patronising and insulting way to look at a modern, productive economy.

Fiona O'Donnell: Will the hon. Gentleman give way?

Stewart Hosie: No. I have only five minutes.

The hon. Member for Edinburgh South suggested that so much money had been put into Scottish banks. I draw his attention to chapter 1, paragraph 1 of the report by the Parliamentary Commission on Banking Standards. The cash cost at peak is reported to be £133 billion—that was £47 billion to Royal Bank of Scotland in return for 82% of the stock, around £25 million into Lloyds, and smaller amounts to the Icelandic and other financial institutions. Where taxpayers are still on the hook is the near £50 billion owed to them from Northern Rock and Bradford and Bingley, which may be many things, but they are not Scottish banks. The notion that the argument was ever about Scottish banks bad, English banks good, must be knocked on the head.

The old chestnut about Scotland in a sterling currency zone being like Greece was also raised. Greece’s problem had nothing to do with being in a currency union and everything to do with appalling productivity. As we know, Scottish productivity is nigh on identical to that of the rest of the UK. That would avoid such problems entirely.

David Mowat (Warrington South) (Con): Will the hon. Gentleman give way?

Stewart Hosie: No. I do not have time.

The hon. Member for Edinburgh South rightly and understandably prayed in aid Dr Carney’s recent speech, which he said did not pass judgment on the relative merits of the different currency options for Scotland, but instead drew attention to the key issues. However, Dr Carney did point out that any arrangement would be negotiated and that the Bank of England would implement whatever monetary arrangements were put in place. That is to be welcomed, not just by me, but by the 71% of people in the rest of the UK who support the continued use of sterling after Scottish independence. The same proportion—71%—of Labour voters in Scotland also support the continued use of sterling after independence.

The hon. Member for Edinburgh South and the no campaign seem to fail to understand what Scotland brings to the table. Of course we recognise the constraints—I will come on to them—but we bring export revenue receipted in sterling. The impact on the sterling balance of trade would be immediate and significant were Scotland somehow—impossibly—forced not to be able to use sterling. The same applies to trade—the rest of the UK sells £60 billion into Scotland. If we were forced to use a foreign currency and transaction costs were applied, that would imply a catastrophic loss to English businesses: additional costs that the no campaign never mentioned.

Let us put the matter into context. In 2012, the rest of the UK sold into Scotland more than it did into Brazil, South Africa, Turkey, Russia, India, South Korea, China, and Japan combined, yet we hear from the no campaign

12 Feb 2014 : Column 305WH

that they do not want us to use sterling, even though that is impossible, which would imply massive transaction costs and the loss of jobs in the rest of the UK. I am sure that is not something they intend to do.

Mr MacNeil: Will my hon. Friend give way?

Stewart Hosie: No, I do not have time. So where would independence while keeping sterling leave us? It would not imply a foreign currency controlling our economy, because the central bank does not control the economy. It works to a single 2% inflation target, which we think is sensible.

Mark Garnier: Will the hon. Gentleman give way?

Stewart Hosie: No, I do not have time. It would effectively leave us in Scotland in the same place as the rest of the UK, accepting the discipline of an independent Monetary Policy Committee, while leaving Scotland, along with the rest of the UK, in complete control of the rest of its social and economic levers. We would have parity.

Mark Garnier: Will the hon. Gentleman give way?

Stewart Hosie: I do not have time. I have barely a few seconds left. I do not even have time to comment on the Chancellor’s supposed intervention tomorrow. However, if a Tory toff Chancellor goes to Scotland to bully and to scaremonger, it will be looked on very badly indeed by the Scottish people.

3.11 pm

Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): It is a pleasure to serve under your chairmanship, Mrs Riordan. I follow the hon. Member for Dundee East (Stewart Hosie) from the Scottish National party, and I hope that, in the words of Bill Clinton, he will feel our pain in Scotland. This is the level of debate that we have to put up with day in, day out in the separation campaign. It is full of bluster, assertion and very little detail.

In the short time available, I want to pose the argument in the language that the ordinary man and woman on the street understand. We face the biggest decision we will ever make on 18 September 2014, and I had high hopes that the debate would deal with all the big issues. A business man—a friend of mine in my constituency—told me about a meeting that he had with the SNP treasurer in charge of finances for the campaigning. He asked the SNP treasurer how he would deal with the big issues such as currency, and he replied that they would make lots of promises, spend money before the campaign and that hopefully that would get them through. I did not believe that statement, but I do now, because I have read the Scottish Government White Paper. It contains no facts and no detail and threatens the future of my country.

We should also realise that the people who support a separate Scotland are largely cultural nationalists who believe that, irrespective of the economic damage that separation would do, Scotland must be a separate nation. I do not have a gripe with people who believe in that

12 Feb 2014 : Column 306WH

particular brand of nationalism, but the rest of the people are Jerry Maguire individuals—if I can use that term—when it comes to the debate, because they want someone to show them the money. They want someone to say they will be better off if Scotland separates and is not part of the UK.

After last week’s debate about the future of the UK, I would put the debate into three different boxes: first, things that we know will not change; secondly, things that we know will change; and thirdly, things that we will have to negotiate on. The SNP is trying to put as many issues as possible out of the negotiation box and into the “will not change” box. That is why we will keep the Queen, although MSP Christine Grahame wants Annie Lennox to be the Head of State in Scotland.

Ian Paisley (North Antrim) (DUP): The unintended consequences that the hon. Gentleman raised were touched upon last week in a speech by the leader of Sinn Fein when he said that the United Kingdom hangs by a string. Is that not a very worrying statement that shows how important the referendum is for everyone in the United Kingdom?

Mr McCann: Absolutely. We have been in this Union for 307 years. It has served us well, and I want to make sure that it continues after 18 September 2014. We have loads of statements about what will not change and all the contradictions: we have the Queen and we have NATO; we want to be a member of NATO, but we do not want nuclear weapons. We had the fiasco over Europe: we will waltz in—presumably a Vienna waltz—and we will keep our rebate, and be delighted when everyone welcomes us in as a member of the European Union.

Ann McKechin: My hon. Friend will be aware that the Scottish Government said that universities in Scotland will be better off under separation, but the EU education commissioner has confirmed today that their proposed policy on tuition fees for students in the rest of the United Kingdom is illegal. Does my hon. Friend believe that yet again they have been proven unsuccessful?

Mr McCann: Absolutely. It is a significant nail in the case for separation. All those things make a mockery of the debate, because people in Scotland want a truly open and honest debate with all the big issues discussed, flaws and all, but we do not get it. It reminds me of the quote from Groucho Marx, who said:

“I don’t want to belong to any club that will accept me as a member.”

Alex Salmond says that he has to set the rules before he decides to join the NATO, European Union or currency clubs. In terms of what happens in the street and what people talk about, we should simply retrace our steps in the currency debate.

Alex Salmond’s first position on the euro made a lot of sense when he presented it, because we would leave the United Kingdom, become a separate state, apply for membership of the EU, and, as part of applying for membership as a new state, we would have to accept the euro as our currency. However, as we know—my hon. Friend the Member for Edinburgh South (Ian Murray) exposed the argument cruelly—the debate on the euro currency caved in when the crisis came. The arguments have been well set out by my hon. Friend. The SNP then

12 Feb 2014 : Column 307WH

brought us back to the pound as our currency, which, as has been mentioned, Alex Salmond had described as a millstone round Scotland’s neck.

If Scots vote for independence, there will be massive uncertainty, because negotiations will be required on all those issues. At the moment, we have the pound as our currency. The Bank of England is our lender of last resort, which means that when we pool and share risk, interest rates will be the same in Land’s End as in John O’Groats. We know that the SNP proposed that we have the currency of a foreign state and we know that there will be no political and fiscal union, so, in the event of separation, Scotland then becomes—this is really important for the man and woman on the streets of Scotland—a higher risk. As a result, our interest rates will increase, which means that we will have to spend more money on mortgages, loans, and credit cards. The cultural nationalists will accept that, because they will pay any price for separation, but most canny Scots will not.

3.18 pm

Mr Iain McKenzie (Inverclyde) (Lab): It is a pleasure to serve under your chairmanship today, Mrs Riordan. I congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on securing this important debate. The choice of which currency to use is perhaps the single most important economic decision a country can take. That is why Scotland is asking, as we close in on the independence referendum in September, why the yes campaign does not seem to know what currency it wants. We hear that the SNP wants and favours a currency union with the rest of the UK, keeping the pound. However, the other members of the yes campaign want either the euro or a new currency altogether. This leaves us in Scotland very confused and worried. What currency does the yes campaign want for Scotland?

The people of Scotland want a straight answer about the currency from those who support separation, with a guarantee of which currency we would use if a yes vote should transpire in September. But today all we have on currency from the nationalists is a wish list at best, wrapped up and qualified with ifs, buts and maybes. We now know that keeping the pound in a currency union would require the agreement of the rest of the UK; but what if agreement could not be reached on that? What is plan B? Even if a separate Scotland wanted to continue to use the pound, and agreement was reached with the rest of the UK, it would mean that there was no control over our interest rates and how much Scotland could tax and spend. I do not believe that even the nationalists would accept that as independence.

Mr Nigel Dodds (Belfast North) (DsUP): Is not the bottom line the fact that there is a fundamental contradiction at the heart of the yes campaign—that on one hand the SNP and the yes campaign want national sovereignty to be transferred to Edinburgh, but on the other hand they want to give it away almost immediately in a currency union?

Mr McKenzie: The right hon. Gentleman makes the point clearly and we have been highlighting that throughout the debate on Scotland’s future.

If Scotland carried on using the pound regardless, we would have no control over our economy and we could lose our central bank, which acts as the lender of last

12 Feb 2014 : Column 308WH

resort. The nationalists are now suggesting that Scotland should default if they do not get their way on a currency union; the Deputy First Minister has said that Scotland might not take its share of national debt if it is not agreed. That is wildly irresponsible and would jeopardise an independent Scotland’s creditworthiness. The people of Scotland have every right to worry about the future of the money in their pocket, when they hear bullying threats, such as the threat of reneging on our share of the debt. What tone would that bring to other negotiations about separation? It is hardly the way to make friends and impress people.

David Mowat: The hon. Gentleman is right to say that the Scottish Government cannot default on the debt, but can only refuse in the negotiation to take their share; the debt is already underwritten by the UK Treasury. What I do not understand about that position is that all the cash collection systems operating in the UK—Her Majesty’s Revenue and Customs, benefit systems and all the rest—will continue to be operated centrally. It is a mess.

Mr McKenzie: The hon. Gentleman makes some good points; but the main thing is that the Scottish Government believe they can do anything they want.

Losing the pound would mean a higher cost of living, with higher mortgage repayments, higher credit card and store card bills and more costly loans, because Scotland would start out as a separate state with no credit rating. There would also be an unnecessary threat to jobs: what would the exchange rate be? The cost of changing money every time Scottish firms were to buy from or sell to our biggest customer—the rest of the United Kingdom—would be an issue. There would be deeper cuts or higher taxes as the Scottish Government paid more to borrow money, leading to more debt and lower public spending. There would be risks to benefits and pensions as payments were converted into a different currency. Many people worry about what currency they will be paid in and what their savings will be worth.

There would also be risks to the economy. Without the back-up of the rest of the UK following the world banking crisis, Scottish banks would have gone under and families and businesses would have lost everything. Let us remember that billions were pumped into our banks following the world banking crisis. In my constituency alone, more than 400 jobs were saved. Time is running out for those who want a separate Scotland to give an answer and provide an assurance on currency. The Scottish people cannot be expected to go on any longer with “Don’t worry—it will be all right on the night.” It is not scaremongering to want a direct answer from the nationalists, incorporating a guarantee on currency in Scotland after 2014.

Jim Shannon (Strangford) (DUP): Members representing constituencies in Northern Ireland, which borders another country with a different currency, can attest to the difficulties with prices and services. Does the hon. Gentleman agree that retention of the pound sterling is essential for the continuation of trade, but also for the continuation of the United Kingdom of Great Britain and Northern Ireland?

Mr McKenzie: I fully agree. What is scary is the attitude of the nationalists and the yes campaign—an attitude of casually and arrogantly waving off any

12 Feb 2014 : Column 309WH

challenge to their supposed plans. Those plans do not stand up to scrutiny—as we find now on the matter of currency; they would deliver not so much independence as isolation.

The question to the nationalists is simple, but the options are limited. Can they deliver a currency union? All the indications are that the answer is no. Will they go it alone and just use the pound, with the result that they will have no control over the economy? Will they go for a new currency, and will that be pegged or floating? The Scottish nationalists are keen to get closer to the Nordic regions, nations of a comparable size; they always cite Norway, Finland and Sweden, or anywhere in that supposed arc of success, as it fluctuates. In the past 10 years, Norway’s currency, which was pegged against the euro, has fluctuated, and there has been a high degree of movement, and cost implications, as a result. Alternatively, will the nationalists adopt the euro—if and when Scotland can gain entry to the EU?

Those questions are as yet unanswered. Scotland needs to know from the yes campaign what currency—guaranteed—would be used after 2014. We who want to remain part of the UK can guarantee Scotland’s currency after 2014; it will be the pound, and all that is necessary for that to happen is to vote no in September.

3.25 pm

Anas Sarwar (Glasgow Central) (Lab): It is a pleasure to serve under your chairmanship, Mrs Riordan. I thank my hon. Friend the Member for Edinburgh South (Ian Murray) for securing the debate and for his powerful and passionate speech. I also thank the hon. Member for Dundee East (Stewart Hosie), who in stating the successful trade statistics between Scotland and the rest of the UK made the case for Scotland to be part of the United Kingdom, not independent.

The currency that Scots would use after separation goes to the heart of the independence debate and cuts to the core deception in the SNP’s argument. There can be few more important issues than the currency in our pocket, the money that our businesses trade in, the cost of borrowing money or, indeed, how much money individuals, businesses and the country have to spend. It is not just a matter of what we spend in shops; it is about what people’s pensions and benefits are paid in, what businesses across the common UK market trade in, and what we borrow more of to buy a house or a car.

The proposals on currency put forward by the nationalists are rooted in assertion and baseless opinion, and in a determination to bluff and bluster their way to 18 September, when every credible expert on the issue has exposed the flaws in their currency union proposals. They used to be very clear about what sterling meant to them. We all remember when Alex Salmond said that

“sterling has been a millstone around Scotland’s neck”

or that it

“is costing Scotland jobs and prosperity.”

However, now that those arguments do not suit the cause, they have been conveniently dropped and he says:

“Retaining the pound under independence is something I believe is in Scotland’s interests”.

12 Feb 2014 : Column 310WH

The nationalists have made those shameless U-turns and about-faces because they are determined to win the vote on 18 September.

Jonathan Edwards: My party shares with the SNP many of those criticisms. They are not about currency but monetary policy: the way that the Bank of England’s monetary policy has been directed towards pushing the financial sector in the south-east of England, rather than promoting the manufacturing-based economies of Wales and Scotland.

Anas Sarwar: The hon. Gentleman fails to realise in making that criticism of how the Bank of England has operated and the effect on Scotland and Wales that the nationalists’ currency union plans after independence would have exactly the same effect. Decisions about the interests of the people of Scotland would still be taken in this place; the choice is whether we should have a voice here at the same time. The hon. Gentleman is undermining that voice.

Mr Bain: Scotland’s First Minister wants to frame the debate as him against the elite, but perhaps I can share the views that a voter in my constituency expressed to me in Edgefauld road in Springburn on Saturday afternoon. She said, “If you get the details about the currency wrong, it is ordinary working people like me who suffer the biggest hit.” Is not that right? Is not that what happened in Ireland when living standards declined by 20% between 2007 and 2011, and is not my hon. Friend right to campaign in favour of the pound?

Anas Sarwar: I could not have put it better. Yes, this has an impact on business and big institutions, but the price will always be paid by the poorest and most vulnerable people. I and my Labour colleagues stand shoulder to shoulder with those people throughout the United Kingdom. The nationalists will throw everything into this debate—every assertion, opinion, myth, allegation, contention and baseless claim—so that they can win on 18 September. They do not have any recognition of reality; they are much more the Walter Mittys of Scottish politics. The only thing that they have been clear on is the willingness to hand over control of monetary policy to another country; in the words of the Governor of the Bank of England, they would “cede sovereignty”.

It is important to look at the first letter sent in May 1997 by the then Chancellor, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he made the Bank of England independent. In paragraphs four and five of that letter, the point is made that

“The Bank is there to fulfil the objectives of the UK Government, as set out by the UK Government and not as determined by the Bank.”

So the Bank is there to support the economic policy of the UK, and after Scottish independence, it will be there to support the economic policy of the rest of the UK, not that of the Scottish Government. The Bank of England would go by the political will of the Chancellor of the Exchequer—whether the current Chancellor or the future Chancellor, the current shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls). The Bank will follow that remit and not the remit of the current Scottish Government or, indeed, a future Scottish Government.

12 Feb 2014 : Column 311WH

What does that mean for Scots? If someone has a mortgage, their interest rate will be controlled by the central bank of a foreign country, with no input or influence from Scots, no accountability and no say on inflationary targets or the cost of money supply. Likewise, if someone has a car loan, a credit card or an hire purchase agreement for a new suite or a new washing machine, all those things will be controlled by a foreign Government, with Scots having no say or influence, and with no accountability.

Margot James (Stourbridge) (Con): I thank the hon. Gentleman for giving way. He is making a very passionate speech. In addition to the points that he is making, there are the lessons from the European currency union and the debate within that union about the central bank having pre-budget approval of all the budgets proposed by member states. Can he envisage that applying to Scotland as well if those plans should unfold?

Anas Sarwar: I thank the hon. Lady for that intervention. What I envisage is Scots making a confident and passionate no vote on 18 September and working together with our friends and colleagues in the UK to create the right kind of economy that works for everyone right across the UK.

The reality is that the cost of borrowing money would be in the hands of an institution over which the people of Scotland would have no say—none. If a Scottish business wanted to invest, the cost of borrowing that money would be controlled not by the Scottish Government but by the Government of Scotland’s biggest competitor and trading market. That is like British Airways setting the trading conditions and pricing policy of Virgin Atlantic. There would only be one winner in such an arrangement.

Is it any wonder that business organisations are horrified at these proposals? It is not that long ago that the SNP would churn out press release after press release attacking the UK Government, UK politicians or the Monetary Policy Committee, saying that the interest rates being set were not suitable for Scotland. What on earth does the SNP think would happen after independence?

The reality is that what the SNP is offering Scotland is neither right nor fair for Scots. That is the real democratic deficit on offer in this election. The other reality, and the reason why the SNP does not want to outline plan B, is that it knows that its entire White Paper is based on the assertion that sterling is kept. If sterling is lost, the entire White Paper comes into disrepute.

Mrs Linda Riordan (in the Chair): Order. Before I call the last Member to speak, I remind her that I will call the shadow Minister to speak at 3.40 pm.

3.33 pm

Katy Clark (North Ayrshire and Arran) (Lab): Thank you very much for calling me to speak, Mrs Riordan. It is a pleasure to have the opportunity to speak in this debate. I expected more Members to put their names forward to speak in this debate, and I would have liked to have seen more Members from the Scottish National party. I know that they have complained about lack of time, but this is the third debate on Scottish issues

12 Feb 2014 : Column 312WH

in the last week in which the SNP has not put many speakers forward. I have been in this place since 2005—

[

Interruption.

]

Mrs Linda Riordan (in the Chair): Order.

Katy Clark: I am very grateful to you, Mrs Riordan. As I was saying, I have been a Member since 2005 and I am very aware that, frankly, it is often far easier for a member of one of the minority parties to be called to speak than someone from one of the larger parties, because of the way that the rules in this place operate.

Fiona O'Donnell: On a point of order, Mrs Riordan, I am very sorry to interrupt the flow of the debate, but it would be helpful if you could clarify something. The hon. Member for Perth and North Perthshire (Pete Wishart) has made serious allegations about the conduct of this debate. Could you clarify whether any hon. Members from the SNP asked to speak in it? Have they been prevented from speaking in it? Have they ever even requested a debate on the issue of the currency in Scotland?

Mrs Linda Riordan (in the Chair): That is not a point of order. I call Katy Clark to speak.

Katy Clark: Thank you, Mrs Riordan. As I say, I agree with the hon. Member for Dundee East (Stewart Hosie): I would have liked a longer, more detailed debate. I hope that this is just one of a series of debates in this House on these kinds of issues.

Pete Wishart: The hon. Lady is a fair and reasonable woman, and she has accepted that we have very little time to address the other side of the argument. This really important debate must, of course, be heard in the House of Commons; will she work with us to try to ensure that when we debate these issues in future, we get a more equitable division of the time, so that both cases are made?

Katy Clark: I suggest to the hon. Gentleman that perhaps the first step would be for his colleagues to put in requests to speak.

Mrs Anne McGuire (Stirling) (Lab): Does my hon. Friend accept that yesterday, we had a six-hour-and-four-minute Opposition day debate, promoted by the Scottish National party and Plaid Cymru, in which all these issues could have been aired?

Katy Clark: Indeed, and we had a debate last Thursday on Scotland’s place in the Union. Those were the kind of events that we should use to explore these issues.

There is a great deal of debate on the subject in Scotland, but the decision taken there in September will have massive implications for the whole United Kingdom. I regret that in the two and a half years that we have been having this debate in Scotland, the quality of debate has not been higher. I hope that getting more people involved in the discussion, and getting more information and facts on the table, will improve the debate’s quality. I hope that today the UK Government will give their perspective on some of the questions, because that is part of what is required to continue

12 Feb 2014 : Column 313WH

the debate, which should be taking place here, in the Scottish Parliament, and communities up and down Scotland.

One of the most important decisions that an independent Scotland would take, if we voted for independence in September, would be on the currency, so I strongly congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on his choice of subject for debate, but currency is only one of the many economic issues that will be central to people’s decision making. To be honest, I never believed that I would see a referendum on Scottish independence in my political lifetime. It was not something that many people in Scotland argued for, historically. It is really only as a result of the electoral success of the Scottish National party—we can perhaps discuss the reasons for that on another occasion—that we are in this position. I also honestly do not believe that colleagues from the Scottish National party in this room ever believed that they would have a referendum on independence in their political lifetime.

Many people in Scotland are in the same position: when we go from door to door and speak to people, many genuinely have not finally made their mind up on the issue—particularly, I think, because of the economic turbulence that we have been living through in the past few years. It will not be simply an emotional choice that people make in September. Historically, many people who are sympathetic to independence have made that choice on emotional grounds, and grounds to do with identity and culture, but in the coming months, economic issues will be central to people’s decision-making processes.

I welcome the debate and some of the statements that have come forward in the past few weeks from people at UK level. I am a member of the Select Committee on Business, Innovation and Skills; we had the Secretary of State for Business, Innovation and Skills before us last week, and he gave some of his views on the issue. We still need to get a lot more information to make decisions.

I have always looked at things from an economic point of view, and considered decisions on the basis of how I think we can improve the democratic accountability of our economy. I have always considered how we can take economic decisions that are more central to how we run our economy in the interests of ordinary people, rather than elites. That will be central as we go forward.

Mrs Linda Riordan (in the Chair): Order.

3.40 pm

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): It is a pleasure to see you in the Chair in this important debate, Mrs Riordan. It has been lively at times, and there has been more heat than light on occasions, but none the less it is about trying to ensure that we have the opportunity to discuss the important issue of currency.

I congratulate my hon. Friend the Member for Edinburgh South (Ian Murray) on his superb opening contribution. He laid out clearly and articulately the issues that we have to discuss. We then heard useful contributions from my hon. Friends the Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann), for Inverclyde (Mr McKenzie), for Glasgow Central (Anas Sarwar), and for North Ayrshire and Arran (Katy Clark).

12 Feb 2014 : Column 314WH

I want to pick up on a couple of points made by my hon. Friend the Member for North Ayrshire and Arran, because she articulated clearly that although many people in Scotland may have an emotional attachment to the idea of Scotland being an independent country, they none the less recognise the importance of the political, social and economic union that has existed over the years, and what an important decision this is for the people of Scotland to make in September. The Scottish National party would sometimes have us believe that everything will stay the same and nothing will change, but at the same time it tries to advance the notion that everything will change. That is not so. Increasingly, people are beginning to see through that false prospectus. A number of hon. Members spelled that out in some detail.

Increasingly, people are beginning to realise that the currency issue is important. For them, it is not just about the macro-economics, because some will, perhaps, not take an interest in that. However, they will take an interest in the money in their pay packets and in their pockets, in their ability to pay their way in the world, and in the impact on their mortgages, credit arrangements, store cards and car loans.

Fiona O'Donnell: My hon. Friend is summing up the debate in her usual excellent fashion. Is she struck by the views of young people, who will live with this decision far longer than any of us, particularly the youngsters in Fife who, having heard my hon. Friend the Member for Glasgow Central (Anas Sarwar), voted no yesterday?

Cathy Jamieson: My hon. Friend makes a valuable contribution, as always. I recognise that this is of huge importance to young people in Scotland. Obviously, young people aged 16 and 17 are, for the first time, have the vote in an important election. Of course, there are many young people here today in Parliament, including some members of the Scottish Youth Parliament, who are here to lobby on votes for 16-year-olds. I am struck by the intelligent way that young people have approached this debate. When it comes to the independence cause, they have not simply rushed to the barricades, as the SNP may, at one stage, have thought they would. They have thoughtfully debated, considered and put forward the arguments, and will come to their own conclusions, as indeed the rest of the people in Scotland will.

I have to say to the SNP that it is becoming rather tiresome to hear, every time anything is said that is not in agreement with the First Minister or his team, that we are somehow scaremongering. It is right and proper to scrutinise the proposals, including the White Paper and all the policies. [Interruption.] Indeed, the hon. Member for Dundee East (Stewart Hosie) is agreeing with me. He is an intelligent and articulate man who takes a close interest in all Treasury, banking and financial services sector issues; I gently say to him that it is rather odd that despite that, he continues to trot out the SNP line the whole time, without giving that degree of scrutiny to the proposals made by his political party.

On that point, Professor John Kay, former economic adviser to the First Minister and professor of economics at the London School of Economics and Political Science, said:

“If I represented the Scottish government in the extensive negotiations required by the creation of an independent state,

12 Feb 2014 : Column 315WH

I would try to secure a monetary union with England, and expect to fail…So Scotland might be driven towards the option of an independent Scottish currency.”

He also said:

“Alex Salmond has said I think rather stupidly that there is no plan B. The trouble with having no plan B is you don’t have any negotiating power if you don’t have a Plan B. So there has to be a Plan B. And Plan B has to be an independent currency.”

We are not getting that honesty in the debate, as far as the people of Scotland are concerned. That is important.

Mr Bain: My hon. Friend is correct to talk about scrutiny, but of course the Institute for Fiscal Studies and the National Institute for Economic and Social Research have scrutinised the White Paper and concluded that under any of the possible currency options, the pressure on fiscal policy would mean that taxes would have to rise or spending would have to fall. Would not that create more pressure on public services and the social security system in Scotland?

Cathy Jamieson: Again, my hon. Friend makes an important point. Perhaps the Minister will shed light on whether there has been any discussion on these issues. The SNP’s current argument seems to be that, in an independent Scotland, it will not take any of the difficult decisions that go along with that. It is not entirely clear yet what will happen to all the benefits and pensions arrangements, and all the rest of it, for some time into the distance. The idea that it will be all right on the night is simply not good enough, as was said earlier.

People have lined up to criticise the SNP’s scenario, including Brian Quinn, former executive director of the Bank of England, Owen Kelly of Scottish Financial Enterprise, Iain McMillan, director of CBI Scotland, the chair of political economy at the university of Glasgow, and the chief European financial economist, who is from a key financial institution. All those people—I do not have time to quote them—have criticised it.

I was told, although I did not hear it personally and will look closely at the transcript, that the Deputy First Minister implied, on “Good Morning Scotland”, that if an independent Scotland did not get its own way on the currency union, it would simply default or walk away from a debt. My hon. Friend the Member for North Ayrshire and Arran said that she never thought that she would see a referendum in her lifetime. In all the years I was in the Scottish Parliament, during some of which time I served as a Minister, I never thought I would hear a Deputy First Minister of Scotland shirk responsibility and say that they would walk away from a debt and put Scotland’s economy at risk. I hope that that report from this morning is not entirely accurate. If it is, I hope that the Deputy First Minister now regrets those remarks and looks again at them.

Stewart Hosie: Will the hon. Lady give way?

Cathy Jamieson: I will, briefly, just to show that I am a fair person.

Stewart Hosie: One of the few who is fair. In relation to the assertion that the hon. Lady and many of her colleagues have made about the Deputy First Minister—who, of course, cannot defend herself here—I am sure that the hon. Lady would agree that, if we are talking

12 Feb 2014 : Column 316WH

about negotiating a share of assets, which includes the central bank, we need to talk about negotiating a share of the liabilities, so we can take our responsibility for them. The UK Government and their allies cannot have it both ways. They cannot expect Scotland to take on a share of the liabilities while refusing even to negotiate on a share of the assets. Surely, as a reasonable person, the hon. Lady would agree that that makes no sense.

Cathy Jamieson: I have listened closely to what the hon. Gentleman says. Again, I gently suggest that if it is so important to have those parts of the United Kingdom that the SNP seems to want to retain, why on earth are we looking to break it up in the first place? Why are the Scottish Government and the Scottish Parliament not spending more time looking after the issues for which they have responsibility? Only at the weekend, there were reports about what was happening in the health service in Scotland; about the justice system—we have a proud record of a different legal system in Scotland—being dismantled, bit by bit, by the Scottish Government; and about a range of issues to do with social justice that are simply not being tackled by that Government. It would be better for the hon. Gentleman to reflect on that.

We have had an important debate. There has not been enough time, perhaps, to consider all the issues in detail, as we would have liked. I am sure that there will be further opportunities to do so. I wish to hear what the Minister has to say on this occasion; I am sure that I am more likely to agree with some of it than on other occasions, when I would be looking to put him under the kind of scrutiny that the hon. Member for Dundee East should be under today.

5.49 pm

The Financial Secretary to the Treasury (Sajid Javid): I welcome you to the Chair, Mrs Riordan. It is always a pleasure to serve under your chairmanship, and it is good to see my right hon. Friend the Under-Secretary of State for Scotland here today. I congratulate the hon. Member for Edinburgh South (Ian Murray) on securing this debate, on his excellent, thoughtful speech and on giving all hon. Members an opportunity to discuss this important issue. The debate has been lively and passionate. Indeed, it has been the liveliest and most passionate Westminster Hall debate that I have yet seen, which shows how important the issue is not just to the people of Scotland but to the people of the entire United Kingdom.

It is no exaggeration to say that the currency that we use affects everyone every day, whether they are individuals buying food or paying off loans, businesses paying their employees or trading across borders or banks protecting savings or providing mortgages. Currency is one of the most important issues in the Scottish referendum debate. Members may be aware that last April the UK Government issued a comprehensive paper exploring an independent Scotland’s possible currency options. Members will be aware—many hon. Members have referred to this today—that just last week the Governor of the Bank of England, Mark Carney, set out his views on currency unions in measured and, as he describes it, technocratic terms. Members may also have read that the Chancellor plans to give a speech on the matter later this week.

Pete Wishart: In the past few days, the Prime Minister and the Chancellor have been playing good toff, bad toff with Scotland. The Prime Minister is love-bombing

12 Feb 2014 : Column 317WH

us from London, and the Chancellor will be threatening us on currency in his speech in Scotland in the next two days. Which one does the Minister support—the good toff or the bad toff?

Sajid Javid: That goes to show that the SNP is not interested in a serious debate on one of the most important issues facing the Scottish and British people. That speaks for itself.

The Government have consistently stated throughout the debate that the current economic arrangement—one currency in one United Kingdom—is in the best interest of everyone. We have also consistently stated that it is highly unlikely that a currency union between an independent Scotland and a continuing UK could be made to work. I will use the remaining time to remind hon. Members of our analysis, which explains why that is the case.

First, the lessons of the eurozone crisis are there for us to see. Currency unions do not work without close political and fiscal integration. As a result of the crisis, those countries that use the euro are moving towards ever greater integration to address the challenges that they face. Scottish independence, though, is all about disintegration and would inevitably mean that the continuing UK and Scotland move further apart. The Scottish Government’s proposal for a currency union without fiscal or political integration lacks any credibility and makes one wonder whether the Scottish Government actually understand what the word “independence” means.

Secondly, we know that the economies of an independent Scotland and a continuing UK would be very different and would diverge over time as a result of different laws, different regulations and different industries. One industry that we know would be important for Scotland is North sea oil. A significant portion of an independent Scotland’s economy would depend on oil revenues. Were a change in oil price to affect the two countries differently, a one-size monetary policy with one currency for two separate nations would simply not be suitable.

Thirdly, despite the Scottish Government’s claim, we do not believe that a currency union would be in the interest of an independent Scotland. Such a union would inevitably constrain Scotland’s own economic policies because the remaining UK, to manage the risks of the union, would need to set interest rates and maintain oversight of an independent Scotland’s tax and spending plans. Indeed, a currency union would also be likely to undermine an independent Scotland’s economic resilience and credibility. If, for example, the financial markets sensed that the Bank of England’s monetary policy did not suit Scottish circumstances, they might doubt Scotland’s commitment to the currency union, which would, in turn, lead to financial market speculation. In such circumstances, if markets were not calmed, there would be a very real possibility that Scotland would be forced to adopt its own currency in a time of crisis. One is reminded of the recent situation in Cyprus when there was plenty of talk of the country potentially leaving the euro. Members will know that that was prevented only after a huge bail out from other eurozone members, which came at a significant cost to Cypriots, many of whom lost up to 40% of their deposits in domestic banks.

12 Feb 2014 : Column 318WH

Fourthly, just as a currency union is not in Scotland’s interest, it is hard to see how it could be in the interest of the remaining United Kingdom. Such a union would involve the remaining United Kingdom giving up an element of its economic sovereignty, as we have heard from many hon. Members today. The public would feel very strongly about that. It would increase the risk of having to bail out Scottish banks, and the idea of putting the remaining United Kingdom’s economy at risk because of another country’s banks just as we are getting our own banks in order would make no sense.

Before I come to an end, I will address some of the questions that have been raised. I listened carefully to the speech of the hon. Member for Dundee East (Stewart Hosie) and what he has to say on this issue is very important. I agree with the shadow Minister that he is an intelligent person who makes valuable contributions in the House, but from what I have heard today, he does not seem to want facts to get in the way of a good argument.

The hon. Gentleman and other hon. Members mentioned the banking bail outs of 2008. I remind him that the cost of recapitalising the Royal Bank of Scotland was £45 billion, which is the largest banking bail out the world has ever seen, plus an additional £275 billion of state support through guarantee and funding commitments. That sum is more than 200% of an independent Scotland’s GDP.

Stewart Hosie: Presumably, the Minister does not disagree with the Banking Commission that the total cash cost of the entire financial bail out of all the systems was £133 billion. Of the other figures that he talks about, £220 billion was made up of the asset protection scheme, which was a paid-for insurance guarantee. The scheme made the taxpayer a profit and was never called upon; it has since been shut down. Will the Minister confirm that that is correct?

Sajid Javid: Again, that is a good demonstration of how the hon. Gentleman would like to twist the facts. Just because a guarantee is not called upon does not mean that it has not done its job. The guarantee provided confidence and ensured that the banking system did not collapse. Our analysis shows that Scottish banks, even when we focus only on their assets in Scotland, would have assets equal to 10 times the GDP of an independent Scotland. That shows that it would be difficult for an independent Scotland to give depositors confidence in its domestic banking system.

The hon. Gentleman also mentioned trade between the UK and Scotland. The UK accounts for 70% of Scotland’s total trade, whereas Scotland accounts for 10% of the UK’s trade. Scottish trade is important to the UK economy, but it is not clear that it is important enough to risk recreating in the British isles the problems that we have seen in the euro area.

In conclusion, a fiscal and currency union pursued by two diverging nations would put significant limits on an independent Scotland’s economic freedom, and it would put an independent Scotland at severe risk of losing economic resilience and credibility. Such a union would undermine a continuing UK’s sovereignty and would increase the risk of bank bail outs. That is why we have consistently said that it is highly unlikely that a currency union would be agreed and that it is highly unlikely that a currency union could be made to work.

12 Feb 2014 : Column 319WH

Stansted Airport

4 pm

Mr David Lammy (Tottenham) (Lab): I am pleased to have secured this debate on an important issue that cuts to the heart of growth and success in our country. Stansted airport began life as a United States air force base during world war two. More than 600 planes took off from that air strip on their historic journey to the French coast in the first hours of D-day in 1944. In the 70 years since then, the small air base has grown rapidly into a thriving modern airport, the fourth busiest in the United Kingdom. Last year, it served nearly 18 million passengers and flights to more than 150 destinations. Its passenger numbers are constantly increasing and are set to rise further in the coming years. Stansted is one of the infrastructure successes of our time, and that is the context in which the future of the airport must be considered. I am pleased to see the right hon. Member for Saffron Walden (Sir Alan Haselhurst) here. He represents the area and has taken up the issues over many years. I am also pleased to see other colleagues who have taken an interest.

Robert Halfon (Harlow) (Con): As the right hon. Gentleman knows, my constituency is next door to Stansted. Does he agree that the new owners of Stansted airport have already made a huge difference to the running and management of the airport? I have huge praise for their work. Does he agree that for any expansion or development of the airport to take place, the employer should do everything possible to include local people and ensure that they get the jobs that are there?

Mr Lammy: The hon. Gentleman is absolutely right that the next few years should see Stansted continuing to grow from strength to strength. Since being sold by BAA, its prospects have been strong. The new owner, Manchester Airports Group, has committed to building and improving Stansted. He is also right about the importance of local people. He will understand that unemployment in the region around the airport is fairly low, certainly when compared with my constituency. One reason why I am pleased to co-chair the group of MPs that supports the Stansted corridor is our shared interest in growth and employment in the region, as well as in the concerns of local people.

Zac Goldsmith (Richmond Park) (Con): I am pleased to back the right hon. Gentleman in his ongoing campaign on Stansted. Does he share my view that the liberation of Stansted and Gatwick from the monopoly has worked wonders for both those airports? I know more about Gatwick than Stansted. Gatwick has done things that we were told were not possible, such as opening up flights to Vietnam and Indonesia. The beneficial consequences of competition between airports should be borne in mind as we talk about the bigger issues of airport capacity. Some of my colleagues seem keen to recreate what would effectively be a large taxpayer-subsidised, foreign-owned monopoly at Heathrow.

Mr Lammy: The hon. Gentleman’s persuasive tones are seductive. He is certainly right that the nature of competition in this market has been hugely important, although I suspect that we might disagree on other

12 Feb 2014 : Column 320WH

points. It was important that the monopoly in the system with BAA was broken. We are seeing a flourishing as a consequence of that monopoly being ended.

Guy Opperman (Hexham) (Con): Will the right hon. Gentleman give way?

Mr Lammy: It is wonderful to see so many interventions in a short debate. Because the subject is so important, I give way.

Guy Opperman: I support what the right hon. Gentleman is doing, and I congratulate him on securing the debate. To follow on from the point made by my hon. Friend the Member for Richmond Park (Zac Goldsmith), is part of the ability to prosper as an economy that we allow regional airports—I obviously speak for Newcastle airport—to thrive, just as Stansted and Gatwick have been allowed to thrive? Does he agree that that should be the direction of travel from the Treasury and the Department for Transport?

Mr Lammy: I agree that that is one direction of travel. It has been interesting to see Newcastle airport recently open up huge new routes with huge new carriers, including flights to Dubai. That supports the hon. Gentleman’s point on regional airports.

The new owners have already signed up new airlines at Stansted, announced an £80 million redevelopment of the airport, launched a campaign to attract long-haul carriers to Stansted and signed deals that will add more than 11 million passengers in the next 10 years. That underlines all that has already been said. With ever increasing use and committed and forward-looking new owners, the future of Stansted looks bright.

Graham Stringer (Blackley and Broughton) (Lab): There is no doubt that Stansted is doing well, but does my right hon. Friend agree that the Davies report has not given Stansted a fair analysis, because the analysis stops at 2030? If the Davies report had looked at runway capacity and airport capacity in the south-east until 2050, as we wanted, it might have given a different view on Stansted’s future, which is thriving.

Mr Lammy: My hon. Friend cuts to the chase. Long-term aviation strategy has been handed to the Davies commission, but it will not report until after 2015, so I do not want to stray too far into second-guessing what it might say. I am sympathetic to what my hon. Friend said, because I was somewhat surprised that the new runway at Stansted was not even included in the Davies report’s preliminary shortlist. Given the scope for development there, the predicted increases in passenger numbers and the airport’s ever-evolving success, it is surprising that that runway did not warrant further consideration as an option. I understand that that was in part due to Davies not taking into account the full passenger forecasts or the recent deals that have been signed under the new ownership at Stansted.

I am pleased that the commission, in highlighting the possible need for a new runway at Stansted by 2050, indicates that it at least accepts that the airport has long-term value. Either way, Davies has concluded that the choice over a new runway by 2030 is effectively between Heathrow and Gatwick. My priority for this

12 Feb 2014 : Column 321WH

debate is not what happens in 2030 or 2050, but what happens now. Regardless of what Davies eventually recommends, we have an immediate problem, which is that London urgently needs more air capacity. The prospect of any new runway is at best 15 years away, and those are 15 years that we do not have. London cannot afford to wait and should not sit by as the likes of Frankfurt, Schiphol and Charles de Gaulle surpass us and steal the benefits that accompany better connectivity.

Jim Shannon (Strangford) (DUP): Talking about now and the need to have increased capacity and better facilities at Stansted airport, I encourage the right hon. Gentleman to take note of the impact that an increased number of flights can have on other parts of the United Kingdom. For example, that can increase the number of flights to Belfast City airport and Belfast International airport. That increases competition and drives down prices, and that can encourage more people to take up air travel. We can feel the dividends of what happens to Stansted in Belfast if it is done correctly.

Mr Lammy: I am grateful to hear that, as will be my many Irish constituents.

Last year, Germany overtook the UK on new investments, which is hardly surprising when it has many more connections to developing markets in China, India and Latin America. Heathrow has nearly half as many flights to China as Frankfurt. In fact, London has fewer weekly flights than its European rivals to most of the emerging market economies. All that comes despite the fact that British trade increases by up to 20 times when there are direct flights to a country. That is why short-term measures are crucial if we are to prevent yet more business from being lost to our competitors.

Much more can be done in the short term to boost Stansted’s success and to alleviate pressure on London’s other airports, the core of which is urgently improving rail links to Stansted airport. Given the current state of the links, 34 million people in Stansted’s catchment area avoid the airport and catch flights elsewhere.

Mr Andrew Smith (Oxford East) (Lab): I congratulate my right hon. Friend on securing this debate. He is being generous in taking interventions. I underline the importance of what he says about rail links and want to emphasise importance of high-speed coach links from places such as Oxford and elsewhere to the west and north-west of London, because the length of journeys to Stansted diminishes its ability to fulfil its undoubted regional potential.

Mr Lammy: I am grateful to my right hon. Friend for making that important point. All these factors put unnecessary pressure on Gatwick and Heathrow, which are already operating at full capacity. In fact, Stansted is the only London airport with spare capacity. As a medium-term solution to our aviation problem, why are we not utilising the Stansted’s 50% unused capacity?

The problem is that the West Anglia main line—the main access route to Stansted—is in a dire state. It has suffered from year after year of underinvestment, and, as a result, it is slow, unreliable and inefficient. It takes 53 minutes to get to Stansted from a London rail

12 Feb 2014 : Column 322WH

terminal, compared with 37 minutes to Luton, 30 minutes to Gatwick and 21 minutes to Heathrow. Reliability, meanwhile, is well below the national average. The rail link is a real impediment to Stansted’s growth and future success. The Davies commission noted that in its interim report, which stated that there are substantial arguments in favour of enhancing the link, which merits urgent consideration. I want to press the Minister on that urgent consideration. Like Davies, Transport for London, Network Rail, the Government and London business groups have all voiced their support for the improvements. There is a consensus that four-tracking the line between Coppermill junction and Broxbourne is vital. I welcome that consensus, although it has been long enough in coming. We need urgent action.

Timing remains a real issue, however. It is a growing concern that the work may be delayed further and further. Network Rail has suggested that the improvements, despite being described by Davies as urgent and vital, may be pushed back into control period 6, which does not even begin for another five years. Similar delays have occurred several times already. I hope that the Minister’s response will outline concrete steps that the Government will take to improve the West Anglia main line. Following Davies stressing the need for urgency, I hope that the Minister will tell us how the Government will complete the work in the shortest time possible. If he is unable to give such a response now, will he assure me that it will be included in the Government’s response to Davies’ initial report, which is due to be published this spring? I see no reason why a commitment to proceeding with the upgrades could not be included in this year’s autumn statement, with the start of enabling work being included in next month’s Budget.

London First has reported that four-tracking could be completed by 2021. That should be our aim. There is a minority view that four-tracking is unnecessary, but there are no alternatives. We need to act now. Even if we do not take anything else into account, we cannot ignore that four-tracking is a crucial prerequisite to the development of Crossrail 2. The Minister will be familiar with the undertakings given not only by the Chancellor, but by the Mayor of London to move towards Crossrail 2 over this next period.

I acknowledge the time and know that the right hon. Member for Saffron Walden (Sir Alan Haselhurst) wants to speak, but I want to emphasise the importance of the region to our country as a whole. The London-Cambridge corridor is an essential component of growth in a recovering economy. Cambridge is essential to the region and we need growth in this region akin to that of Boston and the eastern corridor of the United States. That cannot be achieved without a thriving airport with high-speed links to London. A York Aviation study published on Monday found £53 million-worth of journey time savings could be made by improving the quality of the line. A recent report by Oxford Economics concluded that investing in four-tracking could unlock economic benefits to the tune of £4.5 billion by 2021 and £10.7 billion by 2031. Development is also important for jobs in the region. My constituents in Tottenham rely heavily on the success of the Upper Lee valley corridor and on jobs at Stansted. West London accounts for 17% of all jobs in London, for example, and Heathrow supports 230,000 jobs.

The future of Stansted is hugely important to the UK’s whole economy. It pains me that we are still discussing upgrading the West Anglia main line. It is

12 Feb 2014 : Column 323WH

important that this region of London is put on the map. I have been opposed to the Mayor’s idea of Boris island, largely because of where it would leave west London’s economy and the huge loss of jobs that would be a consequence of Heathrow’s closure. Stansted is a key component of the rebalancing of London’s economy to the east and north-east, so I look forward to what the Minister has to say.

4.17 pm

Sir Alan Haselhurst (Saffron Walden) (Con): I am grateful to the right hon. Member for Tottenham (Mr Lammy) and the Minister for agreeing that I can make a small contribution to this debate. It is always interesting to hear from other colleagues about the airport that lies wholly in my constituency. It is a subject about which I have spoken in the House on many occasions over the past 36 years.

The title that the right hon. Gentleman gave this debate raised some eyebrows in my constituency and elsewhere in Essex, almost to the point where briefing was coming in on the basis that we would this afternoon be deciding the future of Stansted airport, but that is perhaps a little optimistic. The reality is accepted by my constituents, who were opposed to the development of Stansted into a major London airport. It currently has an agreed capacity of up to 35 million passengers per annum and it could go further than that on a single runway. It currently handles 7.8 million passengers per annum, so there is a long way to go.

I do not decry the importance of the subject to the right hon. Gentleman’s constituency, but he must recognise that when he talks about job creation in my constituency, he is talking about a constituency with 1.3% unemployment. For all the jobs that will be created at the airport, even with its existing planning permission, a great many of those will be taken by people who will then want to migrate to my constituency, which is essentially a rural area that is already bearing a great burden of demand for more housing. He must understand why there are concerns about the extent to which Stansted can grow.

Mr Lammy: I want to reassure the right hon. Gentleman about the nature of my constituents, many of whom have migrated to Harlow. I am sure that, if some of them left, he would welcome them.

Sir Alan Haselhurst: We have a common position on the improvement of the railway line, so that people from north London can come to find jobs in the area and commute back again conveniently.

There is resistance in my constituency to the development of Stansted beyond one runway and certainly to its becoming a hub airport, because people see the down side of what could happen. As they see it, there is little up side if development on that scale can take place. Had it been possible to say that there would be a first-class rail line as a result of the original decision to expand Stansted, that might have been seen as a benefit, but the service has got worse. I absolutely agree with the right hon. Gentleman that it is important for us soon to have a four-track railway on the West Anglia line.

The blame has to be shared. It starts with the Government of Mrs Thatcher, who agreed the development, but not the infrastructure. It went on through the years of the Labour Government, who wanted not only to

12 Feb 2014 : Column 324WH

expand Stansted, but to put more houses in the M11 corridor, yet they still did nothing about the infrastructure. Under the present Government, we are now waiting for a sign that action will be taken. In that sense, the right hon. Gentleman and I may make common cause, but please do not go away with the thought that my constituents welcome the idea that Stansted should be the hub airport with two, three or four runways. London needs a hub airport, but it does not need it in the Essex countryside.

4.21 pm

The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill): I am pleased that we found time to squeeze in my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst). Sadly, however, I suspect that I will not be able to take any interventions, so that I may answer the points made by the right hon. Member for Tottenham (Mr Lammy), who I congratulate on securing the debate.

I am well aware of the right hon. Gentleman’s ambitions for improving the economic prosperity of the London-Stansted-Cambridge corridor, which includes his own constituency. I applaud his efforts. Stansted airport is clearly of central importance to those aspirations, and the Government also recognise the important role that the airport has to play in maintaining the UK’s international connectivity.

In that light, it is worth while to take a few minutes to consider the future of Stansted airport in the context of the Government’s wider aviation policy. The Government are well aware of the important contribution of aviation to the economy, but we also recognise the need to take a balanced approach. Last year, therefore, we published our aviation policy framework—a long-term strategy to enable the UK aviation sector to flourish and support economic growth, while addressing issues such as aircraft noise and carbon emissions.

The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to the country’s long-term international competitiveness. We appointed Sir Howard Davies to chair an independent commission to identify and recommend to Government how best to achieve that. The commission published its interim report on 17 December 2013, concluding that, while the UK remains well connected, additional capacity will be needed to support competitiveness and prosperity in the medium and longer term. The commission will undertake further detailed analysis of proposals for new runways at Gatwick and Heathrow airports. It will also examine further the Isle of Grain, or Boris island, option to reach a view before the year’s end on whether it should be considered alongside the shortlisted options.

We welcome the interim report as a major milestone for the commission. It represents a significant step forward in its work of assessing the options for meeting the UK’s future aviation needs. As I am sure Members appreciate, the Government have no intention of commenting on any of the long-term options that were, or were not, shortlisted while the Airports Commission continues its work. The Government, however, intend to respond to the commission’s short-term recommendations and will do so as soon as possible. The commission will provide its final report by the summer of 2015 for consideration by the Government and Opposition parties—whoever they may be.

12 Feb 2014 : Column 325WH

I will experience first hand Stansted airport, and surface access to and from it in particular, when I visit the airport next month.

Robert Halfon: We have discussed the railways, but does my hon. Friend agree that if the airport is to be expanded, expansion of the M11 is also needed? Does he support the necessity of an extra M11 junction, in particular into Harlow, to speed up the traffic to and from the airport?

Mr Goodwill: I have something to say on road connectivity, but I rather suspect that I will not get to that bit of my speech, so I will show it to my hon. Friend later if I do not reach it. In addition to rail connectivity, however, the roads in the area are important.

Stansted airport is London’s third busiest airport and the UK’s fourth busiest, but it is still only half full. The airport therefore has an important role to play in growing connections between the UK and the rest of the world, now and in the future, as noted by the Airports Commission in its interim report. Recently, we have seen a number of developments at Stansted that help the airport to fulfil its potential and to fill its spare capacity, including its acquisition by Manchester Airports Group.

At the end of the month, it will be one year since Manchester Airports Group purchased Stansted airport. I welcome the significant investment in Stansted by its new owner, which I am familiar with through Industry and Parliament Trust activity when I was in opposition. In less than 12 months, we have seen huge improvements to the terminal, as part of an £80 million investment programme. I am pleased that the airport has already committed to further investment in the infrastructure to improve all aspects of the customer journey.

In the past year, the airport has announced long-term deals with its major airlines that will see passenger numbers increase substantially over the next 10 years. This summer alone, the airport will introduce 12 new routes and a substantial increase in services to key destinations. It is excellent to see passengers benefitting from the increased competition between airports around London.

The Government are also playing their part in making the airport more accessible and attractive to passengers. For example, since 2010, the Stansted Express has benefitted from a brand new fleet of trains, the Bombardier class 379 electric multiple units, which were assembled right here in Britain. Those modern, spacious and comfortable trains now operate for all Stansted Express services—a change that has been warmly received by users.

It may be helpful if I explain that the West Anglia main line, which serves the airport, is a busy, two-track railway. It provides metro-style services for passengers within Greater London; longer distance and commuter services to towns in Essex and Cambridgeshire; and the Stansted Express airport services. Network Rail and train operators must ensure that all users are properly served. Government investment will support future growth

12 Feb 2014 : Column 326WH

on the route and improve reliability. The Government’s 2012 rail investment strategy confirmed an £80 million scheme to deliver three and four-tracking of the southern section of the route, including a contribution from the Mayor and Transport for London. In the longer term, I am aware of stakeholder aspirations for further capacity enhancements—an issue to which I will come shortly.

The Stansted Express service provides a frequent connection between the airport and London. During the day, services run every 15 minutes to London Liverpool Street station, thereby providing direct connections to the City of London and making Stansted an attractive airport for business travellers from around the world. Liverpool Street of course benefits from good onward connections, including links to four London underground lines and, from 2019, connections to Crossrail.

In addition, all Stansted Express services stop at Tottenham Hale station, which is in the constituency of the right hon. Member for Tottenham and is well served by the Victoria line. That is a convenient route for many airport travellers who wish to gain access to parts of north and west London. Looking to the future, east London is experiencing significant growth and, in addition to having the Olympic park and the Westfield shopping complex, Stratford is becoming a major transport interchange with connections to two underground lines.

Stansted passengers of course do not only want to travel between the airport and London. West Anglia in particular is a thriving region, and its economy is supported and enhanced by its proximity to Stansted. At present, an hourly service runs to Birmingham, providing connections to Leicester, Peterborough and Cambridge—a market that we see as extremely important and one that we wish to support. The Government are already working with Abellio Greater Anglia, Network Rail and the airport to introduce new early morning trains from Cambridge to cater for the first wave of outbound flights.

We recognise that there is a desire for more early morning and late night trains to and from Stansted. The Government are working with train operating companies and Network Rail to see whether some rail services can be made available at night or in the early morning, which is when a great many flights arrive or depart from Stansted. That of course is also the time when essential maintenance needs to be undertaken on the line, but if a solution can be found, that will benefit both the airport’s passengers and the work force.

In the interim report, the Airports Commission proposed improvements to surface access to airports. The Government set out their initial response to the recommendations in the national infrastructure plan, published in December. It included accepting the need to study possible rail improvements at Stansted airport and their interactions with other growing areas, as identified by the commission. We have instructed Network Rail fully to consider the needs of the airport as part of its Anglia route studies, currently due to report in the summer of 2015. In conclusion, as I am sure the right hon. Gentleman agrees, taking all that into account, the future of Stansted airport looks very promising indeed.

12 Feb 2014 : Column 327WH

Mid-Wales Connection Project

4.30 pm

Glyn Davies (Montgomeryshire) (Con): I look forward to speaking once more under your always sympathetic chairmanship, Mrs Riordan.

I will make a few initial comments about how I want to approach today’s debate. I could have tackled this issue, the effective industrialisation of the uplands of central Wales, from several different directions, but I want to focus completely on the direct implications of the mid-Wales connection project—the 400 kV line that will run from north Shropshire to the middle of my constituency. I assure the Minister that I have no intention of making any reference to the public inquiry currently taking place at the Royal Oak hotel, Welshpool, into the six proposals that have been refused and are to go to appeal. I know that he would not be able to comment on that, and I intend to refer to it only tangentially.

Normally when my thoughts turn to the appalling consequences of this project for the people of mid-Wales, I find it difficult not to become over-emotional—I become pretty angry and tend to lose my grip completely. That is fine when I am speaking to 2,000 people in Welshpool livestock market who all share my view and are protesting, or to the 1,800 people who have come with me on a three-and-a-half-hour bus journey to Cardiff to make their views known outside the National Assembly. Today I want to be calm, cool and rational, and to speak with understanding for the position of the Minister, who of course has to make his response in the context of Government policy.

Mr Mark Williams (Ceredigion) (LD): I congratulate my hon. Friend on securing this debate. Before he leaves his point about the passion with which he has directed this campaign—or crusade, as I guess he might regard it—I remind him that the concerns that he has voiced are felt very much to the immediate east of his constituency, across the border in England, but also to the west in Ceredigion. Mercifully, we have seen a project abandoned, temporarily at least, in Nant-y-Moch, but does he agree that the natural environment that he is keen to defend and protect is under threat in my constituency as well?

Glyn Davies: Indeed I do. I am glad that my hon. Friend intervened, in part because he is a Liberal Democrat, which shows that the feeling in mid-Wales is cross-party. If my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), another Liberal Member, were here, he would take exactly the same view. The people of mid-Wales as a whole, along with all their representatives, share the view that I intend to express today.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): Will my hon. Friend give way?

Glyn Davies: It is the same in Shropshire as well.

Daniel Kawczynski: I am grateful to my hon. Friend for including Shropshire in the title that he gave to the debate. We had to fight tooth and nail to prevent the power lines coming through my constituency—they will now, as he knows, be going through north Shropshire—and for a long time, there was tremendous anger and fear among residents in the western part of my constituency:

12 Feb 2014 : Column 328WH

the proposed lines might have been coming through the area where their homes are and they feared the impact of that. I completely concur with him on the devastation and misery that the project has caused.

Glyn Davies: I thank my hon. Friend for those remarks. There is quite a large part of the country in which the feeling is comprehensively the same.

I have two overall objectives today. I want to lay out the full appalling reality of what the mid-Wales connection project means for mid-Wales and Shropshire. Many people do not understand what the project is. Clearly, there is the 400 kV line, about 50 km long, from north Shropshire to the middle of my constituency, travelling up the beautiful, narrow Vrynwy valley. But because that line is dedicated to onshore wind farms, it is more than reasonable to conclude—in fact, it is blatantly obvious to anyone—that that will mean that there will be about 500 extra turbines in mid-Wales on top of what we have already; there are about 240 wind turbines now. On top of that, there will be about 100 miles of 132 kV cable criss-crossing Montgomeryshire all over the place, from the wind farms themselves to the 20-acre hub station in the middle of the county.

By any description imaginable, that is the industrialisation of the central uplands of mid-Wales and the Cambrian mountains. To many of us, it is an absolute abomination; I cannot believe that anybody with any sanity or appreciation—I am sorry, I am starting to go off on my usual rant. I will draw myself back.

Jonathan Lord (Woking) (Con): I have come here to support my colleagues from Shropshire and Wales, a part of the country I happen to know extremely well. Does my hon. Friend agree that the cables are going to go through some of the most beautiful countryside in our two countries?

Glyn Davies: I could not agree more. That was the inspiration for my taking an interest in the issue, as I have since 2005. I will come back to why that date specifically is important.

My second objective today is to ask the Minister to agree publicly that enough is enough and that it is time for a moratorium on onshore wind farms. Much as I would like him to, I do not expect him to be able jump up and say, “Yes, I absolutely agree—as from today, there will be no more.” But it is important to put on the record that a huge and increasing number of people think that there is a strong case for that.

I want to put the case that I myself feel there is for a moratorium. I have never been convinced that onshore wind power was the right way to go to solve the UK’s energy demands, but I have always accepted that it had a part to play in the mix, which is what Government policy usually says. The mid-Wales connection project became an obvious likelihood in 2005 when the Assembly adopted a policy the consequences of which very few people understood. I am deeply grateful to Peter Ogden, the director of the Campaign for the Protection of Rural Wales, who explained it to me in 2005. I became the president of that organisation three years before I came to this place because I so appreciated his understanding of what the impact of the policy would be. It was only then that I realised quite how bad the situation was.

12 Feb 2014 : Column 329WH

It is not, then, that I have always been against onshore wind power in principle, but mid-Wales has 240 turbines already. Another 500 on top, with all the power lines as well, is simply beyond the scale of anything that is reasonable. I wanted to look at the Government’s policy, so I asked the Library about the issue. I know that the Government have an overall target of 15% of energy coming from renewable sources by 2020. I understand that there is no direct policy for targets within that on specific types of renewable energy, but the Government have expectations and aspirations, or whatever word we want to use, and the sort of total that is being looked at is 10 GW to 15 GW for wind power—that is the figure the Library told me in November. Now, 7 GW have already been installed, a further 6.63 GW are through the planning process and another 6.33 GW are already in planning. We have already reached anything that could reasonably be described as the Government’s expectation. There is no case for taking it any further.

If we look at Governments in Europe—Germany, Spain and the European Union itself—they are identifying that the cost of the subsidies is unsustainable. Indeed, those countries are all looking to cut back. We might find that we are committing ourselves in the United Kingdom to a massively expensive project in mid-Wales, but in 10 years time the policy behind it will have been abandoned, and we will have stranded assets. The cost of the project is huge: 10% of the capital investment will be added on to the cost of everybody’s electricity for the next 30 years. That is the scale of what happens with such a hugely expensive project. The only reason National Grid is going forward with it is because it has a statutory obligation to do so. It makes no sense at all.

Daniel Kawczynski: Does my hon. Friend agree that one crazy aspect of the matter is how far the site is from the national grid, and that the Government must provide some advice and management about where the pylons will be sited so that the countryside is not plastered over to connect places to the national grid?

Glyn Davies: My hon. Friend will not be surprised to know that I agree with that point.

I want to spend a little time on the impact on democracy in central Wales and perhaps wider. Democracy is the principle on which the Government and the House of Commons operate, and people believe they can have some influence on policy through their elected Members of Parliament. That is particularly apt, because the Government are committed to the principle of localism and legislated for that in England, although there has been no such legislation in Wales. Localism is a key part of the Government’s policies.

I receive dozens of e-mails, and I have one here from someone who says that National Grid is now at their door with a legal right of access to conduct a walk-over service for the forthcoming pylon route corridor, and that they feel the rope tightening around their necks but powerless to fight against it. That is standard. A research paper from Aberystwyth university referred to the hopelessness and helplessness felt by the people of mid-Wales when they see what is happening. They do not want the pylons, but they believe that they can do nothing about it. They feel helpless.

12 Feb 2014 : Column 330WH

I have spoken before about National Grid’s behaviour, which makes me cross. I received a letter yesterday from Llansantffraid community council about the way National Grid behaves. Not only that, an 86-year-old woman contacted me after going to her county councillor. She had been subject to process service, whereby heavy-duty bailiffs turned up at her door and terrified her. The chairman of the council told her straightforwardly to agree with them and to do what they say for the sake of her health. That has happened umpteen times throughout my constituency. My point is not about proper behaviour, but about the attitude to our right to influence what we can do.

Alun Cairns (Vale of Glamorgan) (Con): I pay tribute to my hon. Friend for his fantastic campaign here and elsewhere on behalf of his constituents. Does he agree that localism means many things, but if it is to mean anything it should take account of local constituents’ views on major projects?

Glyn Davies: I do, and onshore wind is not the only area where there is an uprising of local opinion. I am not saying that the Government ignore that, but there is a feeling in mid-Wales that we are being ignored. The area does not have a huge number of people living there. Shropshire is more populous, but the main impact is on mid-Wales. There is a feeling that we are being forgotten and ignored, and that is dangerous because any Government who behave like that will lose people’s support for democracy and disengage them from the process. They will start to ask why they should vote if no one in the world takes any notice.

Last Saturday morning, I went to a bring-and-buy sale at the Royal Oak in Welshpool. There were stalls selling pot plants, books and bric-à-brac to raise money to resist these developments. People had paid taxes on that money, which came from their own pockets, and they were raising it to try to obtain proper legal advice to fight the cause. At the inquiry, lined up against them, will be a row of barristers employed by wind farm companies and National Grid. Those people paid money from their own pockets to defend mid-Wales from something they believe is wrong, but in a supposedly equal position will be a row of barristers representing the companies and paid from the public purse—from subsidy. That is where the money comes from. Not only do people have to pay from their own pockets to try to defend themselves, they must pay for the other side to have the most professional advice imaginable to defend their corner.

I know the Government’s policy, and I hope that they will review it and start to take on board the general view. I have spoken about the matter before, and if we ignore the overwhelming views of the people of mid-Wales and cover the place in wind farms, it will be an abomination in one of the most beautiful parts of Britain, and a great risk to the democracy that we all hold so precious.

4.45 pm

The Minister of State, Department for Business, Innovation and Skills (Michael Fallon): I congratulate my hon. Friend the Member for Montgomeryshire (Glyn Davies) on securing this debate. The need for and the impact of electricity network infrastructure is an important and sensitive issue. I welcome the opportunity to explain the need for upgrading our existing electricity network, to

12 Feb 2014 : Column 331WH

clarify the approach when deciding where and how new infrastructure is delivered, and how that relates to the proposals for Montgomeryshire and Shropshire. I understand, not least because my hon. Friend champions them so articulately, his concerns about the impact that onshore wind development can have on communities.

We have made it very clear that onshore wind farms must be appropriately sited and that local communities should be properly engaged and see real benefits from hosting them if they choose to do so. My hon. Friend knows that I cannot comment further on individual applications, but to accommodate the new generation, irrespective of onshore wind, but including nuclear power and offshore wind, the existing transmission network needs to be expanded. Before I turn to the proposed electricity connections in Montgomeryshire and Shropshire, it might be helpful if I explain the wider approach to how we decide on new network infrastructure.

Under the current regulatory framework, it is for the network companies to submit proposals for new infrastructure to the regulator, Ofgem, and to the relevant planning authorities. The proposals must be based on a well-justified need case, such as new generation connection or maintenance of a safe and secure network. The companies also propose routes and types of infrastructure, and in doing so they are required to make a balanced assessment of the benefits of reducing any adverse environmental and other impacts of new infrastructure against the costs and technical challenges of doing so following extensive consultation with stakeholders. Those requirements are set out in their licence obligations under the Electricity Act 1989 to develop economic and efficient networks and to have regard to the preservation of amenity and the mitigation of effects that their activities might have on the natural beauty of the countryside.

In addition to the legal requirement to consider the wider impact of new infrastructure, Ofgem published in July 2013 information for stakeholders on how that should be taken into account. That clarifies the fact that network companies are required to consider wider impacts and alternative solutions to overhead lines. That regulatory approach is reinforced by the Government’s energy national policy statements. They set out the framework for factors to be considered when consenting to an infrastructure project of national significance. They make it clear that for electricity networks cost should not be the only factor in determining the type of network technology used, and that proper consideration should be given to other feasible means of connection, including underground and subsea cables.

Glyn Davies: I thank my right hon. Friend for making that point, but all I can say is that when people in mid-Wales speak to National Grid or SP Energy Networks, who will do the 100 miles of cable between the hub, they say that it would cost six times as much to build a line from Shrewsbury to north Shropshire, so it will do that on only a small portion of it. They will not do the rest of the lines purely because of the cost back to the wind farm companies. That is what they tell us. That is what they tell me.

Michael Fallon: I understand my hon. Friend’s frustration and how his constituents feel about it. In a few moments I will turn to the specific issues in Montgomeryshire

12 Feb 2014 : Column 332WH

and Shropshire. I was explaining how we have reinforced the framework and laid the additional duty to consider both the impact on the countryside and alternatives such as underground or subsea.

Within that framework, National Grid, which owns the transmission network in England and Wales, published a new approach to building new transmission infrastructure, putting greater emphasis on mitigating the visual impact of new electricity lines while balancing that against the need to manage the impact on costs, which ultimately are funded through our constituents’ energy bills. I hope that that balanced approach provides more reassurance to areas potentially affected by cables and pylons that alternatives to new overhead lines are considered fully and very thoroughly. Since the costs and technical difficulties vary so much from project to project, it is also important that each one is assessed on a case-by-case basis to ensure that the right planning decision is taken each time.

The Government consider that the costs and benefits of undergrounding electricity lines are important. That is why my Department supported an independent study to give clarity on the practicality, whole-life costs and impacts of undergrounding and subsea cabling as alternatives. That report was published in January 2012 and its findings are generally consistent with the comparative costs that National Grid has quoted when evaluating options on current projects. It should provide a useful point of reference to inform the planning process.

Let me turn to the potential need for and development of network infrastructure in Montgomeryshire and Shropshire. The application to connect the proposed wind farms in mid-Wales will be decided by the appropriate planning authorities and Ministers, and it would not be appropriate for me to give a view on the particulars of the project or on the proposed wind farms, which are, as my hon. Friend the Member for Montgomeryshire said, currently subject to a public inquiry. However, I certainly recognise that many people feel very strongly about overhead lines and other network infrastructure, and about the impacts they can have on the landscape. Effective consultation with local communities and other interested parties is a vital part of the planning process. When making proposals for new infrastructure, network companies have to demonstrate that alternatives were considered and why the preferred option is justified. That consideration must show that stakeholders have been engaged effectively.

National Grid has been undertaking a pre-planning applications consultation within the framework that I set out earlier. Last year, it sought views on the preferred route option and substation site, including some undergrounding of lines. National Grid has received more than 200 replies to its latest consultation, which closed in November, and more than 500 people attended drop-in events that it hosted. That demonstrates the very strong local interest in the proposals and in their potential impacts. It also shows that National Grid is engaging with local communities as it develops its proposals.

National Grid plans to publish its final proposed design for the connection towards the end of this year for further consultation. After that, it expects to submit its applications for consents in 2015. I am encouraged by the greater stakeholder engagement and consideration being given by National Grid to alternatives to overhead

12 Feb 2014 : Column 333WH

lines since the new planning framework was introduced. That is the behaviour that the planning and regulatory frameworks now require.

I thank my hon. Friend for raising the subject again. It is important that we understand that although our challenge is to build a low-carbon economy, based on an energy mix that meets our environmental targets and security of supply needs, that, in turn, requires an expansion in the transmission network to accommodate the required new generation. However, deciding where and how that infrastructure is delivered requires informed and balanced consideration of a number of factors, including not only costs, but the environmental impacts and the needs of local communities, as well as the needs of the country as a whole.

12 Feb 2014 : Column 334WH

The planning and regulatory approval processes for new electricity network infrastructure require that stakeholders are properly consulted on those important decisions, and that their views are demonstrably taken into account when the proposals are finalised for final consultation. That process is now under way in Montgomeryshire and Shropshire, where National Grid is consulting stakeholders in developing its proposals. I strongly encourage those with an interest to continue to engage with National Grid in that process and to help ensure that the right decisions are made. I again thank my hon. Friend for drawing the House’s attention to this important set of proposals.

Question put and agreed to.

4.55 pm

Sitting adjourned.