Poundland

Yesterday I wrote a piece for Bella based on the briefings coming from the SNP leadership about currency (Bad Fudge). I greeted them with a generally positive tone and really thought they represented a step forward (though not quite there yet). Unfortunately I’ve now read the motion (text copied below).

It is very difficult to square off what its proponents have been saying in the media with what is contained in this motion. It adopts the Growth Commission almost verbatim, with the only change I can see is that the fiscal rules (the strongest ‘austerity’ part of it) not being mentioned.

After three pages of platitudes, what this motion does is to enshrine the appalling ‘six tests’ model for currency and hands the decision over to whatever Parliament is elected in an independent Scotland. It seems to loosely commit the SNP as a party to asking for a vote in the parliament during its first term, but it does not explain the position if these tests were not met during that parliament.

Would the SNP vote for a currency its own ‘six tests’ say shouldn’t be introduced? Does it think it is likely to win a vote if the other parties in the parliament are able to say ‘but you haven’t met your own tests’? What if it isn’t the biggest party. What then?

The SNP membership is being sold something very, very different from what they are being told they are being sold. I really hope that people have time to understand what this motion really says. It categorically does not commit Scotland to having its own currency.

I have spoken to many serious economists since this report was launched, not all of them from the left of the political spectrum by any means. Not one of them has a good word to say about the Growth Commission report – and yet this is to define the SNP from hereon out.

Every one of those economists see the six tests as a Gordon Brown-style trick for NOT introducing a Scottish currency. Can I remind you once again that one of the six tests is that the size of the public sector must be sharply reduced as a proportion of the overall economy.

I am begging the delegates who will be going to the SNP conference not to be conned by the rhetoric around this. Please, read this motion carefully. It seems to me to have entirely and utterly disregarded everything its own membership told it during the National Assemblies.

Personally, I’d reject the whole thing in favour of the motion committing to a Scottish currency as quickly as possible after a Yes vote. This was submitted by Edinburgh Central but, surprise surprise, it seems to have got ‘lost in the post’ and doesn’t appear on the conference agenda. (Yay for party democracy, eh?)

But I know how SNP conference works and that may not be possible. If that’s the case, I think it needs two amendments. First, take out II: 28 – 29. The idea that the weedy negotiating stance proposed by the Growth Commission and the perpetual ‘solidarity payment’ are either in the interests of Scotland or reflect the will of the party is miles from reality.

Then simply delete III onwards and replace it with text along the line of ‘The SNP will therefore adopt a policy that, immediately on an independence vote, work to establish a Scottish currency will begin immediately and the currency will be implemented as quickly as possible’.

If this does not happen, the SNP leadership will have provoked a crisis in the independence movement.

 

*

An extract of the provisional agenda of the SNP spring conference is published below:

 

 

  • Resolutions
    1. SUSTAINABLE GROWTH COMMISSION
    I) Reaching our full potential with independence – matching the success of
    other small, independent nations.
    i. Conference notes that Scotland is a prosperous and successful nation,
    with significant economic assets and advantages, such as our vast
    natural resources, the skills and education of the people who live here
    and a range of sectors with existing and potential global
    competitiveness. Scotland is a rich country with the potential to
    achieve more.
    ii. However, Conference also notes that despite these abundant
    resources, similarly sized independent countries with the ability to
    tailor economic policy to their own needs have performed significantly
    better than Scotland.
    iii. In terms of GDP per head, the median income of the 12 small
    advanced economies considered by the Sustainable Growth
    Commission is around 14 per cent higher than Scotland’s – equivalent
    to £4,100 per person.
    iv. Conference believes that the example of these similarly sized
    independent nations illustrates the vast potential for an independent
    Scotland to develop a stronger and more sustainable economy as the
    foundation for the fairer and more equal society that we seek.
    v. Conference therefore welcomes the publication of the Sustainable
    Growth Commission’s report “Scotland –the new case for optimism”
    which contained 50 recommendations for the future of Scotland’s
    economy, and thanks the Commission for its work.
    vi. In particular, Conference considers that an SNP government in an
    independent Scotland should adopt the Commission’s recommended
    targets of (a) matching the average growth rate of these other small
    advanced economies within ten years (or earlier if possible) and (b)
    closing the gap in GDP per capita with these countries within 25 years
    (or earlier if possible).
    vii. Conference also supports the work of the Scottish Government – and
    a number of other governments internationally – to ensure that the
    wellbeing of the population is at the heart of our approach to inclusive
    economic growth, welcomes the decision of the Scottish Government
    to consider factors than just GDP, in assessing the performance of the
    economy and the country, and agrees that the Scottish Government
    now and with independence should look for further ways to promote
    wellbeing in its approach to policy development, budgetary decisions
    and how we measure success.
  • viii.Conference endorses the Commission’s advice that improving
    economic participation and equality, increasing productivity, and
    growing Scotland’s working age population must be an independent
    Scotland’s top economic priorities.
    ix. Conference welcomes the work already underway by the Scottish
    Government in these areas – including support for continued
    migration to Scotland, the development of the Scotland is Now
    campaign, progress on the Scottish National Investment Bank, the
    establishment of an Infrastructure Commission, actions to reduce
    poverty and close the gender pay gap, and increased support for
    innovation, research and development and exports.
    x.Conference also welcomes the Scottish Government’s inclusive
    approach and the work of the Fair Work Convention and Just
    Transition Commission, and agrees that future economic policies must
    be developed in partnership with trade unions, civic society and
    business.
    xi. However, Conference believes that without the full powers of an
    independent country the Scottish Government’s ability to act in these
    areas will continue to be restricted and the potential of our nation
    constrained as a result.
    xii. Conference therefore instructs the National Executive Committee to
    oversee a programme of work to develop a range of policies – building
    on those recommended by the Sustainable Growth Commission – that
    an SNP government in an independent Scotland would pursue to
    boost population, participation and productivity; and to immediately
    develop a campaign focused on Scotland’s economic potential as an
    independent country.
    II) Sustainable public finances – rejecting austerity.
    xiii. Conference notes the Sustainable Growth Commission analysis of
    Scotland’s public finances.
    xiv. Conference agrees with the Commission that the levels of debt and deficit
    that an independent Scotland will inherit is a feature of the economic
    mismanagement of successive Westminster governments and not a
    reflection of the merits and opportunities of independence.
    xv.While there are different views on Scotland’s finances to the extent that
    Scotland, governed by Westminster, has an estimated notional deficit that
    is higher than comparable countries, Conference believes that this is an
    argument for change not for the continuation of Westminster governance.
    xvi. Indeed, in light of Brexit, simply continuing as we are is likely to make
    Scotland’s fiscal position more challenging, not less.

    xvii. Conference endorses the view of the Commission – and indeed of the UK
    Treasury – that UK debt will remain the responsibility of the UK
    government and that, by definition, an independent Scotland will start
    with zero or minimal debt.
    xviii. However, Conference also agrees that an independent Scotland should
    make a fair and reasonable contribution to the servicing of UK debt. The
    amount of such a contribution will depend on a fair negotiation of both
    debt and assets and Conference agrees with the Commission that this
    would form part of an annual solidarity payment. Conference endorses in
    principle the Commission’s recommended approach to negotiations.
    xix. The deficit that an independent Scotland will inherit will be influenced by
    the outcome of these negotiations and also by specific spending decisions
    of an independent government – for example, in the case of an SNP
    government, the decision not to invest in nuclear weapons.
    xx. Conference endorses the Commission’s recommendation that future
    revenues from North Sea oil and other windfalls should be invested in a
    Fund for Future Generations to support intergenerational projects such as
    the transition to a green economy.
    xxi. Conference welcomes the Commission’s conclusion that the starting deficit
    of an independent Scotland is manageable and fundable and can be made
    sustainable. Conference agrees that sustainable public finances and
    achieving the lowest possible cost of borrowing are important and that an
    SNP government will seek to maintain debt at sustainable levels and
    reduce the deficit to sustainable levels as early as is consistent with
    continuing support for public services, people’s wellbeing and investment.
    xxii. In that regard, Conference notes that the Commission’s projections take
    no account of the higher growth that the powers of independence will
    enable Scotland to target, nor of the benefits of Scotland continuing to
    operate within the EU single market.
    xxiii. Indeed, Conference stresses that sustainable public finances
    fundamentally flow from a healthy, sustainable and fair economy.
    xxiv. Fiscal targets must never be an end in themselves and an SNP
    government will not pursue such targets at the expense of the economy
    or investment in public services. The UK government has demonstrated in
    recent years that such an approach is counterproductive and harmful.
    xxv. Conference therefore agrees with the Commission that an austerity or
    cuts approach to deficit reduction should be firmly rejected. At times of
    lower growth, investment in the economy and public services should take
    priority over short term targets.
    xxvi. Conference also agrees that an economic stimulus at the point of
    independence should be considered.

    xxvii. Conference concludes that the choice facing Scotland is the economic
    decline of Brexit or taking our economic future into our own hands with
    independence; and resolves to persuade the people of Scotland that
    independence offers the best pathway to a more prosperous and
    sustainable future.
    III) Towards an independent Scottish currency.
    xxviii. Conference notes that despite significant economic assets, natural
    advantages and a talented population, independent countries with the
    ability to tailor economic policy to their own needs have performed
    better than Scotland.
    xxix. Conference notes that among small, successful independent countries
    there is no single approach to currency. Conference also notes that
    the pound sterling is a shared currency across the UK and is available
    for Scotland to use, just as Ireland did for an extended period.
    xxx. However, Conference believes that it should be the policy of an SNP
    government in an independent Scotland to establish an independent
    currency; and agrees that the process and precise timescale for doing
    so should be subject to robust governance and guided by the six tests
    recommended by the Sustainable Growth Commission.
    xxxi. During the period of transition to independence, work should begin on
    the establishment of an independent Scottish Central Bank with a
    Scottish Financial Authority, and the other steps required to support
    the establishment of a new currency.
    xxxii. Until a new currency can be safely and securely established in the
    interests of the whole economy, the currency of an independent
    Scotland should continue to be the pound sterling, ensuring continuity
    and stability for the Scottish people.
    xxxiii. Conference considers that the independent central bank should report
    annually to parliament on progress toward meeting the necessary
    criteria; and that an SNP government should aim to complete the
    preparations to enable the Scottish Parliament to take a decision on
    establishing a new currency by the end of the first term of an
    independent Parliament.

 

Comments (15)

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  1. Tony Perridge says:

    This is a disgraceful negating of the grass-roots case for a Scottish currency to be established and fully working from the first day of Scottish independence. The six tests are a neo-liberal construct to make establishing the currency as difficult as possible. This is what you get when you employ people from the established banking industry to design your fiscal programme. The Sustainable Growth Commission report would have us start a new, free country burdened with all the baggage of the failing UK. It is a horrible piece of work which should not be adopted as SNP policy. Doing so will tear the heart out of the vital grass roots Yes movement, because what is the point of independence if we remain under the thrall of the corrupt banking industry. I feel myself losing heart on the strength of this agenda.

  2. John Mc Gurk says:

    I think they are trying to confuse the SNP members this is just not good enough It feels live a re hash of Tony Blairs and Gordon Brown failed polices . I think the SNP are forgetting that a lot of their members left labour because they were so badly let down and this will not satisfy them. It is to watered down to suit the neoliberal polices that got us into this mess in the first place .

  3. Jim Stamper says:

    You propose “First, take out II: 28 – 29.” and “Then simply delete III onwards”.

    Where are 11:28-29 and 111?

    1. Ian Sanderson says:

      xxviii
      xxix

  4. P says:

    Robin, your the guy who wanted to set up a Scottish stock exchange! I mean FFS! Radical eh? Pseudo intellectuals make this smile issue complex. Scotland if ever independent smoky needs the Scots pound we have already. Case closed. Any other option is stupid. Esp Alex Salmonds old policy from the 1990s of adopting the Euro. Without a Scottish clearing bank owned by the government to print our own currency we are at the mercy of the new-liberal financial elites. So, the choice is, from chains to chains in the name of Freedom? Or from one set of financial chains to another? Remember the adage that it’s who controls the currency that controls the economy!!!!

  5. Dr P Ciancanelli says:

    Its a very disappointing result; the ‘choice of currency’ is an opportunity for political economic debate essential to the project of independence. What this result implies is understandable but deplorable magical thinking: a re-run of the 2014 referendum only this time IndyRef wins. Westminster will never allow another open-ended referendum. Ever. The question of currency is not a ‘policy’ choice (as it has been set up by the current SNP leadership) –its an existential question. Whatever independence means in a globalized world economy/culture, it certainly means having some capacity to protect the home market & domestic residents with institutions, including monetary institutions, equipped to do so. From a coast guard to hospitals to central banks…one might say. One other thing: those with savings in Scotland are mainly older people–apart of course from the .01% who have already diversified along with the rest of the brexiteers into the USD and other currencies. So those with the least flexibility because of age have some savings: one would think the question of currency is quite important to their views on independence and yet there is absolutely no effort to include them in the discussion. This fact alone reveals how ill equipped ‘silo’ economics and ‘silo’ policy wonkishness infects the debate on independence.

  6. Me Bungo Pony says:

    This is a great disappointment. It’s giving unionists a pinata to just keep beating with a stick until the “candy” of another No vote comes tumbling out. An independent Scotland NEEDS its own currency as soon as is possible if it is to have any control worth the trouble over its own finances. It does not need to fit any criteria other than Scotland being independent.

    I realise they are trying not to “scare the horses” but all they are doing is giving unionists the golden opportunity to scare them away. Not only does it wreck any chance of putting the currency issue to bed, it also scuppers the argument about rejoining the EU as you cannot join if you are using another state’s currency.

    It’s all very disheartening.

  7. Graeme Purves says:

    How deeply depressing. Will the SNP sleepwalk into Balernoism?

  8. Me Bungo Pony says:

    Wishful thinking Jamsie. And how you can claim the Scottish Govt are “fiscally incompetent” when they have run up no debt while the UK govt has run up £trillions in debt is truly logic defying. Then again, that is a main stay of the unionist arguments.

    1. Swiss Toni says:

      Scotland is not a sovereign nation so it cannot access the capital markets so cannot accumulate debt. Scotland annual deficit of 9% of GDP, higher than any European sovereign state, is funded by the Barnett Formula and the surplus generated by the South East of England.

  9. Wul says:

    How come Jamsie’s writing style keeps changing?

    More than one person perchance? Or simply a shattered personality? (living with no hope could do that)

  10. Redgauntlet says:

    How many times did people BTL on Bella tell us that the Growth Report wasn’t SNP policy?

    That it was just something “handy” to have around like maybe a pack of chewing gum or a a pack of hankies you keep in the glove box of your car? “You know, we just commissioned this neo-liberal report, just to have it…”

    This is what happens when all of the independence eggs are in one basket. The SNP is so big, powerful and influential, that inevitably, the dynamics of power start taking over and the leadership – who are ALL on Twitter, ALL OF THE TIME – lose touch with reality….

    We need another party…small concentrated, modest in its aims, but very articulate in the vision of the Scotland we want (the SNP don’t do vision; they do blueprint, but a blueprint is not a vision…)… maybe it’s not even a party, maybe it’s a political platform… or a cultural platform in the mould of National Collective (without the combination of those two words if possible)

    The SNP are basically New Labour in a kilt… and we all know it… who can trust them after this to deliver meaningful independence?

  11. John S Warren says:

    Mr McAlpine,

    “The idea that the weedy negotiating stance proposed by the Growth Commission and the perpetual ‘solidarity payment’ are either in the interests of Scotland or reflect the will of the party is miles from reality.”

    I cannot speak for the ‘will of the party’, as I know little about it, and am not a member; however, on the content of the motion, it seems to me that an undertaking to make interest payments on the rUK debt (a major part of the ‘solidarity payment’), presumably to be made in the currency (Sterling) over which Scotland will have wholly ceded all control, is tantamount to acknowledging that Scotland would never break with Sterling; and thus would fall into precisely the financial policy predicament that at all costs should be avoided. I am astonished; but I was astonished by the Growth Commission

  12. anja cradden says:

    Robin, I share your concerns. I have been trying to work out though what the establishment of the new currency ought to look like instead. Presumably the government can raise money in bond markets in the usual way as long as someone agrees to buy our bonds. But is the private debt of Scottish citizens changed into debt in the new currency? Can banks be obliged to do this? Or do we start earning in scots pounds while still paying our debts (mortgages) in Sterling? When we establish a central bank for the new currency do we also need to establish new retail banks? With government charters to lend for mortgages and overdrafts and all the ordinary banking services people need? And should these banks be given power to create the money supply in the same way that private banks do with Sterling at the moment? Or should we adopt a different method of money creation? And what might that be?

  13. Jim_MacDonald says:

    I am a big fan of Common Weal, but the hostility toward the growth commission and the six tests banboozle me.

    1. We have a form of a currency union now. Scotland has no representation in that union. This is important since Scotland has no representation on the Monetary Policy Committee.

    The issue with the currency union is more a reflection of the situation now. Arguing for a more formal currency union should be the Scottish Government position now. Otherwise UK macro policy (austerity) will forever be decided by London. The argument we should not have a currency union is more nuanced than Common Weal care to admit.

    2. The currency, when it would be implemented highlight issues with GERS style reporting where UK assets are not correctly recorded or apportioned whereas liabilities are.

    I think Common Weal and Robin would be better to address issues with Scottish currency now, and not debating a hypothetical future position.

    Fundamentally, the argument for new currency arrangements need to be made now. “Why are current UK currency arrangements unsatisfactory?” Arguing over two solutions that wont happen over the next few years, while interesting, avoids important issues today.

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