NOTE: In the spirit of open debate, I’ve posted this. The ideas are entirely those of Alasdair. I have my own dissenting views on, for example, NATO and the Monarchy, but as a party member choose to keep them for a later date.
By Alasdair Galloway
Richard Murphy, as so often, is well worth a read in the National (https://www.thenational.scot/politics/20199448.snp-must-drop-disastrous-policy-currency-scottish-independence/)
He concludes his most recent piece with this – “The SNP really do need to drop the idea of sterlingisation, because it would be a disaster”.
I fully agree with him. In fact, I felt the “sharing the pound” argument in 2014 was foolishness on stilts because it left the goal open for Osborne to say – and he duly did – “oh no we won’t”.
However, first another consideration concerning the estsimable Dr Tim Rideout, who has been certainly one of the main proponents of getting our own currency out there asap after independence, rather than sterlingisation as suggested by the Growth Commission.
As some of you might know, as the result of a tweet in March about my good, good friend Priti Patel, which was careless rather than racist, Rideout was suspended by the SNP and that suspension still stands. Now leaving aside the passage of time – more than two months and counting – the importance of this is that if the suspension is not lifted Rideout will be unable to attend any future SNP Conferences.
Right now, the investigation into the tweet is with the National Secretary, not having been moved on to the SNP’s disciplinary committee for action to be taken. We might want to explain this by organizational stasis, but it would be, I think, be naïve to imagine that this does not suit the SNP leadership which remains tied to the Growth Commission recommendation of continuing to use the Pound – which Murphy refers to as a “sinking ship” – after independence.
Conference did of course agree to follow Rideout’s recommendation the last time it met – and while not a member, I was under the impression that Conference was the supreme policy setting body. A good example is Blackford’s statement last month (https://www.thenational.scot/news/20157543.independent-scotland-keep-british-pound-years-ian-blackford-says/) that Scotland could continue to use the pound for several years, for reasons of maintaining stability. This totally ignores the overwhelming majority Rideout’s motion won last November. His absence therefore might not be a matter for the leadership to regret.
The situation, however, throws up a number of issues
- Why is it that a suspension can be, in effect, be ‘stuck’ with the National Secretary without being moved on for investigation and action to be taken (should this be necessary). As above this has taken more than two months so far. Rideout has therefore suggested a Constitutional Amendment which, while he might not be able to propose it as things stand, he hopes other members and/or branches would take it forward. His proposal is to require the National Secretary to amend section 6.2 which reads just now
6.2 The National Secretary may suspend a member from exercising any or all rights of Membership while allegations are being investigated and considered by the Party. In all cases where this action has been taken, the suspension will be regularly reviewed.”
Rideout’s suggested alternative would replace “the suspension will be regularly reviewed” with “National Secretary will refer the complaint to the Member Conduct Committee within 30 days or the Suspension will automatically lapse.”
It’s a bit early to speak of plots, but it does seem just a little convenient that someone who has been a thorn in the side of the leadership should be excluded by a failure to take forward a party procedure. At the very worst, even if Rideout had been investigated and a decision taken to expel him from membership at least the process would have operated. Why has it not?
- Why is conference policy not being adopted by the leadership? There is always a tension in leadership anywhere between on the one hand keeping the members onside, but on the other hand the leadership taking its own initiative. The problem with this particular instance, it seems to me, is that the “sharing the pound” policy in 2014 was a presentational mistake at that point in the process. Have we really not learned from this at least?
I am not unmindful of the complexity of setting up a new country, and at the very least we should consider delaying anything that can be delayed with little damage. Thus, as former Bank of England Governor, Mervyn King pointed out after 2014, the week after a Yes vote it would have been “business as usual”. In other words, if “Scotland’s Future’ had suggested our own currency, it is not impossible that for the initial years of independence we might have shared the pound till there were fewer challenges to launching our own currency. That though is not where we are now.
For instance, in 2014 the UK was still part of the EU, and therefore to share currency with another EU member would not have been a great problem. For instance, prior to the Euro, Luxembourg currency was freely interchangeable with that of Belgium. But the UK is no longer an EU member, and it is very likely that sharing the currency of a non-member would be an obstacle if we propose joining the EU.
- Why do we want to share the pound? Perhaps the most important reason for our own currency is that if independence is not about taking our own path, which is likely to be different from that of rUK, what the hell is the point of independence? As the two economies diverge, sharing becomes that much more difficult.
Moreover, to quote Murphy again, the OECD “predicted lower than expected growth for the UK this year, and none at all in 2023. Russia apart, that puts the UK in last place amongst the top twenty nations in the world. No other major economy is expected to stagnate in the way we are.
Worse, the OECD also predicts that we will have a worse inflation rate than most other economies. As a result, the likelihood is that the pound is going to fall further against all other major currencies over the coming year. If the OECD is right, it is hard to come to any other conclusion.”
What is more, this makes even a peg to Sterling – not using Sterling but maintaining 1:1 value – for any new currency even more of a loser. For one thing, if the OECD is right, we are pegging to a currency declining in value. Does that make sense? Moreover, as Cameron Archibald pointed out in another article in the National, a peg is an incitement to speculators trying to force a new currency out of alignment. Think Black Wednesday in 1992 when the UK was forced out of ERM by speculators (eg George Soros) at enormous expense, as well as the possibility of interest rates at 15%.
Thus, in conclusion, two questions
- Why are the SNP keeping Tim Rideout under suspension?
- Why, despite last year’s Conference decision, do they continue to proselytise using Sterling, particularly when increasingly it looks like a really bad idea.
Talking-up Scotland 
Tim Rideout spoke very articulately and clearly on the resolution to have our own currency, and there is no doubt it was his speech that carried the vote. Thank you for publishing this article John. While there may be tactical reasons, such as voters instinctively feeling ‘safe’ and ‘reassured’ by continuing with Sterling, the article makes it clear that would be dishonest, and that continuing in the ‘safety’ of the union is way more dangerous than taking our independence. We need TR high profile in the campaign.
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Sterlingisation for us for a few years after Indy is a vote loser and a gift to the No cause. Disgraceful. As time goes on I am starting to dislike the party of independence more and more. They do not listen.
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Why are the SNP keeping Tim Rideout under suspension?
Why, despite last year’s Conference decision, do they continue to proselytise using Sterling, particularly when increasingly it looks like a really bad idea.
Why indeeed. Well said, Alasdair.
(Good use of proselytism)
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I take on board all these points but sometimes feel the SNP can’t do right for doing wrong. They’re not perfect and it would be worrying if we couldn’t point out where we think they are wrong. But, they’re still the best chance we have for securing another vote and maybe the better time to address the weaknesses are after a referendum? Given the scale of challenges just now relating to cost of living, Brexit repercussions and a toxic Westminster it seems to me that pointing out the Scot Govt failings just does the opposition’s work for them. Divide and rule has long been an established tactic for weakening opposition, we can see it in the pitting different sectors against each other in regards to pay disputes. My own feeling is we need to park our concerns until a referendum has been secured & won, then the battle for direction can start for real. Naive maybe but there you go
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You know brobb, I actually agree with much of that. I will, and have defended them against the rubbish that is published by the msm (though a long way behind John – that’s why he was a Prof and I wasnt!) as well as their political opponents. They are certainly our best chance of getting a Yes vote next time – absolutely no doubt about that.
We both agree that they are not perfect and I acknowledge that it is right we are able to point out when they are wrong. I take too your point that by criticising them as I have I might be doing the work of the opposition for them. However, in this case, there are two exceptional points
1. the manipulation of the rules is just too similar to what I remember of a formerly dominant Scottish party (the one that lost 40 seats in 2015). Moreover there have been other, parallel stories of the rules being manipulated (or just ignored) for the party leadership to achieve their aim. It’s not a good trend, and in this regard Rideout’s case is particularly egregious
2. having agreed that the SNP are not perfect (no one can/ is) can we agree it would be better if they could be improved? Is it better to allow them to wander into another referendum with the donkey that is sterlingisation round its neck, or argue for a change in policy? Is that better now, or a couple of weeks before the next vote? Let’s face sterlingisation or own currency is going to get a kicking, but which is the better policy whether long term or short term?
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You say “is it better to allow them to wander into another referendum with the donkey that is sterlingisation round its neck, or argue for a change in policy? Is that better now, or a couple of weeks before the next vote? Let’s face sterlingisation or own currency is going to get a kicking, but which is the better policy whether long term or short term?”
I’d certainly agree that no matter what they do they’re going to get a kicking! My fear is that by holding the SNP to higher standards than any other political party we risk getting bogged down in arguments about the right path to take. I actually have a lot of respect for the land reform/community participation aspirations of the likes of Lesley Riddoch or Andy Whiteman, and understand some of the frustration of the Alba supporters when progress towards independence seems achingly slow. I have no doubt that much better minds than mine have better solutions to the currency issue and I am equally sure that some good people have fallen foul of SNP party discipline failings
However I would argue that Labour’s anhilation in 2015 came about partly because of the 45% indy vote uniting, partly because of Labour complacency in the first years of devolution and partly because of infighting UK wide. Are we really saying that if the SNP don’t do X, Y and Z (depending on different factions aims & beliefs) , or if they fail to handle in-party disagreements as well as they might that they will then be responsible for the chance of a referendum going tits up? If you think of working for self determination as a game strategy, we are handing those in favour of the union a free pass to divide us up, sow doubt and division and eventually out manouver us
Of course the SNP can be improved but maybe too they deserve some credit for what they have acheived with one hand tied behind their back and pretty much every UK institution seeking to undermine them. I see a bunch of principled, hard working folk doing their damndest to improve life in Scotland while knowing even the smallest slip up will be pounced on and hyped to death. I see a political party that has helped to change the socio political discourse in Scotland by not giving up the fight for independence but accepting the need to win over support
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I feel that independence is the single subject to be discussed and the only object to be achieved. All the rest is pitchforks and torches. From this point until voting closes on the referendum day anything we choose to discus amongst our selves is likely to become a stick for our backs. So great care needs to be taken that we don’t give the yoons a helping hand.
I am sure that Dr Rideout is well aware of the implications of any stray comment. and is very unlikely to provide succour to the enemy.
But his suspension does need to be felt with ASDP. By close of business Friday the 17th June he should be fined, expelled, otherwise slapped over the wrist, or exonerated.
THERE IS NO EXCUSE FOR CONTINUED INACTION.
This is shaping up as a stick to beat us with.
National Secretary, extract the digit.
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The 2014 referendum was lost on the matter of post-Indy currency and the next referendum cannot be fought with the same policy of sterlingisation or it too will be lost as sure as eggs are eggs. For starters, if the policy of the next referendum is to rejoin the EU, we MUST have our own currency – that is a pre-condition for joining. We would also have to agree to adopt the Euro at some unstated future date, but how long have Sweden and Denmark been EU members and they’re still using their own currencies? The automatic adoption of the euro has never been enforced.
The treatment of Tim Rideout has been scandalous and there is a strong smell of conspiracy to silence/sideline him. It seems the inner core of the SNP does not understand how the macroeconomy functions in real life and accepts the Growth Commission’s proposals without understanding the colossal damage that will result from its adoption. I’m not a herd animal, so I’m not a member of any party, but I fully recognise that the only party capable of managing and winning an independence campaign is the SNP and this leaves me in a highly conflicted position: I’ve been a supporter of an independent Scottish state since 1970, but I don’t want my children and grandchildren to live in a Scotland that is an economic basket case and I can’t vote for a state which will assuredly cause that to happen if does not issue its own currency on the day we become independent.
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You are dead right about the Swedes, and the Commission seem to be sitting on their hands on that one. Indeed they have said that they would never force a country to join the Euro (though it could in the future be cut off from certain benefits by not being in the Euro zone – in passing this should not be understood me arguing to join the Euro).
The Danes, as the UK did, have an opt out. However, they peg their currency to the Euro and follow the Fiscal Stability Treaty. In that regard, I am not entirely sure why they dont just go the whole way and join up.
It is very unlikely that Scotland would be forced to join – particularly if we didnt meet the criteria for membership. Greece was a warning to be very careful about that. It would be no more than committing to join when conditions allow.
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I have no fondness for conspiracy theories, but you are absolutely correct to say the TR issue should be resolved quickly.
I was frankly appalled at the myopia of the Growth Commission Report, the stance on currency made no financial or political sense at the time, and makes even less sense in present circumstances aside familiarity.
It’s not just Murphy and Rideout recommending a new Scottish currency, Mark Blyth is an advisor to SG and has made no bones about that necessity either.
My initial thoughts were that SNP were trying to sideline it much as the monarchy until after the referendum, but we all know damned well they can’t, the anti-indy brigade and media will be all over this like flies on shit, just as they were in 2014.
Is it possible the tactic is to have all the answers ready for when the inevitable whitaboutery starts, hence wrong footing the attacks ?
I guess we’ll find out soon enough….
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About the only mis-step Alex Salmond made, was on the currency.
The tide had turned in our favour, and the Brit Nat panic was on.
Then we got bullied by Osborn, Miliband and Clegg.
This became the defining issue—that Scotland had “no currency”, and allowed all the colonial media to pound us with their big guns.
Get this issue right, with a Central bank and a “new currency” launch (backed by our immense energy assets) within months …. and Scotland will be independent, no doubt about it.
Get it wrong, AKA sterlingisation, and the gemme’s a bogie!
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Some they’ve done earlier: Australia New Zealand. Canada etc.
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Scotland already has a currency, the Scots Pound, since before the union in 1707 which functioned at a different monetary value to Sterling, exactly the same as every other national currency on the planet. Scottish banks have to deposit Sterling with the BOE before issuing Scottish bank notes. That mechanism pegs the Scots Pound to Sterling with its value rising or falling in line with the currency value held by the bank of England. Floating the Scots Pound will effectively delink the currency from Sterling while at the same time providing some Foreign currency reseves. Not by the way it’s only source of acquiring Foreign currency from the BOE. Obviously notes and coin already in circulation will have to be changed, coin being the priority. As for a central bank, although desirable for various reasons so long as it’s stays under state ownership, is not required as the Scots Treasury can act as the issuing authority, which is exactly what happens in the UK currently. Sterilisation is the problem, not the currency nor the lack of a central bank.
The Scots Government are absolutely correct with their current stance on maintaining the link with Sterling, at least until we get past the period after a Yes vote which will undoubtly create a very unstable period for the pound. How long we maintain the link will depend heavily on the negotiations with westminster. Sterling like the monarchy are major negotiation tools for the SG.
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First “Scottish Banks” are owned by English banks – BoS by Lloyds, RBS by Nat West and Clydesdale remains very small, and transitioning into Virgin Money.
Secondly the Scottish Pound is firmly in the hands of the Westminster Government in that while they are a legal currency, this is by approval of Westminster.
In that sense I dont think there is a Scots pound separate from the UK, but that said, I dont have much of a problem with sterlingisation for a short and defined period after independence. Setting up a new country is a big ask (and in that regard Pat Kane’s recent article arguing for institutions that will be needed post independence to be set up now to act as part of Scotland’s governance even within devolution is sound) and if we can kick currency down the road – for a SHORT time (certainly not the kind of period that Wilson was talking about) – then that might be a wise action.
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Of course there’s a Scots Pound, it was still in use for most of the 18th century, I’m not aware of any legislation which stopped its use rather than it became inconvenient because of the exchange rate. That difference was removed when Sterling had to be lodged with the BOE to enable Scottish banks to issue their own notes. Of course Westminster control the currency, they control everything, isn’t that what we are trying to change? Trust me, selling the Scots Pound will be a hell of a lot easier to sell to Scots than the convoluted and opinionated bollocks on what we need before we can bin westminster. A legally empowered issues of currency is required and that is the Treasury.
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Agreed, Golfnut. As an aside to Scottish banknotes being tied to the GBP, about 25 years ago I was working in Germany and used to convert Scots notes to BoE notes before I left home and then convert the BoE notes to Euros on arrival in Germany. I used the same bank in the German airport each time as it had marginally better rates than any of the other banks there or here, so they knew me. One day the teller said they’d take Scottish notes at the same rate as BoE notes as they knew it was effectively tied to GBP and this would save me time on departure from Scotland.
A few weeks later the German bank’s exchange rates board showed both a Union Jack and a Saltire and they had different rates, with the “Saltire rate” slightly more advantageous than the Butcher’s Apron one. I asked them why and was told they were given daily rates by their head office and, other than that, they were just as puzzled as me. The different rates continued throughout the rest of my contract (about 5 months I guess) and became a standing joke every Monday morning when I arrived. No explanation was ever forthcoming and by the end I’d got a lot more euros than I would have had with BoE notes. It could happen again for an indy Scotland with its massive renewable resources and able to restore its healthy export trading with Europe without the shackles imposed by the Brexit we voted against.
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I experienced a similar situation in the early 90s in Norway at first we changed to Kroner in Aberdeen airport. then we discovered that shops (supermarkets, hardware, gift etc) hotels, and bars, were all quite happy to accept Scottish notes, some would also accept BoE notes, but at a lower exchange rate. This resulted in the “english jig” whereby any crew member carrying BoE notes would hot foot it to the banks at the George street / Union street corner in Aberdeen to change to Scottish notes or take their chance with the bureau de change in the airport. The same exchange rate difference occurred when drawing local currency from a hole in the wall. depending on whether it was a Scottish Bank account or an english Bank account. So it was obviously an official policy of some kind.
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There is no such thing as the Scots Pound. What we need is a decent vision or even visions for a future Scotland that covers currency, defence and borders. These were the issues that looked weak the last time, I would assume that after eight years we should have something coherent to present to the undecided and to convince the No voters.
Thanks John for publishing this article and thanks Alasdair for raising this issue.
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“There is no such thing as the Scots Pound” – Eh ?
Multiple economists have pointed out again and again, NI and Scotland still issue their own distinctive banknotes despite only England appearing to have a “problem” over it, they are and remain legal tender in the United Queendom.
It is only official recognition of the Scottish Pound as a legally separate entity to the English version which is required, which in the current climate would be a slam-dunk.
What bothers me most is “What we need is a decent vision or even visions for a future Scotland that covers currency, defence and borders”, a decidedly English perspective.
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Hello Bob. I don’t understand the reference to my views being an English perspective. These were the issues that we fell short of the last time. If we want to win a referendum then we have to have a solid case. WE also need to rid ourselves of romantic notions such as the Pound Scots. There is no such thing as the Scottish pound. All we have are promissory notes. See the Banking act 2009.
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What I meant by “English perspective”, is precisely as you have laid out – The argument the 2014 referendum was lost only because of a lack of detail on such as “currency, defence and borders” – This is a retrospect we’ve been encouraged to believe as it allows those opposed to indy to frame the arguments then tie us up in knots over the detail.
What lost the 2014 referendum was fear of everything not granular detail – The media and BT went into overdrive boosting fear of the unknown, everything from losing pensions, lack of protection from meteorites, collapse of the free world economy, everything but the kitchen sink was thrown at Scots, and ultimately succeeded in scaring the daylights out of enough of them.
Neither Yanis Varoufakis nor Mark Blyth are inclined to “…romantic notions such as the Pound Scots”, they are pragmatic economists who simply pointed out that there are fairly simple solutions to formalising a scottish currency post-independence, it’s current constraints are irrelevant.
NONE of this needs formalised with every i dotted and t crossed before Indyref2, we only need know the general direction of travel and approve of it, the rest we can work out once the decision is made.
Until then we can expect further “complications” to be floated, such as BBC Scotland’s recent adventures over the future of the Monarchy in Scotland.
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Yes well said Bob Lamont, and while yessers were tying themselves in knots validating these ‘disastrous’ outcomes by trying to disprove them, BT came out with Cereal Woman to validate the doubts they has successfully seeded in the electorate’s consciousness, reassuring them that a yes vote wasnt even worthy of consideration. It worked. We’ve learned nothing from that.
Prior to Tim Rideout’s currency speech, the mood was to go with the leadership. He was helped by the weakness of the ‘keep the £’ speeches. I think his speech created cognitive dissonance – you could tell the members wanted to trust the leadership, but what he said hit home. That was some feat. Trying to convince with facts is far more likely to further entrench the OP in their current position. We desperately need to learn either: a) how to qualify your lead in order to have a genuine conversation with a potential yes supporter, or b) recognise the pitfalls and avoid counter-productive argument/debate – sometimes we do more harm than good to our cause.
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Tim Rideout’s views are widely respected and he is eloquent in explaining in layman’s terms why the “accepted norm” of economics is anything but.
This immediately thrusts him into conflict with those who would rather the status quo remain, Andrew Wilson for instance – That creates powerful enemies with quite literally money to burn in order to silence him. I have no idea what political motivations there are for Tim’s ludicrous situation, but I’d bet it is less politically motivated rather than engineered via back channels, the old pitchforks V torches game for which the Scottish Office were once renowned 😉
My point to WT was that there is absolutely nothing Scotland cannot do once London’s bonds are officially severed, and it is that which terrifies the continuation, Andrew Wilson included, hence promoting solutions to the tides as a prerequisite.
To be perfectly clear for those of a vengeful persuasion, England will not suddenly become bankrupt, they simply will no longer be able to freely cash in on Scotland’s resources, but I have no doubt whatever that unpredicted thunderstorms will descend across SE England when Scotland wins it’s independence, thousands of simultaneously shrinking sphincters can have that effect.
I have an idea Mr chrome-dome Campbell will feature in full PRESS body armour and helmet visiting Carlisle with an OB unit whilst somebody waves a torch for the searchlights effect on the night before the vote on Indy2, “And now back to the Scotland Office sorry Studio…”
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Hello again Bob:
“My point to WT was that there is absolutely nothing Scotland cannot do once London’s bonds are officially severed,”
I completely agree with you on that. I understand the arguments over currency (not the pound scots) but the point I am making is that we need a prospectus that will convince those presently opposed to independence to change to YES. I don’t think either you or I nor Annie need convincing.
“NONE of this needs formalised with every i dotted and t crossed…”
I also agree with this, but in my opinion we do need to have good arguments to counter what will be a very hostile press.
I genuinely appreciate your reply though.
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Alasdair has got it about right. Dr Rideout has done a lot of work on the Scottish currency issue and has managed to convince the SNP conference on important issues which need to be pursued. It is strange indeed that the SNP leadership appears to be ignoring party policy on the currency issue, and convenient for them that Dr Rideout’s contribution to the next conference can be silenced. It is of course totally unacceptable that someone can be removed from membership, for an indefinite period of time, with no right of response, based on the decision of one party official. This is not what we would expect from those to say they want a new Democratic Scotland.
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Anyway, back to the main issue. Despite the member consultation and governance review last year, its obvious issues remain. Therefore members need to take the suggested amendment to their branch NOW for submission to conference:
“Why is it that a suspension can be, in effect, be ‘stuck’ with the National Secretary without being moved on for investigation and action to be taken (should this be necessary). As above this has taken more than two months so far. Rideout has therefore suggested a Constitutional Amendment which, while he might not be able to propose it as things stand, he hopes other members and/or branches would take it forward.
His proposal is to require the National Secretary to amend section 6.2 which reads just now6.2 “The National Secretary may suspend a member from exercising any or all rights of Membership while allegations are being investigated and considered by the Party. In all cases where this action has been taken, the suspension will be regularly reviewed.”
Rideout’s suggested alternative would replace “the suspension will be regularly reviewed” with “National Secretary will refer the complaint to the Member Conduct Committee within 30 days or the Suspension will automatically lapse.”
Remember, this is not about one high profile individual or issue, its about proper process and fairness.
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