The euro crisis has shown that you can’t have a single British currency without fiscal union, says PAUL SINCLAIR


One of the lessons of the AV referendum was that you can’t sell a solution to the public when they don’t see there is a problem.

John Swinney’s suggestion that we can kick-start the economy by the Scottish Parliament taking control of – and lowering – corporation tax doesn’t have that kind of hurdle: we see the need for growth in the economy every day. We shouldn’t therefore dismiss it out of hand just because it comes from the SNP or involves a transfer of powers from Westminster to Holyrood.

While Nationalists naturally have a dogmatic view of where powers should lie, the Labour view should be more pragamatic, but based on these two principles: that power lies with the Scottish people, and that the choice of  institution to exercise specific powers depends on what is in the best interests of the Scottish people.

But then there is another problem which the Scottish public see every day which points to Swinney’s solution: George Osborne deciding what Scotland’s tax rates are when he is cutting too fast and too deeply and has no mandate in Scotland.

That is the argument ten minutes into the debate, and it’s one which seems hard to answer.

Problems, problems and seemingly only Swinney solutions.

But if we look at the bigger picture, there is a fundamental problem which the public see on their televisions, smartphones and iPads all too often which blows Swinney’s solution away – the euro.

In these miserably uncertain times there is little agreement on economic solutions, but one orthodoxy is emerging: monetary union doesn’t work without fiscal union and possibly political union. The Euro doesn’t work for Greece because the Greeks’ fiscal policies don’t fit the euro. The same is true for Portugal and increasingly for Italy and Spain.

The lesson of the euro is that one currency means one fiscal policy and preferably political union.

You could argue that on these islands we realized that more than three hundred years ago.

But with the SNP currently saying that an independent Scotland would retain sterling, you have to ask why they then would want to replicate the economic system which has put Greek in a straight jacket of economic decline they can’t get out of – monetary union without fiscal or political union?

Why do they want to start the process now with corporation tax?

An independent Scotland would have the choice of three currencies: the euro, Sterling or the Scottish pound. Only the last one would allow Scotland to have independent fiscal policies – if you fancy launching a new currency in the current economic circumstances.

Swinney’s solution can be demolished – but it still leaves the problem of what we do in Scotland to promote growth. Those of us who believe that Scotland is best served by remaining part of the United Kingdom have to do better than just attack what the Nats come up with.

This goes to what I believe is one of the reasons why the SNP won a landslide in May.

For me, people like John Smith, Donald Dewar and Robin Cook are political heroes not just because they championed social justice but because they also offered a sense of possibility for Scotland; that Scotland, through devolution, would remain part of the Union but would be able to come up with particularly Scottish solutions to Scottish problems and build our own distinct prosperous and just society.

Fairly or unfairly, neither our policies nor our candidates at the last few elections seemed to measure up to that ambition.

In contrast the SNP set the question of independence aside and with a towering figure like Alex Salmond, and increasingly impressive ones like Nicola Sturgeon and Swinney, seemed to own that sense of Scottish possibility.

The SNP seemed positive while we, at best, looked inert.

To get that sense of possibility back we need to offer a clear and understandable idea of how we would rebuild the Scottish economy – and it needs to be a bit more than just saying jobs. We need a vision of what a Labour Scotland means.

And there is something fundamental we need to do which should have been done decades ago: explain in clear terms why Labour values lead us to the conclusion that Scotland is best served by being part of the United Kingdom. Why we believe in a politics of values rather than a politics of identity. Why the Union is the positive choice which gives Scotland greater opportunity.

And we must smash the view that London retains the power and only grudgingly doles it back to Edinburgh in small, hard fought for, rations. Power resides with the Scottish people and where it is exercised should depend on what is in the interests of the Scottish people, decided by the Scottish people.

If the upcoming debate on independence becomes a fight between William Wallace on one side and the Bogey Man on the other, both the SNP and the Labour Party will have let the people of Scotland down and we will have missed a great opportunity to explain what we want Scotland to be.

Those of us who oppose independence don’t do so because Scotland isn’t up to it – we do so because there is a better future for Scotland in the UK.

Saying ‘No’ to the SNP is the easy part. But we will lose if we don’t expand the statement to say, ‘No, we can do something much better.’

And the answer to the Osborne point is quite simple: monetary union benefits Scotland and fiscal union is the price we pay for it. We don’t want to end up like Greece.

We need as much influence as possible within the UK and in the global city of London to make sure that our neighbours adopt policies which allow us to build our Scotland whether we are in the Union or not.

And George Osborne really isn’t a significant enough figure to change Scotland’s destiny.

Scotland’s problems are clear. The SNP’s solutions always seem to be to make the world a little smaller.

Labour will get back to winning the arguments when we look to the bigger picture – and have greater ambitions for Scotland.

Paul Sinclair is the former political editor of the Daily Record and a former special advisor to Gordon Brown and Douglas Alexander. He Tweets as @PaulBSinclair.