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David Mundell: The case for the union: now stronger than ever speech

Two years on from the independence referendum, the Secretary of State for Scotland David Mundell spoke at IPPR Scotland to reiterate the value of Scotland being in the United Kingdom.

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Introduction

It is a real pleasure to be here with you and to participate in your ongoing discussion following the UK’s vote to leave the EU in June.

The IPPR has a track-record of influential policy development and IPPR Scotland has established itself firmly in the Scottish political landscape.

You are an avowedly progressive, cross-party body and I am pleased to be here with you as a Conservative Secretary of State for Scotland, because I think that open, civilised and respectful debate, across ideological and party political divides, is a hallmark of our democracy.

That respectful and collaborative approach will be absolutely essential in the months and years ahead, as we negotiate the United Kingdom’s withdrawal from the European Union and together forge a new role for ourselves in the world.

Team UK

And that is the approach the UK Government has taken in Scotland since the referendum result.

I met with Scottish Government Minister Fiona Hyslop the day after the referendum, and I have maintained a dialogue with Scottish Ministers since then, including two meetings with Mike Russell, who sports the catchy title Minister for UK Negotiations on Scotland’s Place in Europe.

Throughout, I have been clear that we should adopt a ‘Team UK’ approach. Working closely with the Scottish Government, and the other devolved administrations, our aim is to get the best possible deal for all parts of our United Kingdom as we leave the EU. We have been clear from the start that we will give the Scottish Government every opportunity to have their say as we form our negotiating strategy and we will look at any suggestions they put forward.

Our aim should be to work together to ensure the best deal for Scotland and the whole UK. But in order to do so, there need to be some clear principles for that engagement. First, that the EU referendum result provides a democratic mandate for the United Kingdom to leave the European Union.

Those who advocate ignoring the result, or interpreting it as anything other than a clear instruction to leave, are wrong to do so. For the UK Government, part of making a success of Brexit means the United Kingdom leaving the EU in one piece, and remaining in one piece after that process is complete.

Those who have long argued for separation will have a different goal – but it should come as no surprise that a Conservative and Unionist government should put maintaining the Union as one of its chief aims.

Second, that the referendum result applies just as much to those parts of the UK which voted Remain as voted Leave.

To suggest otherwise is to question the integrity of the United Kingdom and, in the Scottish context, to subvert the democratic will of the Scottish people as expressed in the 2014 independence referendum.

And third, that under the devolution settlements, foreign affairs are a reserved matter to the UK Parliament and the responsibility of the UK Government. Of course anyone can disagree with any or all individual policies being pursued in this area, as in any other area. That’s what our democracy is all about.

But to question the legitimacy of the UK Government exercising its foreign policy function on behalf of the whole United Kingdom is again to dispute the democratic mandate of the 2014 referendum.

Speaking as someone who voted to Remain, I did not do so on the basis that my vote would be used as a mandate to question the integrity of the United Kingdom in the event that the vote went the other way.

Many thousands of committed Unionists voted to Remain in the EU, just as many thousands of convinced independence supporters voted to Leave.

I respect the views of those who support independence, but it is simply incorrect to use the EU referendum result as a front in the constitutional dispute between independence and Union, and it will not help us to achieve the best outcome in this process.

That is why it is so disappointing to see a second independence referendum once again under discussion.

Scotland and the EU

Because tomorrow will be two years to the day since voters in Scotland chose to maintain Scotland’s place in the United Kingdom, by a ten per cent margin, on a clear and decisive question:

‘Should Scotland be an independent country?’

I have said previously that the arguments in support of Scotland’s place in the UK have got stronger, not weaker, since September 2014.

And I do not think that the UK’s vote to leave the European Union does anything substantial to weaken the argument for UK.

It certainly does not make Scottish independence any more attractive, viable or beneficial a prospect than it was in 2014. Indeed quite the reverse. However, the First Minister has said she believed that a second independence referendum is now ‘highly likely’.

And I said in a speech I gave to mark the first anniversary of the independence referendum, those of us who believe in maintaining Scotland’s place in the UK cannot stop making the case for it – because those who take the opposing view will certainly not stop making their case.

In discussion of this topic in recent weeks, we’ve seen some history being re-written, and I’d like to address today.

It has been claimed that those of us who campaigned to maintain the United Kingdom in 2014 did so on the basis that it would guarantee Scottish membership of the EU. But that was not the case.

By the time people voted on Scottish independence, David Cameron had already made his commitment to hold a referendum on the UK’s membership of the EU if he was re-elected as Prime Minister with a Conservative majority in 2015 – he did that in his Bloomberg speech of January 2013.

He said: ‘we will give the British people a very simple in-or-out choice. To stay in the EU on these new terms, or come out altogether.’

As my colleague Ruth Davidson made clear at that time, ‘if people vote to stay in the UK, they will have a chance of a say on Europe.’

That was the context in which people voted in September 2014.

So contrary to the claim that people voted No in 2014 to guarantee EU membership, they in fact did so in the full knowledge that the issue of the UK’s EU membership might very shortly be in question.

In fact, the debate in 2014 was not about a UK guarantee of EU membership, but about the failure of advocates of independence to explain by what means an independent Scottish state could become a member of the EU, and on what terms it might conceivably do so.

The argument went like this: the EU is a treaty-based organisation, and the United Kingdom – not Scotland – is the contracting party to those treaties.

So if Scotland were to leave the United Kingdom, it would be those parts which remained of the UK which would be the state that was a party to the treaties. An independent Scotland would be a new state, outside of the EU, which would have to embark on its own process of accession.

This position was confirmed by the then-president of the European Council, who said: The treaties apply to the Member States. If a part of the territory of a Member State ceases to be a part of that state because that territory becomes a new independent state, the treaties will no longer apply to that territory. In other words, a new independent state would, by the fact of its independence, become a third country with respect to the Union and the treaties would, from the day of its independence, not apply any more on its territory.

And that sentiment was echoed by a number of other senior EU figures. So it was very clear – if Scotland left the UK it left the EU automatically. In 2014 the Yes campaign was not able to explain how Scotland would re-enter the EU in those circumstances.

This week, and belatedly, Alex Neil confirmed what he and his party would not at the time, when he said:

‘We are not the member state; that is the UK.’

Fast-forward two years and we find ourselves in the aftermath of a different referendum.

And let’s remind ourselves what that referendum was really about, because once again there has been some revisionism in the public debate.

The question on the ballot paper in June this year was as simple and decisive as the question asked two years ago.

It was:

‘Should the United Kingdom remain a member of the European Union or leave the European Union?’

It did not ask about Scotland in the abstract.

The question was about the UK – which voters in Scotland voted decisively to remain a part of two years ago – and the answer came from the UK as a whole.

England and Wales voted to leave, Scotland and Northern Ireland voted to remain.

Now, I was sorry to see divisions across our United Kingdom on an issue like this, but they should not be exaggerated.

We should remember that almost four in ten Scottish voters backed leave – not an insignificant number.

And the variation in the result did not amount to simply a Scotland-rest of UK difference. There was generational difference, with older people more likely to have voted to leave and younger people to remain.

A difference between cities and the countryside, with rural places like Moray voting differently to cities like Edinburgh.

And there was an economic division, with some of the poorest communities amongst the most pro-leave, while more prosperous areas voted to remain.

All of these raise troubling questions – but they should be looked at in the round and not through a narrow lens.

And we should also be clear about exactly what people were voting for in June.

Those who voted to Remain, in Scotland as in all parts of the UK, voted on the basis of the UK’s current terms of membership.

So if Scottish independence is being touted as a possible alternative to Brexit, we have a right to ask what an independent Scotland’s membership of the EU might look like.

In 2014 the Yes side was unable to explain how an independent Scotland would be able to join the EU – they simply asserted that it would.

The fact is that if Scotland had voted to leave the UK in 2014 it would also have voted to leave the EU – it was as simple as that. And no new arguments to the contrary – beyond a priori assertion – have been forthcoming since.

So first, there is the question of accession, which as Alex Neil helpfully pointed out, would be a requirement for an independent Scottish state, because the remaining parts of the UK would be the signatories of the EU treaties.

There is no certainty that countries with their own independence movements to consider, like Spain or Romania, would look favourably on an application from an independent Scotland.

But even assuming hypothetically that accession were a viable option, an independent Scotland’s membership as a new joiner would not be an attractive prospect.

All countries that have joined the EU since 1993 have been formally required to commit to adopt the single currency in due course. Would that be a good thing for Scotland’s economy?

What might participation in the Schengen borderless agreement mean for Scotland’s membership of the British-Irish common travel area? Clearly, the only way to guarantee an open border between England and Scotland is to stay part of the same Union.

And the UK’s budget rebate, which is a function of the UK’s respective shares in the EU economy and receipts, is unique and bespoke to Britain’s current membership status and not something which would be given to a new applicant.

The fact is that an independent Scotland’s membership of the EU would be very different from the current arrangements, which Remain voters – me included – voted for in June. Whereas the recent GERS figures showed that through membership of the UK Scotland benefits from an annual fiscal transfer of nearly £15 billion per annum, membership of the EU for an independent Scotland would not only mean Scotland losing that UK dividend, but actually mean Scottish taxpayers having to pay in to the EU pot – and at a higher rate than they do today.

In early 2014 that amount was estimated to be almost €13 billion over the next Multiannual Financial Framework – which – without the UK rebate – would be €3 billion higher than the notional amount Scotland pays as part of the UK.

And the GERS figures also demonstrate just what a challenge Euro membership would be for an independent Scottish state with oil prices where they are.

Article 126.1 of the Treaty on the Functioning of the European Union requires states at ‘avoid excessive deficits’ – which it defines at 3% of GDP.

GERS shows that Scotland’s deficit is now over three times that level, at 9.1% of GDP. Today, the UK is exempt from coercive measures under the Stability and Growth Pact, meaning we have been able to run a deficit without facing punitive measures from the EU. That exemption would not be granted to an independent Scottish state in the EU which was subject to the Euro.

Both Spain and Portugal have smaller deficits than Scotland, but this summer were found in breach of the Stability and Growth Pact, and under threat of coercive measures.

These ‘coercive measures’ can take the form of:

  • restrictions on the state’s ability to issue bonds and securities;
  • the European Investment Bank cutting off lending;
  • forcing the Member State to pay an interest-free deposit to the EU as security until the deficit has been corrected;
  • or the EU imposing fines of whatever size it deems appropriate.

Does any of this sound attractive?

What would it mean for Scottish schools and hospitals?

And was this what Remain supporters in Scotland were voting for?

I know that I wasn’t.

And it is the same right across the piece.

From being a strong voice within the third largest member state, Scotland would instead be one of the EU’s smallest members.

With qualified majority voting having replaced the veto in a number of key areas - that would amount to a major downgrade and loss of control.

On issues like agriculture and fishing, where UK-wide interests often align, and the clout of the UK has seen policy successes in the past, Scotland would be a lone voice.

It is, in truth, a very different proposition from that which Remain voters in Scotland backed in June, and those who are advocating it as alternative way forward for Scotland can claim no democratic mandate for it from this year’s referendum.

Happily this scenario is one which Scotland does not have to face. The alternative – for which there is a strong democratic mandate – is much brighter.

The UK is the vital union for Scotland

Because the vital Union for Scotland’s interests remains the United Kingdom, and I believe we are entering a phase full of opportunity for Scotland within the UK.

First, because of the fundamental strengths of the United Kingdom, which have endured for centuries.

There are the broad shoulders of the world’s fifth-largest economy, and the pooling and sharing of resources across its constituent parts.

On the Scottish Government’s own figures, people in Scotland receive £1,200 more per head in spending compared to the rest of the UK as a result of Scotland’s UK membership. That provides the Scottish Government with the means to invest in Scotland’s future in the way it sees fit.

The Scottish Government’s recent announcement of infrastructure spending to stimulate the Scottish economy was only possible because of the resources Scotland received through the UK fiscal transfer.

With a deficit of over 9% of GDP, there is no way an independent Scotland could have afforded to take such measures.

Instead, they would have been cutting Scottish services on a dramatic scale.

And it is the UK’s fundamental stability, even in the context of Brexit, which makes the case for the Union so compelling. As the GERS figures showed, over the past five years, Scotland’s tax revenues have fallen 5.6% while public spending has increased 4.3%.

Scotland contributed 7.9% of UK tax and received 9.1% of UK spending in 2015-16. After the EU referendum vote, the Chancellor moved quickly to provide businesses and organisations with clarity about EU funding streams.

All of this is possible because of the Union and the pooling and sharing of resources that it provides for.

And with the EU single market much on the lips of Scottish Ministers, we should not forget that while Scottish exports to the EU amounted to £11.6 billion in 2014, exports to the rest of the UK amounted to £48.5 billion.

It is clear that full and unrestricted access to the UK single market is far more important to Scottish businesses than is the EU single market.

As well as providing Scotland with this essential economic stability, the Union has also proven itself to be adaptable in the face of changing circumstances.

The IPPR has stated its belief that ‘a strong United Kingdom is one in which Scotland and the other devolved nations have more powers to control their own affairs, and power is also decentralised within England’.

That is exactly the approach the UK Government has taken, with the implementation in full of the recommendations of the Smith Commission in this year’s Scotland Act.

The Scottish Parliament will become one of the most powerful devolved Parliaments anywhere in the world.

It will be responsible for raising more than half of the money it spends, will have the power to shape the Scottish welfare system and the tax powers to increase its budget if it wants to. These are transformational changes from the Scottish Parliament which I served in from 1999 and give the Scottish Government the tools it needs to address many of the concerns they have raised about UK Government policies in the past.

Making use of these and other devolved powers in the best interests of people in Scotland is the prime responsibility of the First Minister and her government and that should not be forgotten amongst her now daily interventions into the Brexit debate.

And contributions to that debate would be most effective if they were constructive. While Brexit will not be simple or straightforward, it does present opportunities. We have the chance for the UK together to forge a new role for ourselves in the world. This requires a positive and responsible approach from those in positions of responsibility. Part of that means using temperate language – and in that regard I think the First Minister does needs to consider carefully the approach she has taken in recent weeks. We are, after all talking about the result of a democratic exercise. To call, as she recently did, members of a Conservative Party which was elected on a manifesto commitment to hold a referendum ‘arsonists’ is, I think, beneath her.

And her doom-mongering warnings of a ‘lost decade’ and ‘deep and severe’ damage are becoming increasingly alarmist.

Objective observers might wonder if her aim is to provide bracingly frank analysis – or to try and talk up the challenges of Brexit in the hope of making Scottish independence seem less of a risk.

As I have set out today, I don’t think that argument stands up to scrutiny.

Forging a new role for ourselves in the world

So I hope that the First Minster and everyone who, like me, voted to Remain, but wants to make a success of the future, will join together in a common effort to do just that.

As Ruth Davidson has said:

Now that we are leaving the European Union, more than ever, we must prove…that we remain that same outward facing nation which wants to play our full part, which seeks to be a beacon for the values we share – of the rule of law, freedom and solidarity with one another.

That is the positive approach we now need and that is what we mean when we talk about forging a new role for ourselves in the world.

It is a big task and an exciting prospect.

Scotland can shape that future by playing its part as a strong and influential member of the world’s oldest and most successful Union of nations.

By building on the fundamental strengths of that union, its economic and social solidarity, its strong defences, its integrated free market, its common currency, its open borders, its shared language, its family ties, its cultural heritage, Scotland can be stronger still and together we can make a success of Brexit.

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