Day: February 15, 2014

Gloves come off over currency union

A currency union in the event of a vote for independence ‘would not be in the interests of either the people of Scotland or the remaining UK’, Chancellor of the Exchequer George Osborne told an Edinburgh audience on Thursday. Unsurprisingly his claims have been rubbished by supporters of independence, but while the two sides disagree over currency union, one thing is clear – the gloves are well and truly off …

Mr Osborne’s speech follows official Treasury advice that in the event of independence they would not recommend a currency union to the Government of the continuing UK, and in an unusual departure from procedure he also published the advice he received from the Treasury Permanent Secretary on whether to join a currency union should Scotland become independent.

Speaking at the Point Hotel on Thursday, the Chancellor said: “I hope passionately that the people of Scotland choose to stay within our family of nations in the United Kingdom. I want Scotland to keep the pound and the economic security that it brings. But it is clear to me I could not as Chancellor recommend that we could share the pound with an independent Scotland. The evidence shows it wouldn’t work. It would cost jobs and cost money and wouldn’t provide economic security for Scotland or for the rest of the UK.I don’t think any other Chancellor of the Exchequer would come to a different view.

“The Scottish government says that if Scotland becomes independent there will be a currency union and Scotland will share the pound. People need to know – that is not going to happen.”

The Treasury also  published the detailed analysis on the economics of a currency union which underpins its advice to the Chancellor. The paper states that while the United Kingdom is one of the most successful monetary, fiscal and political unions in history, the fiscal and financial risks of entering into a currency union with a separate Scottish state would be too great.

The analysis states:

UK is a successful union because taxation, spending, monetary policy and financial stability policy are coordinated across the whole UK, with risks pooled and clear political accountability

  • Scotland’s economy would be more exposed in the event of independence, with greater risks from shocks in the financial and energy sectors
  • in a currency union, the continuing UK would be exposed to much greater risk from a separate Scotland, with the possibility of continuing UK taxpayers being asked to support that state in the event of a fiscal or financial shock
  • if people in Scotland vote for independence, the Treasury would advise the continuing UK Government against entering into a currency union with an independent Scotland

The Chancellor’s view was supported by the finance spokespersons of both the other main Westminster parties.

The announcement was also welcomed by the Better Together campaign. Former Chancellor Alistair Darling, who leads the campaign, said: “If we vote to leave the UK in September, Scotland will not be able to keep the pound. That is the message Scotland must keep in mind when deciding how to vote. This was the day on which Alex Salmond’s bluff and bluster about independence came face to face with reality.

“Why would taxpayers in England want to bail out the banks of what would be a foreign country? Why would a continuing UK Treasury accept a veto from what would be a foreign government over tax, spending and borrowing?

“And why would Scotland agree to have its budget subject to a veto by the rest of the UK? That’s how a currency union works. You only have to look at the problems of the eurozone to see that. It makes little sense. Yet everything about the First Minister’s case for breaking up the UK rests on keeping the pound.  The jobs of thousands of Scots in our financial services industry depend on using the pound. Without the pound, all of these are at risk. That is a big gamble we simply don’t have to take.”

The Better Together campaign called on Yes Scotland to explain what currency Scotland  would use if we vote to leave the UK – would we join the euro, or maybe even set up a new, separate currency? Put simply, if yer no’ gettin’ the pound, what’s your Plan B?

Calling for clarity, Better Together campaign director Blair McDougall said:

“The nationalists have been in chaos on currency over the last few days. Alex Salmond is a man without a plan. First he says we will keep the Pound, even though it is now clearly off the table. Now Yes Scotland tell us we can keep the Pound without a formal agreement, even though the SNP’s own Fiscal Commission Working Group ruled this out. And Patrick Harvie, a Yes Scotland board member, today said that Alex Salmond needs to set out an alternative to the Pound.

“It is time they got their line straight. If Plan B really is the Panama plan that would mean if something like the collapse of RBS happened again a crisis would become a disaster in an independent Scotland.

“Leaving the UK and losing the Pound would mean higher mortgage repayments, more expensive credit card bills and a big risk to thousands of jobs in our financial services industry. Alex Salmond is gambling with the livelihoods of the people of Scotland.

“The message from those of us who support Scotland remaining in the UK is very simple – a vote for separation is a vote to lose the Pound. The only way to keep the Pound is to stay in the UK.”

However, supporters of independence have cast doubt on the Chancellor’s assertions. First Minister Alex Salmond accused Mr Osborne of ‘bluff, bluster and bullying’ and former Labour Scottish First Minister Henry McLeish also expressed concern over Osborne’s ‘misguided’ intervention, saying the Chancellor’s heavy-handed tactics could push more Scots into voting Yes.

Mr McLeish said: “He is basically saying vote yes and we won’t allow you to join a currency union. We will withdraw any goodwill and sacrifice the best interests of Scotland, England, Northern Ireland and Wales.

“Do we really believe that would be the response if Scotland voted to exit the Union? I don’t think so. Wisdom and sanity would return. It would help if the Union would spell out their vision, provide an alternative to independence and offer a bit more carrot and less stick to Scots voters.

“Let’s remember that Osborne’s party want to take us out of the EU. It is the Union that is on trial, not Scotland. Creating a currency union is first and foremost a political decision, not a financial or technical one.

The UK and Scotland would have to settle the politics of this in their respective parliaments or at the polls, so the people of England, Wales and Northern Ireland could have a say in this significant decision.”

Scottish Finance Secretary John Swinney maintains that an independent Scotland will continue to use the pound as it is in the best interests of Scotland and the rest of the UK .

Responding to the Chancellor’s comments on a currency union, the Finance Secretary said that the Treasury analysis has been developed without any discussion with the Scottish Government – and without acknowledging the independent expert work of the Fiscal Commission Working Group (FCWG).

The Scottish Government last year published comprehensive analysis of the different currency options available to an independent Scotland. This analysis by the Fiscal Commission Working Group, consisting of four pre-eminent economists including two Nobel laureates, considered the full range of options and concluded that a monetary union would be in the best interests of Scotland and the rest of the UK.

The Fiscal Commission provided advice on:

  • Banking union
  • Risk sharing
  • Monetary and exchange rate policy
  • Duration of a currency union

The HM Treasury has had no discussion with the Scottish Government on any of these points.

Responding to the Chancellor’s comments, Mr Swinney said:

“We welcome the opportunity to continue the debate with the Chancellor on the merits of our proposals on a currency union.

“However the Chancellor made clear his conclusions on currency union were based on the advice of Treasury officials. That advice is incomplete and with regard to the size of the Scottish financial sector and operation of monetary unions is backward looking and takes no account of the comprehensive evidence provided by the independent economic experts of the Fiscal Commission, including two Nobel laureates, Professor James Mirrlees and Professor Joseph Stiglitz.

“On every one of the four points the Chancellor rehearsed today, the FCWG have already published comprehensive advice and analysis and their proposed macroeconomic framework is a workable model that would ensure financial stability and allow both governments autonomy over economic and social policies, including fiscal policy. In addition the Governor of the Bank of England has confirmed the Bank will deliver a currency union if agreed by both Governments.

“On the banking union: no country should have to bail out banks again. Across the EU and UK recent regulation has been designed to break the link between taxpayers and banks. The Treasury hugely overstates the size of the banking sector in Scotland which is in line with the rest of the UK. It is the City of London which is hugely reliant on the financial services sector, accounting for 50 per cent of UK financial services GVA. A banking union with an independent Scotland is in the interests of the rest of the UK as the sector benefits from integrated trade.

“On fiscal risk sharing: Scotland’s fiscal position is stronger than that of the UK. An independent Scotland would have had the opportunity to spend more, tax less, invest in an oil fund and still borrow proportionally less than the UK. The Fiscal Commission proposition ensures a harmonised system for financial regulation and resolution of banks. Scotland would take its fair share of responsibility recognising that ‘both Scotland and the UK have a shared interest in ensuring financial stability’.

“On monetary and exchange rate policy: Scotland would have full fiscal and economic freedom to set taxes and economic policy, as has been shown by many countries in the different currency unions which have operated internationally.

“And on permanence; all Sovereign states have the ability to determine currency arrangements that are appropriate for their circumstances. That is not a barrier to successful currency unions.

“The model proposed by the Fiscal Commission Working Group has not been considered and the Chancellor’s statement today is political and completely counter to the spirit of the Edinburgh Agreement, which commits both Governments to working in the best interests of both countries whatever the result of the referendum.

“If the UK Government is to honour its commitment to the terms of the Edinburgh Agreement, the discussion that the Chancellor has entered into today must be informed by the best evidence available. The Fiscal Commission have recommended early engagement between the Scottish and UK Government to properly address these critical issues. The gaps in the Chancellor’s analysis demonstrates the force of that recommendation.”

So there you have the two sides of the currency union divide. The Unionists say it can’t and won’t happen, the Nationalists say it can and it will. Political panic over narrowing poll leads, or a pie in the sky economic gamble?

You pays your money, you takes your choice. For now at least, that money is sterling.

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Pilton gala queen’s now Queen of Hearts!

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Local businesswoman Ann Budge hit the headlines this week when it was announced that she would give financial support to Hearts fans in their fight to save the club. It’s not the first time Ann’s come to the aid of a struggling organisation – back in 2010 Ann, who was born and brought up in North Edinburgh, sponsored a NEN initiative called ‘An Inspiring Community’.  Here’s the article:

An Inspiring Community?

This month, NEN launches a new feature, and we need your help and ideas.  We want to showcase the successes and achievements of people who live or have lived in the North Edinburgh area and who have, in major and minor ways, helped to make North Edinburgh the vibrant community it is.  Who inspired them?  Have they gone on to inspire others?  Have you or do you know someone who has achieved success against all the odds?  Do you know someone who has done something really inspirational?  We are looking to encourage people to believe in themselves and to show that humble beginnings need not be an insurmountable barrier to success.   If you have been inspired by others or if you know someone who is inspirational, we want to hear about them.

In a regular feature over the coming months we will highlight the people who have made a difference, and later this year we plan to hold a gala event to showcase all that’s good about inspirational North Edinburgh.

The feature is kindly being sponsored by IT entrepreneur Ann Budge, who won the accolade of Woman of Outstanding Achievement in 2009 following an outstanding career of over 30 years in the computer industry.  When she received the Entrepreneur of the Year Award in 2005, Ann was described by Entrepreneur Exchange President Sir Tom Farmer as ‘a tremendous icon for all businesswomen’.

Ann is very much a local girl made good.  One of five children, Ann was born and brought up in Royston, West Pilton and Drylaw.  Dad Jimmy was a docker and Esther, her mother, was a cleaner at the Western General.  She attended Pennywell School – which later became Inchview – and was West Pilton’s gala queen in 1960. Ann’s schooling continued as a bursary pupil at Trinity Academy, where she passed five Highers.

She then went on to study at Strathclyde University, where she gained an Honours Degree in Psychology.  At that stage in her life Ann had no clear idea of what career path she would follow, and got into computing almost by accident.  Following a comment from her sister – “Computers are the future; I don’t know what they do, but everyone is talking about them!” – Ann decided to find out more about computers and soon found herself on the first rung of the ladder in a new and developing industry.  She was taken on by Scottish & Newcastle Breweries as a graduate trainee and quickly showed her aptitude for systems analysis in the then exciting new world of computers.

Following a series of management promotions over the next 12 years Ann was head-hunted to join her future business partner Alison Newell at F International, a visionary computing company that actively encouraged the wider participation of women professionals in IT – particularly those with dependants.

In 1985 Ann and Alison set up their own IT company Newell and Budge, which proved to be very successful and the partnership lasted until 2001 when Alison Newell decided to retire.  Ann bought out her former partner, and the company continued to flourish – the annual turnover was then £38 million – attracting world-wide interest from the business community.  In summer 2005 Newell and Budge was sold to French giant SOPRA.

Ann stayed on as Chief Executive of Sopra Group UK, responsible for over 1000 staff across the UK, Ireland, North America and India.  One of the few women Chief Executives in the IT industry, she officially retired last year.  An honorary degree from Robert Gordon University summed up her remarkable achievements in a traditionally male dominated industry:  ‘Ann is an outstanding role model for women and an inspiration for everyone in computing”.

Ann is remarkably candid about her success, and her inspiration comes from very close to home.

“I laugh when I hear myself described as some sort of visionary entrepreneur – I don’t think I’ve ever had a vision in my life!   For me, throughout both my education and working life, it’s always been about hard work and being the best you can be.  My parents instilled in us from an early age the values of integrity and being honest.  They were very encouraging and supportive, particularly my mother – as children we were all encouraged to do your best, but never pressurised.  I was never boastful about being top of the class at school, but I know how proud it made my parents.  I know the sacrifices that were made to give me all the support they could and I always had a strong desire not to let them down”.

She went on:  “They were my role models and the values they taught us from an early age still hold true today:  you get nothing for nothing, if you want to get on you’ve got to work for it, be honest with people and, most important, look after your family.  We are still a very close-knit family”.

Despite a punishing work schedule that sometimes meant meetings in Edinburgh, London, Paris and India – all in a week – Ann has indeed always made time for family matters.

Ann’s sister said:   “To us, Ann is our sister first and foremost, not only a very successful business woman; she is part of a family circle in which she plays a big part.  Ann is supportive and inspirational to us all in many different ways. She spends a lot of time with her daughter, son in-law and granddaughter, she has a wonderful relationship with them, and as anyone who is busy knows this is never an easy balance to get right. Also her nieces and nephews have all benefitted from Ann’s willingness to give time to them and to listen and share ideas with them. She is always enthusiastic and encourages self belief in the younger members of her family. We are all very proud of her and her achievements”.

Ann also named two people from the world of commerce who she believes were influential on her career.  “Lesley Wise, who was my boss at Scottish and Newcastle, was an absolute autocrat and a very strong leader.  People respected him – maybe even feared him – because of his tough attitude. But in many ways he was a visionary, as he showed by encouraging and promoting woman within an industry which was predominantly a male environment.  I enjoyed working with him, he taught me a lot about IT and business management and we worked well together – perhaps he found it harder to be horrible to a woman!  Alison Newell had a very different management style – she really was a charismatic leader, the kind of woman you want to follow.  They were very different in style and personality, but both were inspirational in different ways and I was fortunate to work with them both.  I do believe in strong leadership – since early in my management career I’ve found that, for things to succeed, you’ve got to have strong leadership.”

So there is no magic formula to success, then?

“We came from a relatively poor background, but I was very fortunate because I had the right support at home.  I was never an ultra-confident person, but I’ve always believed that it’s perfectly possible to succeed – in life and work – through hard work, self-belief and striving always to do your best”.

Strong leadership, support, hard work and striving to do your best – qualities that will now be tested to the limit as she takes on the toughest challenge she – and the Hearts community – have ever faced.