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15/01/14 18:00

Keynote speech to the David Hume Institute

Deputy First Minister Nicola Sturgeon
David Hume Institute
15 January 2014

Thank you, Jeremy.

Let me take this opportunity to wish you all a very happy and successful 2014.

This will be a momentous year - a year when we have the opportunity to debate, consider and choose the future of our nation.

One of the many notable events of 2014 will be Jeremy's retirement after eight years as Director of the David Hume Institute - so let me take this opportunity to congratulate him on his success and wish him well.

The Institute is a most prestigious organisation and an excellent platform for debate.

So I am extremely grateful to it and to the Young Academy for inviting me to open this series of discussions.

The aims of the Institute and the Young Academy are relevant to all of us in Scotland as we look forward to the historic decision that we will take this year.

The Institute is “sceptical in Hume’s sense of seeking to avoid dogma and preconception in addressing complex and important issues of public policy”.

I believe that is entirely the spirit in which Scotland will weigh up its decision this year.

There will be high feelings, and passionate exchanges, of course. That is right and proper for these are serious and important issues.

As David Hume himself said:

"Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them."

But the overwhelming appetite is for rational debate. The Scottish people will use their reason to guide their passions. And those of us most closely engaged in the debate have a responsibility to conduct ourselves in a way that facilitates rational and reasonable discussion.

We should consider how history will view us: the respect we show for our opponents and their arguments; the respect we show for our country – and our friends and neighbours - in considering our future. We owe it to ourselves and to everyone in Scotland to lead a debate that Hume and his fellow Enlightenment thinkers would be proud of.

The Young Academy’s mission is to:

"Foster interdisciplinary activities among emerging leaders…to develop a coherent and influential voice, and to address the most challenging issues facing society in Scotland and beyond."

This underlines two profoundly important aspects of the independence debate.

First, independence involves thinking about our country as a whole. The opportunities that independence gives Scotland to take an truly inter-disciplinary, joined up, coherent approach to our problems and to make the most of our opportunities.

Second, independence is about the future. It is about the country that we want for our children and grandchildren and for generations to come. And so, as well as established voices, young people and emerging leaders must be key voices in this debate.

This evening I am going to talk about the referendum as a choice between two futures and why it is better for all of us if decisions about Scotland are taken in Scotland.

The choice we will make on 18 September this year is very different to the decisions we are used to taking at the ballot box.

It is not a choice between political parties with a programme for the country for the next four or five years. It is not a vote based on party loyalty.

It is instead a choice between two futures for Scotland.

In one of those futures we vote for independence. That means decisions about Scotland will be taken here in Scotland. Our Parliament will have responsibility for all matters in our national life – the economy, welfare, taxation – and not just those matters devolved to it by Westminster. The government of Scotland will reflect the views of its people.

In the other future we vote No. That means decisions about Scotland’s future will continue to be taken at Westminster.

Decisions on taxation, on welfare, on replacing Trident, on staying in the EU - will be out of our hands and in the hands of others.

So those in summary are the two futures Scotland faces.

One in which we take responsibility and decide our own future.

And one in which we wait for things to happen to us and can only mitigate the worst effects of decisions that we do not endorse.

Last week, the Chancellor of the Exchequer made a speech on his plans for the next few years.

He laid out clearly what the choice of a No vote would mean. He said:

“We’ve got to make more cuts. £17 billion this coming year. £20 billion next year. And over £25 billion further across the two years after. That’s more than £60 billion in total…”

As the Chancellor himself put it:

“...what was hard won, can be easily lost. So we have a choice in 2014.”

These are words that we would do well to heed. Because it is clear from his comments that our welfare state and our public services - not to mention our budget and our place in Europe - could be in jeopardy if we vote No and continue to be governed from Westminster.

But, to strike a note of consensus, I agreed with the Chancellor’s final thoughts:

“So we can all live in a country that is in control of its own destiny in this world.

“A country where we can have the peace of mind that comes with knowing you can provide for your family.

“A country that offers security and a better life for the next generation.”

As we contemplate the two futures that open up to us after the referendum, I firmly believe that these aims – control of our own destiny, providing security for families and future generations – are at the heart of this debate and will best be served by a Yes vote.

Before I develop these two futures in more detail I want to highlight a truth that underlies the debate - one that is acknowledged by those on both sides.

Scotland has got what it takes to be independent.

Scotland can be a successful, independent country - these are the actual words used by David Cameron.

Our white paper – Scotland’s Future – sets out clearly the relative strengths of Scotland’s economy and current financial position compared to the rest of the UK.

Looking at our economy, even without North Sea oil and gas, economic output per head in Scotland is virtually identical to that of the UK as a whole. With oil and gas it is considerably larger.

So oil and gas is a huge bonus. But the Scottish economy also has key strengths in growth sectors like food and drink, energy, creative industries, tourism and life sciences. Per head of population we have more top universities than any other country in the world.

We perform strongly as a location for inward investment and we have a strong financial services industry.

Looking at our public finances, in each of the last 32 years, we have contributed more tax per head of population than the UK as whole.

Taking tax and spending together, over the last five years Scotland’s public finances have been stronger than the UK as a whole by a total of £12.6 billion – almost £2,400 per head - and the ratio of public spending to GDP has been lower for Scotland than in the UK.

And, as Scotland’s Future sets out, at the point of independence in 2016, Scotland’s estimated financial position will continue to be healthier than the UK's as a whole.

So there is broad agreement – even consensus - on Scotland’s fundamental economic and financial viability as an independent state.

There is also agreement on other matters that are fundamental to the argument for an independent Scotland.

Devolution - in the limited areas that we already have responsibility for - has worked. Taking decisions in Scotland, rather than at Westminster, on health, education and justice has brought real benefits to people living here. Independence will extend these benefits to all other areas of government activity.

There is also agreement that after the referendum, whatever the result, both the Scottish and UK governments will work together in the best interests of people in Scotland and in the rest of the UK. That joint commitment is enshrined in the Edinburgh Agreement – although it is no more than common sense and the way that nations across the world conduct their affairs.

That is why - regardless of what is said now in the heat of debate - we can be confident that, following a Yes vote, sensible agreement will be reached on issues such as a currency union.

We saw earlier this week, with the Treasury's announcement about UK debt in the event of independence, the first clear acceptance by the UK government of the rational, common sense positions laid out in the White Paper. It also demonstrated that clarity on such matters is as much in the interests of the rest of the UK as it is in Scotland's.

And if the UK government can accept the common sense position on debt, there is no reason why they should not also accept the common sense position that Scotland and the rest of the UK should share a currency. Or that Scotland's continuing membership of the EU can be agreed in the way we have set out in the White Paper.

The barriers that the No campaign has sought to build fall down when faced with simple logic and common sense.

One of the specific questions the Young Academy asked me to address this evening concerns the future of research funding in an independent Scotland. I believe that a continuing Common Research Area is a good example of where we will have continued cooperation after independence. It is clearly in the interests of both Scotland and the rest of the UK to continue these arrangements, given the importance - and not just for financial reasons - of collaboration in research. The international trend in research is towards greater collaboration, not just between the different countries of the UK - but between different countries in Europe and across the world. In the end it is the excellence of the research carried out in Scottish universities that will guarantee that it attracts funding and it is the mutual interest of Scotland and the rest of the UK that will ensure we remain within a common research area, with Scotland paying our way.

So as you make your minds up over these next few months, be clear about these key points of agreement.

We can afford to be a successful independent country. We have very strong economic foundations and robust public finances.

We already have a track record of running our country successfully. The principle of taking decisions here in Scotland has been proven to work.

And we will work with our friends and neighbours to make an independent Scotland a success. It will be in the interests of Scotland, the rest of the UK, and our partners in the EU to ensure that we are two successful, friendly countries.

So we can be independent if we so choose. That was settled in 2013, and is now accepted.

In 2014 we are debating the heart of the matter.

Should we be an independent country?

Our current strengths will give us the strongest possible starting point as an independent country.

But – as I said earlier - the choice we face in the referendum is about the future, and not just the future for one Parliament but the long term good of our country and our people.

Like other countries – including the UK - we face some big challenges.

I believe that the need to meet these challenges provides one of the strongest arguments for independence.

The challenges we face - like constrained public finances, a legacy of debt and a working population that is not growing fast enough - are not arguments against independence. They are products of the status quo. They are reasons, not to keep things as they are, but to do things differently.

So let us consider the first of Scotland’s two futures.

What future will Scotland have if we vote Yes.

The Scottish Government has set out, in the White Paper, a comprehensive vision and plan for how Scotland can change for the better with independence.

Scotland’s Future sets out three main objectives for independence:

• To create a more democratic Scotland
• To build a more prosperous country
• To become a fairer society

With independence Scotland will get the governments it votes for. In contrast, we are now governed from Westminster by a Conservative led administration. In the last four UK General Elections, the Conservatives have won - in order - zero, one, one and one Westminster seats in Scotland. Yet they make the big decisions on our economy, welfare and tax systems, and on whether nuclear weapons should continue to be based in this country.

That might sound like an anti-Tory point. But it is more fundamentally a pro-democracy one. For the leader of the party that has comprehensively lost the election to end up as Prime Minister is neither right nor democratic.

But the democratic argument goes beyond simple Parliamentary representation.

It is about a fundamentally different view of the sort of country Scotland should be.

A Scotland where we don’t wait for things to happen to us but one where we take responsibility and shape our own future.

Independence has the transformational potential to empower our country and our people. I believe that is the over-riding reason to vote Yes.

And how can independence make us a more prosperous country?

First, we should look around us.

Our independent neighbours have grown their economies more quickly than we have.

Scotland’s Future and our accompanying economic paper set out the opportunities that independence will bring to improve our economy and build on our current strengths.

These range from industrial policies that will promote innovation and manufacturing to using tax powers and Scotland’s new global status to develop growth sectors, widen our export base, and attract investment.

Scotland's Future also identifies some specific early priorities this Government would pursue on independence, if we are elected to be the first government of an independent Scotland.

We would set a competitive corporation tax and reduce Air Passenger Duty by 50 per cent.

Another vital area for improving our economic performance, as well as addressing the challenge of an increasing pensioner population, is the size of our working population.

Historically, Scotland’s population has grown less quickly than the UK as a whole and countries like Switzerland, Ireland, Sweden and Norway.

With independence we could address this crucial issue with, for example, a sensible, managed immigration policy suited to our needs, and action to help more women into work.

You will know that in Scotland’s Future we set out a plan to transform childcare in Scotland. This is not just about improving the early education of our children, or helping families, important as these aspects are. It is also an important economic policy.

If we can raise female participation in the labour market to levels achieved in, for example, Sweden then, as well as a boost to general economic performance, we will raise an extra £700 million per year in tax revenue.

With devolution we have been able to increase the amount of childcare available - we announced a further extension just last week. But with independence we can go beyond this, and deliver our ambitious plan for the provision of free universal childcare for all children aged 1-5.

Let me be crystal clear why independence is required to deliver this transformation for Scotland’s children, women and families, and our economy.

At the moment Scotland receives a fixed budget from Westminster. We would not receive the increased tax revenues from more women in the workforce unless Westminster decides we should.

So the costs of providing increase childcare with devolution would have to be met from within a fixed budget – by cutting other services.

With independence, the costs can be met initially by making different decisions on defence and then because increased tax revenues stay in Scotland.

So transforming childcare, increasing female participation in the workforce, and boosting our working age population and economic performance is a social and economic transformation that is only possible in an independent Scotland.

And this principle doesn't just apply to investment in childcare - it applies also to investment in education, training, infrastructure, transport. The economic benefits and the benefits to public finances of all of these policies stay in Scotland with independence and go to Westminster with devolution.

That is a fundamental change in the way we approach our economy and public services. Independence is the difference between being a country that takes responsibility and enjoys the benefits – and indeed risks – of its own decisions; and being treated as just another department of the Westminster Government that has its budget doled out to it by the Treasury.

Another key area where independence will allow us to transform Scotland is the fairness of our society.

Within the UK, Scotland is part of an increasingly unequal society. The UK is one of the most unequal countries in the developed world.

OECD analysis shows that since 1975, income inequality among working-age people has increased faster in the UK than in any other country in the organisation.

This is not the result of the policies of one government, but of almost 40 years of decisions at Westminster.

Seeking to become a more equal society is not just the right thing to do. It also makes sense for the economy. We know that the most equal societies also have the highest levels of well-being and are most prosperous.

But welfare is currently reserved, and the changes being made to Scotland’s welfare system - including the disastrous roll out of Universal Credit and the grossly unfair bedroom tax – are being decided for us at Westminster.

With independence we can build on the record of successive Scottish governments and deliver a coherent approach to social justice and to tackling inequality.

We can build solidarity and cohesion with our society. This Scottish Government recognises that everyone contributes to society and everyone should take some benefit. That is one reason we support universal provision of some benefits and services.

We do not believe that society should be divided between those that pay in and those that take out.

So with independence we can build a welfare system, based on clear principles and values: one that supports people who work; provides support for people who cannot work; and fosters a climate of social solidarity.

We can build on our pioneering approach of preventing problems arising in the first place, rather than relying on crisis interventions.

There will be immediate gains from independence, such as the abolition of the bedroom tax and a halt to Universal Credit.

But the main benefits will come over time as we realise these fundamental transformations to our welfare system and increase fairness in our communities and our country.

There is obviously more to fairness and equality than welfare.

This Scottish Government is already promoting a Scottish living wage. And with independence we would increase the minimum wage at least in line in line with inflation.

Investment in childcare and social housing can also have longer-term, positive impacts for individuals and communities, reducing the need for expensive interventions through the justice and health systems later in life.

This approach can create savings for the long-term that – with independence - can be reinvested for the benefit of people in Scotland in the future, and provide sustained benefits to individuals and communities.

So these are the kinds of positive transformations Scotland can achieve after a Yes vote.

A fairer Scotland, with a welfare system that promotes solidarity and treats those in need with respect and dignity. A minimum wage that reflects the cost of living. And a joined up approach to policy that realises for Scotland the benefits of the investments we make.

A prosperous Scotland, with control of the economy and taxes and the tools to address challenges like our working age population.

And a democratic Scotland, where the Government represents the views of the people and where we take responsibility and make things happen for ourselves.

It is with this idea of taking responsibility; of making things happen for ourselves that I want to address another of the Young Academy’s questions – where the biggest risks and opportunities lie.

For many people living in Scotland today under the Westminster system the risks are great – not because we have too much responsibility but because we have too little.

In wealthy Scotland, one of the richest countries in the world, many of our fellow citizens risk relying on food banks; children risk being brought up in poverty, working families risk taking the brunt of the Chancellor’s planned spending cuts.

These risks are growing. For far too many it is not even a matter of risk – it is the reality. These things are happening in Scotland now, today – and in a country ranked in the top ten wealthiest countries in the OECD.

The risks, and the reality, come from the dismantling of the social security safety net, and the imposition of social and economic policies that are out-with our control, decided by a government we didn’t vote for.

So, yes, taking responsibility in any aspect of our personal and national life can seem daunting.

But I would argue that it is much less of a risk than leaving that responsibility in the hands of others.

I make these points because the referendum is a choice between two futures.

The consequences of both a Yes vote and No vote need to be considered.

Scotland’s Future is the case for independence and I am happy to let the Scottish people be the judge of it.

But to make an informed choice, you also need to know what a No vote will mean for Scotland.

So far, the No campaign has told us why they think independence – taking responsibility here in Scotland - is bad, but they haven't told us why they think continued government by Westminster is good.

There are many questions about what will happen in the event of a No vote and so far these are completely unanswered.

Last week I set out some of these questions. For example:

• What new powers is the Scottish Parliament guaranteed to get if we vote No - given that there is no consensus on this within the various anti-independence parties, let alone between them?
• Will the Barnett formula be retained for the long term? Or will the demands from politicians in all of the UK parties for it to be reviewed or scrapped lead to a cut in Scotland's budget?
• What will the implications be for Scottish families of the £25 billion of additional cuts in public spending announced by the chancellor last week?
• How many more children will be living in poverty in 2020 if we carry on with current Westminster policies?
• How much will Scottish taxpayers be expected to contribute to the replacement of Trident?

Of course, while there are no direct answers from the Westminster government to these questions, we can piece together some answers from the information publicly available.

It is estimated, for example, that up to 100,000 more children in Scotland will be living in poverty by 2020 if we follow the policy path Westminster is on.

But the fundamental truth that underlies these questions – and why they are directly relevant to the debate on the referendum – is that if we vote No, it won't be Scotland that decides these matters . It will be Westminster.

Let’s take one of the questions I posed: about the future of the Barnett formula.

In December, the Prime Minister wrote to the First Minister on the future of the Barnett formula stating – in bald terms – that he could not bind his successors on this issue.

That is precisely the point.

With independence Scotland will retain the taxes raised here. We will make our own decisions on public spending.

Under Westminster, the Barnett formula cannot be guaranteed. It could be changed tomorrow by a Westminster Government with or without support here. We could not do anything about it.

And, while Scottish politicians in the No campaign want us to continue to be governed from Westminster, their colleagues south of the border, speaking to different audiences, illustrate the damage that is being done by the policies of that very system.

Labour’s Shadow Health Secretary says the privatisation of the NHS is underway in England and that it will have irreversible consequences. The UK Shadow Education Secretary says that “the approach of David Cameron and George Osborne to the welfare state reeks of the 1800s.” The Shadow Business Minister says we face "a return to the poorhouse of the 19th century.”

Policies are imposed on Scotland even when they have been opposed by our elected Westminster MPs.

And the answer surely can't be just to cross our fingers and hope for a different government in Westminster. There is a better alternative to hoping for the opposition to triumph in Westminster elections, and being regularly disappointed when they don’t - or being disappointed even when they do win but carry on with much the same policy agenda regardless.

The alternative is to vote Yes and make these decisions for ourselves.

I want to touch on two other aspects of the alternative futures Scotland faces.

The first relates to the dominance of London and the south east of England in the UK economy - an issue which causes concern across the political spectrum.

David Cameron says such a narrow foundation for growth is unstable.

The Business Secretary, Vince Cable says that London is like a huge suction machine draining the life out of the rest of the country.

The gap in economic performance between regions in the UK is larger than in any other EU country. In practical terms, that means jobs and opportunities are increasingly concentrated in London.

So the question for Scotland is what arrangements best equip us to level the playing field and secure greater job opportunities and long term economic security?

Is it continuing as a region of an unbalanced economy with one of the biggest gaps between rich and poor in the developed world, and lacking the economic powers we need to create the incentives for growth?

Or is it becoming a national economy with the full range of economic powers to take advantage of our great strengths?

Who is more likely to plan successfully for Scotland’s future economy? Who is more likely to exercise responsible stewardship of our hydrocarbons to maximise their economic life? Who is more likely to consider the needs of our rural and island communities? A Scottish Government in Edinburgh, focused on the needs of the Scottish economy, or a Westminster Government implementing a one-size-fits-all policy regardless of the distinctive circumstances of different parts of the UK?

The other issue I want to touch on is the role we believe Scotland should have in the international community.

Should we have the status of a region, lobbying Westminster in the hope that the UK Government will protect our interests and promote our values?

Or should we have the powers and status of an independent country, able to engage directly with the international community?

The No campaign in the referendum debate has spent a great deal of time discussing Scotland’s place in the European Union in the event of a Yes vote.

It has been less keen to talk about what would happen to our membership of the EU in the event of a No vote.

That’s not surprising.

Because the hard fact is that we don’t know.

The Prime Minister is pledging an in/out referendum by 2017.

Before that he wants to renegotiate Britain’s relationship with the European Union.

We don’t know precisely what he wants to renegotiate.

We don’t know if he will recommend withdrawal if he doesn't get what he wants.

We obviously don’t know what the result of a referendum on Europe might be.

It is perfectly possible that a majority of people in Scotland would vote to stay in the EU but that a majority elsewhere in the UK would vote to come out.

What we do know is that when Westminster is deciding UK European policy Scotland’s interests are bottom of the list of considerations.

It is crystal clear that David Cameron has other priorities.

He cares about internal Tory party management. He cares that his party is losing votes to UKIP. He cares about trying to outmanoeuvre the Labour Party.

He doesn't seem to care about Scotland.

If he did he would not be playing Westminster political games with our future in Europe.

Last week that future was in the hands of unelected peers in the House of Lords.

That’s the reality of keeping power at Westminster.

The reality of the consequences of voting No in September.

The future of jobs and businesses in Scotland being determined by the internal interests of a political party with one Scottish Member of Parliament and by a chamber with no elected representatives from anywhere.

That is no way to run a country.

In an independent Scotland the government, of whatever colour, will always put the interests of Scotland first.

The current Scottish Government believes those interests lie in being a full member of the European Union. Today, we have published research showing that, if we were an independent member state, we would benefit from an extra £850m in common agricultural policy funding - which would support an additional 2,500 jobs and increase economic output by £1 billion.

In Scotland’s Future, we set out a route through which Scotland would negotiate its continued membership of the EU between the time of a Yes vote and Scotland becoming an independent country.

It is a timescale that the UK’s own adviser has said is realistic.

Eminent legal experts, such as the former British judge at the European Court of Justice, Sir David Edward – someone who describes himself as a “moderate Unionist” - say there is an obligation on behalf of EU member states to negotiate Scotland’s continued membership from within.

There is no provision in any EU Treaty to remove five million EU citizens against their will simply because they have chosen a particular path through a democratic process.

And whatever the No campaign say in their rather tawdry attempts to suggest Scotland would be thrown out of the EU we know they really believe something else.

Last week, the No campaign appointed Professor Jim Gallagher as a policy adviser.

Last year he wrote this:

“It seems pretty likely that Scotland would be an EU member state, probably after an accelerated set of accession negotiations.

“Precisely what the conditions of membership would be is not quite so clear, though immediate requirements to join the Euro or the Schengen agreement can surely be avoided.”

There are clearly differences between our views and those of Professor Gallagher.

But I welcome this effective dismissal of one of the wilder scare stories.

Whatever is said in public from now on we know that that No campaign does not believe Scotland’s independent membership of the EU is in doubt.

And we know they accept that the requirement to join Schengen or the Euro can be avoided.

My argument for Scotland’s continued membership of the EU rests principally on common-sense and on the very purpose of the European Union.

It is time to get real in this debate.

To stop pretending the European Union is something it isn’t.

The EU is not in the business of throwing out its citizens.

Of ignoring democratic processes.

It is founded on the principles of democracy.

Of mutual co-operation among countries and citizens who share the European ideal.

It is engaged in a process of enlargement, not contraction.

The Scottish