What does McGinty mean when he says that there is no place for a scabby sheep in our pen?

McGinty means that there is no place for gang members that are not loyal to the Scowrers.

MCGINTY SAYS THERE IS NO PLACE FOR SCABBY SHEEP BECAUSE HE THINK THAT MORRIS IS WEAK ,HE CAN BE A EASY VICTIM ,HE HAVE NO DEFENCE SYSTEM .

he thought that morris is a weak person who should not be a part of the gang thats why he called him this

It means anyone who is weak and disloyal cannot be a part of the gang.