A House of Lords Committee has declared as "fanciful” any notion, as advocated by the SNP, that an independent Scotland could retain sterling whilst exerting influence over the Bank of England.
A House of Lords Committee has declared as “fanciful” any notion, as advocated by the SNP, that an independent Scotland could retain sterling whilst exerting influence over the Bank of England.
Publishing its report on the economic implications for the UK of Scottish Independence, the Lord’s Economic Affair’s Select Committee concludes:
“Continued use of sterling by an independent Scotland in monetary union with the rest of the UK is the stated preference of the Scottish government. But it would raise complex problems of cross-border monetary policy, multiple financial regulators and taxpayer exposure and could only come about, if at all, on terms agreed by the UK government,” it says.
“Arrangements should be clear before the referendum. But the proposal for the Scottish Government to exert some influence over the Bank of England, let alone the rest of the UK exchequer, is devoid of precedent and entirely fanciful.”
The report goes on to yet again rubbish the suggestion by deputy first minister, Nicola Sturgeon last year that it would be “reasonable” to expect a guaranteed Scottish seat on the Bank’s Monetary Policy Committee. Declaring such a situation to be “unacceptable”, the Committee notes:
“For the Bank of England to provide central bank services to substantial financial institutions operating in an independent Scotland and regulated by a body reporting to an independent Scottish government implies that the Bank would accept risks over which it had little control, which seems implausible.”
The conclusions are the latest in a series of blows inflicted on what amounts to a key plank of the SNP’s proposals. In December the Bank of England was forced to deny suggestions made to the committee by finance secretary John Swinney that dialogue to discuss these issues had been underway between the Scottish government and the bank.
In September, the chancellor, George Osborne used a speech to the CBI in Glasgow to warn that the euro crisis has shown that a properly working monetary union needs political union to match. His views were echoed in a poll released by the Better Together campaign last month which showed that just 17 per cent of Scots supported the SNP’s proposals, with 56 per cent preferring Scotland to stay in a political union if the country is to remain in currency union with the rest of the UK.
Members of the Committee meanwhile were critical of the lack of detail being provided by either campaign on what would happen if there was a Yes Vote. Whilst careful not to come down on either side of the debate, the report observes:
“Scotland needs and deserves a fully-informed debate, based on fact and free from rancour, well before the referendum vote. To help bring it about the Scottish and British governments should be more open about how they see the outcome of negotiations after a ‘Yes’ vote; each should indicate the ‘red lines’ of its negotiating stance on such crucial issues as currency, defence, division of assets and debts and negotiations with the EU before the referendum so that voters can make an informed choice.”
Publishing the report, the committee’s chair Lord MacGregor warned that all parts of the country were “sleep walking” towards possible break-up of the UK without realising what the consequences would be.
The report comes following polling showing a fall of in support for the Yes to independence campaign.
The data, complied by TNS BMRB showed that when given the same question as that envisaged in the 2014 referendum, 30 per cent of respondents said that they would vote for independence, down 3 per cent compared with February. The proportion opposing independence fell by 1 per cent to 51 per cent whilst the don’t knows have increased by 4 per cent to 19 per cent.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by becoming a Left Foot Forward Supporter today.