Darling attacks 'confusion' of SNP's financial regulation plans

Published on Thursday 29 May 2008 22:11

ALISTAIR Darling yesterday attacked the "intellectual confusion" of the Scottish National Party's plans for regulating financial services in the event of Scotland becoming independent.

The Chancellor of the Exchequer said John Swinney, the SNP Cabinet secretary for finance, had conceded that separate regulation in Scotland would damage the industry.

Darling's comments came after Swinney suggested this week that maintaining one UK-wide system after independence was "one option" for the Nationalists.

Speaking ahead of a speech to financial service leaders in Edinburgh today at the end of Global Financial Services Week, Darling launched a stinging attack on the SNP's plans.

The Chancellor said the regulation policy had parallels with Nationalists' intention to continue to use sterling if Scotland were ever independent.

Darling told The Scotsman: "The Nationalists recognise that the more they look at the arguments for independence, the more they fall apart.

"They have already conceded that there would probably be the same currency.

"You then have the absurd situation of the Bank of England setting interest rates with what is good for the English and Welsh economy in mind and it does not have to consider what is good for Scotland. They set the interest rates and you have no influence any more."

The Chancellor continued: "Now they are conceding that a separate regulatory system for Scotland would be very damaging. When you look at the consequences for Scotland and the financial services industry of separation, you start to see it is damaging.

"Swinney knows that full well, which is why he is busy saying at one and the same time 'I want independence but don't worry, the bits you don't like I won't do'."

Darling added: "This shows the intellectual confusion they have got themselves into."

In a reference to the option of the SNP having a separate Scottish regime, the Chancellor said companies wanted a clearer understanding on regulation worldwide.

"Nobody is arguing for more and more separate regulators," he said.

"Setting up another layer of regulation in Scotland is just completely daft.

"I would have more respect for the Nationalists if John Swinney had mounted a robust defence of a Scottish regulator, but he does not seem to have done so, because like everybody else he would struggle to do so."

Darling revealed that the UK government was opposed to the idea of a pan-European financial services regulator.

He said: "I don't think it is the right thing to do.There needs to be closer co-operation between regulators."

European finance ministers had, however, agreed that their regulators would work more closely together, he said.

Darling added: "The prevailing mood in Europe is that maybe one day, in 15 or 20 years' time, you might arrive at that situation but in the present time what we should be making regulators work more closely together, which they do."

No mission creep at Bank

CONTROLLING inflation will remain the Bank of England's key remit, the Chancellor promised.

Darling said he was against broadening the Bank's role to make it more like the US Federal Reserve.

The Chancellor said: "I am not going to change the Bank of England's remit, because I think it's the right thing to do to target inflation. It is one of the reasons that our inflation and our interest rates are at an historically low level."

Darling said the government had always made it clear it would support the monetary policy committee, which sets interest rates, "in whatever action it thinks is appropriate".

Asked if he would change the Bank's 2 per cent inflation target, he replied: "I fixed it in the Budget and we're not planning to change it."