DOWNING Street was last night hunting for the UK minister whose unguarded remarks risk jeopardising the No campaign.
The search for the anonymous politician was under way as Chancellor George Osborne desperately sought to limit the damage done to the pro-Union campaign by claims that an independent Scotland would have a currency union with the rest of the UK – a direct contradiction of the No campaign’s official position.
As independence campaigners gleefully pounced on the comments, saying they proved the UK government was bluffing on the currency issue, senior UK government figures were attempting to find out who was responsible.
“We are intrigued to know who it was, but there has been no resolution yet,” a Downing Street source said last night as speculation mounted over who made the remarks.
Last night Secretary of State for Scotland Alistair Carmichael became the most senior minister yet to warn of a potential nationalist victory. He expressed fears that some pro-Union supporters were guilty of complacency. He said: “The danger is that by the time they realise it could happen, it could be too late. Everybody needs to know that this is a serious contest, and one which it is not impossible that the nationalists could win.”
Nationalists claimed Better Together would find it “impossible to recover” from the damage done by the leak.
Yesterday a London-based newspaper reported a UK minister as saying there would “of course” be a currency union after Scottish independence – a statement which flies in the face of Osborne’s insistence that such a currency arrangement would never happen.
The minister, who was reported to be central to the negotiations that will take place between Westminster and Edinburgh if there is a Yes vote, said: “There would be a highly complex set of negotiations after a Yes vote with many moving pieces.
“The UK wants to keep Trident nuclear weapons at Faslane and the Scottish Government wants a currency union – you can see the outlines of a deal.”
Osborne and Liberal Democrat Chief Secretary to the Treasury Danny Alexander reacted within hours of the comments being made public by issuing a joint statement insisting there would “not” be a currency union.
“A currency union will not work because it would not be in Scotland’s interests and would not be in the UK’s interests,” the statement read.
“Scotland would have no control over mortgage rates, and would be binding its hands on tax and funding for vital public services. The Scottish Government are proposing to divorce the rest of the UK but want to keep the joint bank account and credit card.
“The UK would not put its taxpayers at risk of bailing out a foreign country and its banks. Parliament wouldn’t pass it, and the people wouldn’t accept it. Any suggestion to the contrary is wrong.”
When asked at the Lib Dem conference in Aberdeen about the identity of the source, Carmichael said: “I know various names have been put out there and they’ve all denied it.”
Last night a Downing Street source added: “We will be endeavouring to find out who that somebody is, and that somebody is 100 per cent wrong. All the major players agree that there will be no currency union. Full stop.”
Ruling out Alex Salmond’s demand for a currency union has been key to the No campaign and it is regarded as one of the biggest issues to influence voters on 18 September. Osborne outlined his uncompromising position, which would not allow an independent Scotland to share the pound or central bank with the rest of the UK when he came to Scotland earlier this year.
His intervention, which has been supported by Labour and the Lib Dems, was nicknamed the “sermon on the pound” by Nationalists, who accused the Chancellor of bluffing.
Yesterday Deputy First Minister Nicola Sturgeon said Westminster’s words on currency had “now been exposed as the bluff and bluster that we always said they were”.
She went on: “The result is a deeply damaged No campaign that is riven by splits, in disarray and which will now find it impossible to recover.
“For all George Osborne and Danny Alexander’s frantic denials, by definition this is a story which is impossible to deny – because the story is specifically that everything the UK government and the No campaign are saying on this issue ahead of the referendum is a campaign tactic.
“The revelation from a Treasury source that everything it has been saying on a currency union has been dictated by Alistair Darling is an extraordinary one and is deeply damaging to the credibility of the Treasury on this issue.
“What has been exposed is the deep cynicism and negativity at the heart of the No campaign – a campaign which is clearly badly rattled by narrowing polls and which will never be able to mount a truly positive campaign, because negativity is in its DNA.”
When challenged on the unnamed minister’s suggestion that keeping Trident in Scotland could be used as a bargaining chip in currency negotiations, Sturgeon “categorically denied” this would happen.
The Deputy First Minister stuck to the Scottish Government’s position that a Yes vote would mean nuclear weapons would leave Scottish waters by the end of the first parliamentary term post-independence in 2020.
Yesterday’s developments came at the end of a bad week for the No campaign which saw Better Together forced to deny a meeting of its board in Glasgow was a “crisis” meeting in response to polls showing support moving to Yes.
There have also been murmurings that Better Together’s “negative” focus is damaging the chances of a No vote on 18 September, and questions have been asked about Alistair Darling’s stewardship of the campaign.
There were more signs of discontent at the Scottish Lib Dem conference yesterday.
Former Lib Dem leader Charles Kennedy said a “positive tone” was required with less than six months until the referendum and warned that Labour’s ground war with the SNP in the Central Belt could undermine the pro-Union referendum campaign.
Meanwhile, the blanket opposition to everything that the SNP does by unionists was branded “bonkers” by Scottish Lib Dem leader Willie Rennie, as part of his drive to see the No campaign adopt a more upbeat “sunshine strategy”.
Kennedy criticised “Salmond versus Scotland” rhetoric from Labour at its conference last weekend in Perth.
“I don’t think that’s the tone that we’re looking for in the campaign,” he said at a Law Society fringe event.