Scots’ spending limits ‘would be set by Treasury’

Chief Treasury Secretary Danny Alexander. Picture: Greg Macvean

Mr Alexander was giving evidence to the Scottish Affairs Committee on the decision by the three major economic spokesmen in the pro-UK parties - himself, Tory Chancellor George Osborne and Labour shadow Chancellor Ed Balls - to rule out a formal currency union with an independent Scotland in the event of a Yes vote.

The architect of the oil and gas tax raid in 2011 also admitted that revenues in the sector are “pretty high” and Scotland would not want to raise them further.

Asked if the Scottish Government could bring in a higher North Sea tax regime to make up the revenue shortfall, Mr Alexander said: “The amount of tax paid, in terms of tax rates in the oil and gas sector, is already pretty high.

“That’s certainly not been part of any of their public statements. It hasn’t even been part of any of the secret memos that go around the Scottish Government and get leaked occasionally.”

But committee chairman Ian Davidson wanted to push Mr Alexander on the SNP message that independence was “the best way to get rid of Tory austerity”.

He asked: “Would a UK government demand the right to determine Scottish Government expenditure levels?”

Mr Alexander replied that he was “not going to speculate” on the issue.

However, he added: “What we see in other currency unions is precisely that.”

He went on to say: “SNP promises of a land of milk and honey would not be possible.”

But his message was dismissed by SNP Treasury spokesman Stewart Hosie as “simply wrong.”

He said: “This demonstrates Danny Alexander doesn’t know how currency unions work.

“The central bank, the Bank of England, does not set deficit targets, it does not set growth targets and it does not set spending limits. It does set a perfectly sensible two per cent inflation target. This does not imply any control of the economy by a foreign country.”

But Mr Alexander’s comments reflected the message from Labour’s shadow Scottish Secretary Margaret Curran with 365 days before the general election next year, arguing that the quickest way to get rid of the Tories was not to vote for independence this September but Labour next year.

She said: “In 2015 if the Scottish people choose they can elect a Labour government that will get down to business straight away, and start delivering on the promises we have made, rather than at best negotiations and at worst almost certainly risk and uncertainty.

“Whereas we can immediately start tackling things like zero hours contracts and the like.”