Stick with sterling and you put at risk policies to prevent Scots social exclusion, think-tank warns

RETAINING sterling would leave an independent Scotland tied to UK economic policy and limit its ability to tackle social exclusion, according to a new think-tank.

The Scotland Institute, which aims to present voters with “facts” about constitutional change, has concluded that Scotland “cannot afford to leave key areas, such as monetary policy, to Westminster”.

A new report on social exclusion advises MSPs to pursue greater devolution for specific Scottish policies for Scottish problems, and to ensure that it retains a degree of influence over the Westminster policy process.

Its author, Dr Roger Cox, argues that if an independent Scotland retains sterling “the policies necessary to prevent social exclusion in Scotland are unlikely to be developed”.

He said these problems would have to be addressed by a new economic and legal system.

The report adds: “If Scotland remains tied to UK-wide economic policy, and if that continues to set primarily to meet the needs of the City of London, then the best that can be achieved is a set of policies that will mitigate the worst effects. If, as currently suggested, independence means retaining sterling, then that independence will preclude the ability to create a genuinely different economic model.”

It found the UK had a higher proportion of young people exiting education without or with limited qualifications than is the norm in the rest of the OECD (Organisation for Economic Co-operation and Development) countries, mainly from poor areas.

This contributes to the 10 per cent to 25 per cent lower output per hour in the UK, compared with European countries such as France and Germany, it stated.

It argues that the problem has worsened as a result of coalition cuts, while the narrow framing of the issue as poverty being caused by “attitude” has fogged the debate.