Scottish independence: Gordon Brown warns of higher taxes or more public spending cuts for independent Scotland

• Gordon Brown warns of higher taxes or deeper public spending cuts for Scottish people should Scotland become independent

• Former PM argues that pooling of resources benefits Scotland more than independence alternative

• Mr Brown also argues that independence would be particularly bad for defence in Scotland

• SNP: “he more the Unionist parties continue to offer Scotland nothing, the more they will encourage people to vote Yes to an independent Scotland”

The former prime minister said the proposals, known as devo-max, would “break up the fiscal union” between Scotland and the rest of the UK and mean that Holyrood would be unable to ask Westminster for financial support, which he claimed would lead to tax hikes and services being starved of cash.

In his first major intervention on the referendum debate, the former Labour leader said there would be a “race to the bottom” in an independent Scotland, with different rates for pensions and the minimum wage level north and south of the Border.

Delivering the annual Donald Dewar lecture at the Edinburgh International Book Festival, Mr Brown warned that the “good provider in one area would be

undercut by the bad and the bad would be undercut by the worst”.

Mr Brown also used the speech to attack the SNP’s claim that an independent Scotland that retained the pound would be able to influence interest rates, dismissing the policy as a “colonial” relationship between the two nations.

The former chancellor also appeared to hint that he would come out of semi-retirement to get involved in the referendum campaign, as he talked about how he wanted to make a case for the Union based on “hope not fear”.

Mr Brown also invoked the success of Team GB at the London Olympics and the UK’s armed forces as he talked about the “pooling of resources” across the UK. The attack on devo-max came after Labour’s former First Minister Henry McLeish, a leading supporter of full fiscal autonomy, said independence might be the “shock” required to invigorate Scottish confidence,

Mr Brown said: “If you break up the fiscal union, if you break up the sharing and pooling of resources across the UK, then it’s clear that you will either have to cut public expenditure massively beyond what is being done at the moment, or you will have to tax Scottish people more.

“If you have full fiscal autonomy, you stop the pooling of resources across the UK and you can’t turn to the UK for help.

“I worry about fiscal autonomy as the next stage of devolution. It means more taxes. What’s sometimes called devolution maxy is dangerous.”

Mr Brown went on to talk about what he insisted were the “distinctive Scottish values” at the heart of the Union, through legal, social and economic rights enjoyed by UK citizens both north and south of the Border.

He said he wanted to see a “modern Union”, claiming the UK was the most successful union of nations in history and warning this would be under threat if Scotland were to become independent.

Mr Brown said: “When we pool our resources, the benefit is far greater. We can point also to the BBC, with a common license fee, and the armed forces, where we are clearly better protected because we pool our expertise and resources.

“And this week, of all weeks, we can point to all our Scottish Olympic medals, where it is clear from the views of the athletes themselves that a British team was the best

platform upon which Scotland’s (and every nation’s and region’s) success was built.

“I suggest that if through some version of independence we break this apart and set nationally or regionally varied minimum pay rates, tax rates and social security rates, we will start a race to the bottom, under which the good provider in one area would be undercut by the bad and the bad would be undercut by the worst.”

However, a spokesman for SNP finance secretary John Swinney dismissed Mr Brown’s intervention and claimed that Scotland would be “better off with independence and control of our own resources”.

He said: “Gordon Brown’s attack on fiscal autonomy can only backfire on the anti-independence campaign – because the more the unionist parties continue to offer Scotland nothing, the more they will encourage people to vote Yes to an independent Scotland.

“Scotland is better off than the UK as a whole, and therefore Gordon Brown is wrong on tax and spending, and wrong about fiscal autonomy and independence.”

Meanwhile, The UK and Scottish governments have agreed a timetable for the transfer of power from Westminster to allow Holyrood to hold a legally binding referendum.

The UK government says that under the terms of the deal, an agreement would have to be approved by the February meeting of the UK Privy Council.