Scottish independence: SNP plan makes Scotland a colony, claims Gordon Brown

AN independent Scotland would be governed as a British colony under SNP plans to let London retain key economic powers, Gordon Brown has claimed.

• Brown says SNP plan ‘reminiscent of Empire’

• Read Gordon Brown’s speech in full

In a provocative speech to supporters yesterday, the former Prime Minister said First Minister Alex Salmond’s vision for Scotland was that of “a form of self-imposed colonialism more reminiscent of the old empire than of the modern world”.

If Scotland votes to break away from the United Kingdom in 2014, Salmond has said he intends to keep the pound, let the Bank of England set interest rates and maintain UK-wide banking regulation. He will also ask the British taxpayer to stand behind Scotland’s financial system in the case of a major crisis.

The SNP argues its plans will ensure stability. But Brown dismissed the proposal as “ridiculous” and said it would mean Scotland was “dictated” to by what would then be a foreign country.

Last night, the SNP insisted the Bank of England belonged to Scotland as much as to England, and would remain so after independence.

But the pro-UK campaign was bolstered by a warning from one of Britain’s foremost experts on financial law, Professor Andrew Campbell of Leeds University, who said he could not see why taxpayers in the remainder of the UK would want to provide financial back-up for a newly independent Scotland.

He also said that an independent Scotland would have no legal right to force London to offer support, saying that the most Salmond could hope for was to persuade London during negotiations.

The row opens up a fresh front in the independence referendum battle, with the SNP having spent the past two weeks contesting claims over whether an independent Scotland would automatically become a member of the EU.

The SNP has also insisted it would automatically retain sterling after independence, and would still have access to Britain’s financial clout – with the Bank of England guaranteeing so-called “lender of last resort” facilities to Scotland’s banks.

The importance of the issue has been highlighted by senior bankers in Scotland who have warned that confidence among investors and depositors in Scottish banks could be shattered if their financial position was not assured.

Last week, RBS chairman Sir Phillip Hampton said he hoped to see “clarity” in the debate on Scottish independence.

In his speech yesterday, Brown said the SNP had switched to backing the pound as a result of the Eurozone crisis, which has ruled out the option of adopting the euro single currency in Scotland. But he warned that the new proposal, to keep the pound indefinitely, brought its own problems.

“Under their [Nationalist] plans all the decisions in an economic crisis would be made for Scotland by a separate government and bank from the rest of the UK, a form of self-imposed colonialism more reminiscent of the old empire than of the modern world, setting Scotland back years,” he said.

Brown also claimed the deal would mean London insisting on controls over Scottish spending and borrowing, in order to ensure stability in the new “sterling zone”.

He added: “The incoherence of their policy is such that, while they claim independence will give them more freedom, they now have to admit

they might have to sign a

fiscal pact with the English, Welsh and [Northern] Irish under which the rest of the UK would limit the freedom of the Scottish state to spend or borrow.”

Salmond, however, has suggested such a “fiscal pact” would not be necessary. At First Minister’s Questions last week, he said that the rest of the UK would “be biting our hands off for Scotland to retain sterling membership” on the grounds that Scotland’s economy would bolster the UK’s financial clout. Scottish Government officials have, however, declined to say what discussions have taken place with the UK Treasury and the Bank of England on the proposed monetary union.

Brown yesterday urged the SNP to publish more details, saying that, when he was Chancellor, he had published 19 studies over two years when Britain was considering joining the euro.

He concluded: “It is like being on the [TV] programme Blankety Blank with the blanks still left to be filled in.”

Brown’s warnings about the feasibility of a monetary pact with the rest of the UK after independence were underscored by Campbell last night.

The Leeds University academic has already spoken to SNP figures about the proposals and it preparing a full academic paper.

Asked whether the rest of the UK would agree to under-write Scottish financial institutions after independence, guaranteeing them against a potential collapse, Campbell said: “I haven’t seen the argument put in any way that I think would convince the rest of the UK that it would be in their best interests to be part of this, to provide liquidity or lender of last resort in appropriate circumstances.”

He added: “I have heard the SNP arguments and they put it very well, but I haven’t heard it put in a way that would convince the English, Welsh and Northern Irish voter that this would be in their best interests. They will have to be able to convince the average English, Welsh and Northern Irish voter that they would be in a better position with this arrangement than not.”

Campbell added that, while it was right to note that there was nothing to stop an independent Scotland using the pound, the new country would have no legal claim over the Treasury or the Bank of England’s lending facilities.

He added: “There is no way the Scottish Government post-independence could force London from a legal point of view to provide the service after Scotland becomes independent. It would have to be with London’s approval. I can’t see any other way.

“London approval would be needed. Scotland can’t say ‘we are independent now, this is the deal’. It would depend on the attitude of whichever government is in London.

“I suppose the government may want to keep Scotland on side but maybe the view of the electorate in England would be that, if Scotland wants to be independent, then it should be told to go.”

However, SNP Treasury spokesman Stewart Hosie said: “Maintaining a sterling zone makes sense – for

both Scotland and the rest

of the UK in terms of monetary stability, and to support trade, reduce costs and

provide transparency over relative prices – and this would be in the interests of the rest of the UK just as much as Scotland.”

He added: “Scotland’s strong asset base and considerable wealth would make a substantial contribution to a sterling zone. Oil and Gas UK estimates North Sea production boosted the UK balance of payments by £32 billion in 2010 – almost halving the UK deficit.

“The Bank of England is Scotland’s central bank every bit as much as for the rest of the UK. It provides liquidity in the system, and its role is

to support financial institutions operating throughout the UK.”