Party delegates instead backed a fast-track plan to adopting the new currency “as soon as practicable after Independence Day” at the party’s spring conference in Edinburgh.
It marks an embarrassing setback for Nicola Sturgeon who had backed a more cautious approach after a Yes vote and warned supporters that swift transition would not be “credible”.
Opponents claimed the SNP is now being driven by an “extreme economic agenda” outwith with leadership’s control.
Six stringent fiscal tests were proposed by the leadership, with a decision to be taken at the end of the first Parliament after independence on adopting a new currency. Although the proposed tests are to remain in place, the leadership plan for a new Scottish central bank to simply report annually on “progress” was rejected.
A new poll yesterday indicated that just 5 per cent of Scots back a quick-fire approach to adopting a new currency.
Party leadership sources last night insisted they were “relaxed” about the result as the six fiscal tests remain in place, which they believe will underpin the economic credibility of a new Scottish state.
The broader plan for a new currency ditches the 2014 policy to keep the pound in a currency union with the UK after a Yes vote. However, the new plan would see an independent Scotland still using the pound in the interim until the new policy is adopted.
It was an uncomfortable day for the party leadership as it saw a series of delegates slam the proposed economic plan for independence.
Opposition was led by former East Lothian MP George Kerevan, who warned that it could damage support a Yes vote.
He said: “Scots are canny and they’re going to ask this question: ‘OK SNP, you voted to have your own currency, when are you going to introduce it?’ And you will get your six tests out and you will say when we get through all of these – and they will not be convinced. If you have a Scottish currency you’re going to have to tell them when. Leaving the door open will lose votes not gain them.”
Delegate Bill Ramsay added: “Pro-union parties will look at the six tests and say that the SNP advocates austerity,” he said.
“They will say that it is us that are saying we are too small, they are saying it is us saying Scotland is too fragile and it is us that are being too timid.”
Agnes McGowan, a nationalist councillor in North Lanarkshire, said activists would be “massacred” on the doorsteps.
She said: “I don’t look forward to going round the doors and saying to people, ‘Don’t worry as we’ll just be using the pound anyway’. That is a line which will be massacred by the opposition – and rightly so.”
She added: “Use of sterling would hamper the proper running of an independent Scotland by keeping most of the important tools of governing out of our hands to such an extent that the six tests would never be met.”
Timothy Rideout said that simply using the pound after a Yes vote would mean there would be no control over key monetary policies such as interest rates, exchange rates and money supply.
He added: “There will be no lender of last resort in Scotland and no viable insurance for Scottish bank deposits.”
Four amendments seeking to change the leadership’s economic motion on independence, based on the party’s recent Sustainable Growth Commission, were debated yesterday. These included a proposal to scrap the six fiscal tests, which covered areas such as bringing the country’s deficit under control and the credibility of the new central bank. Three of the amendments were defeated, but one calling on an SNP Government to authorise the preparation of a Scottish currency as soon as practicable after a Yes vote went to a card count which saw the leadership lose by 781 votes to 729.
SNP deputy leader Keith Brown had earlier warned that scrapping the six key tests could undermine the “strongest” case for independence.
“When the time comes to win our independence we have to be sure that we don’t let that opportunity slip through our fingers,” he said.
Brown said the tests were sensible and it would be for an independent Scottish Parliament after a Yes vote to decide when the new currency is adopted, while the proposed amendments seeking a quick-fire transition to a Scottish currency “carry risks”.
If passed they will “dilute what is the strongest prospectus for our economic future”.
Finance Secretary Derek Mackay also backed the leadership case in an appeal for support.
“We don’t have the choice if we don’t have independence – that’s why we need independence,” he said.
“We have a robust plan that unlocks our nation’s enormous potential to match the performance of the best economies on Earth, reject austerity, invest in our public services and break free from the London-centric economic model which has failed us as a country. This is a policy that will deliver an independent policy when the time is right.”
Commenting on the result, Tory interim leader Jackson Carlaw said: “This is a profoundly embarrassing snub for the SNP leadership. And it shows that Nicola Sturgeon is now at the beck and call of an extreme economic agenda within the SNP which would rip the pound from our pockets as soon as possible.”