Scottish independence: Pound at heart of debate

Michael Moore and Nicola Sturgeon, pictured, debated key issues. Picture: Ian Rutherford

The Deputy First Minister insisted that sterling is as much Scotland’s as the UK’s – but was warned the currency would remain under London’s auspices after independence.

However, she refused to discuss the prospect of a “Plan B” on the controversial currency issue, while Mr Moore did accept there would be shared assets after independence.

Ms Sturgeon and the Liberal Democrat Cabinet minister squared up in the first of the major set-piece TV debates between the Yes and No camps in the build-up to next year’s referendum on 18 September.

The prospect of keeping the pound after independence, Scotland’s £92 billion share of UK national debt and the importance of oil and gas revenues to the country’s survival if it leaves the union were among the key issues in the STV showdown.

Nationalists have faced awkward questions over SNP plans for the pound amid warnings it will not provide true independence, because the UK Treasury would have an effective veto over future Scottish budgets.

But Ms Sturgeon insisted Scotland would still have the fiscal freedom to set taxes and spending policy – but there would be limits. “Of course we want a sustainability agreement that would set limits – responsible limits – on debt and borrowing. Regardless of currency option, we would want to do that,” she said.

But she added: “The Bank of England, the pound, the system of financial regulation that’s in place just now – that belongs to Scotland as much as it does to the rest of the UK.”

Mr Moore insisted that “leading international experts” have rejected this claim and said these would belong to London.

“The institutions that belong to the Houses of Parliament – the Bank of England, the regulators, those are creatures of the Houses of Parliament and would remain with the rest of the UK,” he said

Ms Sturgeon refused to say if there is an alternative to a currency union with the UK after independence which would allow Scotland to keep the pound.

Opponents fear the divergent size of the Scottish and UK economies could result in a Euro-style meltdown.

“I’m not going to discuss a Plan B because we have an excellent proposal from the fiscal commission working group,” Ms Sturgeon said.

She offered to hold talks with the Coalition government “next week” about the prospect of a currency union.

Mr Moore would not reveal whether talks have taken place within the Treasury or among Coalition ministers about the prospect of Scotland keeping the pound. “The rest of the UK would need to see whether the state of the Scottish economy would be too dependent on financial services, too dependent on oil and gas – is that something that makes sense to have a sterling union about?”

He warned that this would leave Scotland “constrained” by the rules set by the rest of the UK.

The Nationalists’ vision of independence was called into question by Mr Moore who insisted that Scotland would be left with many of the existing levers of government of the  British state.

“We would keep the same currency that we’ve got at the moment, we would keep the same Bank of England oversight that we have at the moment, keep the same financial regulator that we have at the moment,” he said.

He said the Yes campaign was saying Scotland should just rip itself out from all those, then negotiate its way back in.

The No camp has also faced awkward questions after its warnings that Scotland’s place in Europe would be thrown into doubt by independence were undermined by Tory plans to hold a referendum that could take the UK out of Europe.

Ms Sturgeon said the independence question boils down to whether Scots living here will make the best job of running the country – or Westminster.

But the Coalition government minister said the Scottish Parliament and representation at Westminster gave Scots the “best of both worlds”.