The minister who said that an independent Scotland would keep the pound has given a propaganda victory to the SNP
By Iain Martin
Alistair Carmichael was settling down for what should
have been a relaxing, convivial dinner on Friday evening. The Secretary of
State for Scotland, the Westminster government’s main man north of the border,
was attending the Scottish Liberal Democrats conference in Aberdeen and
preparing to tuck in alongside about 30 journalists, press officers and Lib Dem
parliamentarians gathered in an Italian restaurant, Aperitivo, in the city
centre.
Before the drinks had even been poured, journalists asked
whether he had heard about the story just breaking. The Guardian was carrying a
report on its front page that claimed that a “government minister at the heart
of the pro-union campaign” – someone “who would play a central role in
negotiations after a Yes vote” – had said that Scotland could keep the pound if
the country votes for independence in the referendum taking place in September.
It was news to the Cabinet minister Mr Carmichael, who,
according to one of those present, looked “flummoxed and frustrated” as it was
explained. Did he know who the minister was? Within minutes, after conferring
with aides, Mr Carmichael was answering questions about a range of potential
suspects and trying to quash a story that has infuriated those fighting to keep
Scotland in the United Kingdom and gifted a gleeful Alex Salmond and the
Scottish National Party a propaganda victory.
The mystery minister was quoted as saying: “Of course
there would be a currency union.”
He or she also suggested that Whitehall was ready for a
trade-off in the event of independence, allowing Scotland to stay in a sterling
union in return for Trident, the UK’s nuclear deterrent, remaining in Scotland.
“There would be a highly complex set of negotiations after a Yes vote, with
many moving pieces. The UK wants to keep Trident nuclear weapons at Faslane,
and the Scottish government wants a currency union – you can see the outlines
of a deal.”
What makes the intervention important, and what elevates
it above the standard squabbling of Scottish politicians, is that it damages
the central plank of the pro-Union Better Together operation just at the moment
when the campaign is already under intense pressure from Mr Salmond. Some on
the pro-Union side are starting to fear that the race – which could lead to the
break-up of the United Kingdom – could be tighter than they once thought. And
it enables those running the Yes campaign to tell voters that anti-nationalist
warnings are bogus.
Indeed, the view expressed by the off-message minister is
directly contrary to what the Prime Minister, the Chancellor, the Labour leader
of the Opposition, the shadow chancellor and the Liberal Democrat Chief
Secretary to the Treasury have all claimed in recent months. Citing the learned
opinions of the Governor of the Bank of England and the top civil servant in
the Treasury, they have been quite clear that if Scotland votes Yes to
independence, there is no deal to be done on the pound.
The pro-Union campaign rests, to a large extent, on
explaining to Scots that if they vote to leave the UK there will not be a cosy
deal on offer afterwards from London, as Mr Salmond claims in tones designed to
be reassuring. The Unionists want the electorate north of the border to know
that voting for Scottish independence means Scottish independence.
It was to that end that Better Together earlier this year
staked its credibility on a cross-party attack on the SNP’s currency policy.
Although Mr Salmond had originally wanted an independent Scotland to join the
euro, the crisis in the eurozone prompted him to rethink. He now seeks to
soothe voters’ concerns by advocating Scotland sticking with the pound instead,
even if he manages to win the referendum. This would involve voters in the rest
of the United Kingdom – England, Wales and Northern Ireland – agreeing to
underpin an independent Scottish government’s finances and agreeing to bail out
the Scottish banking system if any of Scotland’s banks get into trouble again.
In response, in February, Mr Osborne told Scottish voters
that such an arrangement “simply isn’t going to happen”. The Chancellor claimed
that the rest of the UK would not want to expose itself to unnecessary risks in
terms of economic stability, a message echoed by the other parties.
Now, in last week’s briefing, here comes someone in the
UK government saying they are all lying. A hand grenade has been rolled under
the front door of the pro-Union campaign.
As the story started to spread on Friday evening, texts
containing speculation about the identity of the minister were whizzing about
the ether and landing in the in-boxes of Cabinet ministers and their aides.
There was no attempt made to deny the veracity of the report.
Members of the Chancellor’s team were particularly
annoyed. A senior source in the Treasury said there was fury that months of
preparation on making the economic case against independence has been
jeopardised by loose talk: “I am livid. The amount of work that has gone into
that.”
There was also fury in the upper echelons of Labour, with
blame directed at the Conservatives. A senior Labour MP said yesterday that he
and his colleagues had been “busting a gut” to try to save the Union: “This is
a first-order piece of strategic self-harm. The Tories need to sort it out. Too
many people see themselves as commentators on the progress of the campaign
rather than participants. People need to be in the trenches firing outwards.”
Another senior Labour figure, closely involved in the
running of the pro-Union campaign, also said the Tory leadership in London must
take action. “Without being too melodramatic, they have a duty to find this
person, explain that they don’t speak for the Government, and then put them up
against a wall and shoot them.”
In an effort to regain the initiative, the Chancellor and
Lib Dem Danny Alexander, Chief Secretary to the Treasury, issued a joint
statement yesterday restating their opposition to a post-independence currency
union. Speaking in Aberdeen, Mr Alexander said: “People should not take any
notice of unnamed sources who are not part of this debate when you have the
Chancellor of the Exchequer, the shadow chancellor and myself for the Liberal
Democrats making clear that a currency union is not something that would be in
the interest of the United Kingdom.”
His Cabinet colleague Mr Carmichael also predicted that
it would be forgotten: “It’s an irritation and it’s not helpful but frankly I
think this time next week everybody will have forgotten about it.”
The persistence of the SNP and its campaigners suggests
that north of the border this may be wishful thinking.
Behind the scenes on Friday evening and yesterday, No 11
and No 10 were also desperately trying to identify the mystery minister, with
several Cabinet ministers asked if they were responsible for the briefing. They
denied it. No 10 also explicitly denied rumours that it was Oliver Letwin, the
Cabinet Office minister who went into hiding during the 2001 election when he
briefed the Financial Times about £20 billion of proposed Tory spending cuts and
blew an additional hole in then Tory leader William Hague’s campaign.
Initially, Tories thought last week’s briefing might have
been a Liberal Democrat Coalition colleague, but as the Lib Dems are generally
opposed to the renewal of Trident it is highly unlikely that one of their
number would speculate on making its retention the centre of a post-referendum
deal with Mr Salmond. “It sounds like an English Tory who doesn’t understand
very much about Scotland,” said a member of the board of Better Together.
Fingers were then pointed at more junior Tory members of
the Government who might have indulged in self-aggrandising behaviour, perhaps
overstating their role in the campaign in an effort to impress a journalist.
Either way, the nationalists were not worrying about such
nuances yesterday. They jubilantly claimed vindication. Nicola Sturgeon,
Scotland’s Deputy First Minister, said: “This quote from a UK minister confirms
the fact that the Treasury, the UK government, the No campaign, is bluffing
when it comes to a currency union.”
There was some awkwardness for the nationalists, however.
The potential “deal” floated by the minister involved Scotland agreeing to
continue to host Trident, an idea to which SNP members are opposed. Even if
such a deal was on offer – which both Mr Osborne and the shadow chancellor Ed
Balls deny – the SNP would not be able to sign up to it.
Better Together was also taking comfort in its extensive
polling, which it says shows that the crucial group of voters who may decide
the result in September are most worried by the prospect of economic
uncertainty. “Once this has played itself out, currency union is not going to
happen and the arguments do not stack up for the nationalists,” said a
strategist yesterday.
Still, the row has come at a particularly difficult
moment for the Better Together campaign. With less than six months to go until
polling day, the SNP is asserting that it is closing the gap in the opinion
polls. A YouGov poll published last week had Yes on 37 per cent (+2) and No on
52 per cent (-1), with a 42/58 split once the “don’t knows” and “won’t says”
were removed. But another poll last week, by TNS BMRB, had Yes on 28 per cent
(-1) and No 42 per cent (no change), with 30 per cent don’t knows.
While the polls have not narrowed by as much as the
nationalists like to boast, by dint of vigorous campaigning they have managed
to create the impression that they have the momentum.
In recent weeks it has led to soul-searching in Better
Together in Edinburgh and London, with some prominent figures from the
pro-Union side – including former Liberal and Lib Dem leaders Lord Steel and
Charles Kennedy – demanding that Alistair Darling, the chairman of Better
Together, pursue a more positive approach emphasising the advantages of the
United Kingdom, placing less reliance on negative campaigning.
A senior figure in Better Together said yesterday that
while the campaign would present a powerful positive case for Scotland staying
in the UK, there would be no let-up in pointing out what it sees as the
weaknesses in the SNP’s economic argument.
“We’re not complacent. But nothing would please the Nats
more than us dumping negative campaigning, because they know it works. They
want to push us on to the emotional argument because it is where they are
stronger.”
On such difficult decisions hang the future of a Union
that has lasted 307 years. If the pro-Union side make many more foolish
mistakes like last week’s, it could be gone for ever in six months.
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