Scottish Secretary’s response to Lords commitee casts doubt on Bank of England as lender of last resort

Yesterday [18th December] the House of Lords’ Economic Affairs Committee, engaged in teasing out the economic realities of an independent Scotland, interviewed Scottish Secretary Michael Moore MP.

Mr Moore was asked about the position of the Bank of England as lender of last resort for a putative independent Scotland.

The Secretary of State’s response was: ‘The Bank of England as a lender of last resort is I think highly unlikely to be an acceptable position for the rest of the UK.’

He also intimated that a paper on Scottish independence to be produced by the Treasury early in 2013, is likely to take this position.

Following the Bank of England’s flat rejection of being in anything that could be described as ‘a dialogue’ with the Scottish Government on this issue, Mr Moore’s words cast additional doubt on independence campaign claim that the economic security for an independent Scotland will be guaranteed in this way.

More and more the emerging picture shows work not done by the Scottish Government on critical issues;  substituted by no more than assertions of what they genuinely believe – but do not know and have not tested – to be possible.

While there will be a degree of playing politics in the Scottish Secretary’s remarks, the foundation for what he is saying underlines the fact that the provision of such economic security  by the Bank of England would have to come at the cost of a handover of fiscal sovereignty to the Bank. They are never going to underwrite something whose policies and activities they cannot control.

The continuing uncertainty over this particular issue could hardly be more widely damaging to confidence in the electorate and in the vital business community, internal and external.

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33 Responses to Scottish Secretary’s response to Lords commitee casts doubt on Bank of England as lender of last resort

  1. Rather than continually spin out statements that are misleading or open to misinterpretation…the SNP and others continue to blur the border between truth and lies ?
    Can Salmond and his little helpers not do something new and rise above what we expect of self serving politicians… simply just give plain answers when questioned, YES or NO or “not certain yet” answers to the people of Scotland.
    At the moment the we Eck and his minions seem only capable of filling the information void with subjective political speal…
    If he could dig deep past the rhetoric, showmanship and lies we would all then be in a better position to give an objective YES or NO answer in 2014…
    I continue to feel better with the Union status Quo rather than uncertainty the SNP are propagating.

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    • Why do you believe one politician and not another? Do you just pick and choose, and believe the ones who agree with you and suit your agenda? How can we differentiate between the liars and the honest ones? Truth is a stranger to all of them and they will say anything to get their way.

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      • We assume all politicians of any colour are playing games and we trust none of them. We read the direction of the games, spot the effective players on either side, note the well scored goals.
        The serious side of all this is that voters have to decide for themselves which is the best option for Scotland. The long recession the UK, Europe and much of the world are in and the crisis in the eurozone have to be very much part of the equation. No one invented these to make problems for the independents but they cannot simply be ignored. This economic situation has a long way to run yet. Do you choose to launch a new ship in a howling gale?

        The currency issue is a massive one.
        An independent Scotland would, of course, whatever the posturing, negotiate successfully to join either a sterling zone or the eurozone.
        But there would be a price for each – the same price – ceding fiscal sovereignty. The EU cannot take on any new states who do not join the euro – because saving the euro is THE major challenge in the EU. While this would theoretically be negotiated, the reality is that joining the euro would have to be be the price of membership. There might be more room to manoeuvre on the Schengen agreement on open borders.
        Neither the European Central Bank nor the Bank of England could responsibly agree to underwrite any separate state as its lender of last resort unless they were in control of its fiscal policy. Without control of fiscal policy, where is independence? Everything you do depends on this.
        The alternative is a Scottish currency.
        Realistically, with its first decade in the current economic climate, what chance of survival would a new state have with a new currency with no lender of last resort?
        It would have to negotiate for membership of a sterling zone or the eurozone.
        Sterling is by far the better bet in a situation where Europe is facing possible failure with the possible collapse of the euro.
        The UK, not being a member of the eurozone, would have a degree of shelter from the impact of this situation that would not be available to those inside the eurozone.

        Tell us where would be the sense in the sheer cost of engineering independence, intending to negotiate for membership of a sterling zone and handing over fiscal sovereignty to get it – when this is where we are and what we have already.

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    • You have to admire the 180o spin on what actually happened in the Lords. For a fuller and more balanced view of the REAL story, have a look at this Herald article:

      Michael Moore was indeed savaged by the Lords committee and by arch unionists like Michael Forsyth to boot. Worth reading in its entirety but here is just one section:

      Lord Forsyth said: “You said that you wanted the debate as informed as possible, but Mr Swinney said they had a difficulty in establishing what the position would be vis-a-vis having to apply for membership of Europe or whether they would be allowed to remain in Europe because the Commission will only talk to governments, and the British Government is not prepared to engage on this issue.

      “I find it a bit puzzling how you can reconcile saying ‘we’re not prepared to talk to the Commission as a Government to ask what the consequences would be’, with saying at the same time that we want to have ‘a fully informed debate’.

      “Does Mr Swinney not have a point there?”

      On banking, Newsroom fails to mention the more interesting contribution from Sir John Gieve, former Deputy Governor of the Bank of England, who “confirmed that an independent Scotland would be able to retain sterling as its currency, but said negotiations would be required over the role of the Bank of England in regulating that currency.” Note that he doesn’t say it is impossible or that Scotland would have to relinquish its fiscal direction to the Bank – merely that negotiations will be needed.

      The latest unionist wheeze seems to be going around shouting “SNP pants on fire” while having their fingers firmly stuck in their ears to prevent them hearing any actual facts they don’t like. Short truth is that it is the UK Government and their NO cronies north of the border who are doing their best to confuse the issue and stifle any real debate by limiting access to the actual facts. All the SNP have been doing is stating their desired position on various subjects post independence but you seem to interpret unionists shouting that “it can’t be done” as evidence that the SNP are lying.

      It is all a bit immature.

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  2. Newsroom: my comments are aimed at the original post from Karl Hughes who clearly claims that the SNP (and presumably the rest of the Yes campaign) are telling lies.

    As I posted earlier, this constant tirade of the SNP being a bunch of liars, misleading the Scottish people is both boring and immature. I wish people would stick to debating the issues rather than this constant defamation. The worst that the SNP are guilty of is of being optimistic.

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    • ” SNP and others continue to blur the border between truth and lies ?” read my post again numb nuts. :)

      If our elected government would state facts rather than misinformation, they would not be on this slippery slope , and me and the rest of the country would not be so confused ! they cannot govern what they already have how on earth do you think they are the ones to put an honest case for indy forward.

      HONESTY IS THE BEST POLICY….simple YES this is happening, NO this can’t be done or ” WE can not answer this at this time as discussions are in process”. rather than the inuedo of ” we have been told”… ” we have been led to believe” or the final one of ” We are assured”…. the UNION case supporters do not have to do anything, in fact all they are doing is handing the rope to the Wee Eck and his Orcs…then going off and making a nice cuppa while they self destruct….it’s absolutely hilarious….

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      • So who are the “others”? The only party you mention are the SNP and the only politician mentioned is “Salmond”. Most readers would take from that at least a presumption that you consider the SNP and Mr Salmond to be the biggest liars.

        If you want to debate the issues then that’s great but constantly deriding people as being liars isn’t helpful. There are differences of opinion on future prospects. That there are differences doesn’t make anyone a liar.

        As for the “report” on future oil revenues, make sure you read the comments underneath as well. The “report” was written by two consultants with very close links to the Labour Party and is really just a parroting of the recent downplaying of future oil revenues from the OBR. I think it can be taken with a pinch of salt and the only thing sensible it says is that future tax revenues are difficult to predict (go Sherlock!). Oil tax revenues may be lower, may be higher or maybe much the same in the future – depends on lots of things but future uncertainty is no reason for not confronting the question of whether or not we want to run our own country.

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        • I refer to the SNP because due to a collapsed of the Tory party…they are the party who sit in Hollyrood

          They are the drivers of this issue and therefore those who should be whiter than white…it is they who wish split the union…they who continually plant the seeds of doubt. I do not see another party asking for a split in the Union…do you ?

          Can Salmond and the SNP not do something new and rise above what we expect of self serving politicians… simply just give plain answers when questioned ? YES or NO or “not certain yet” answers to the people of Scotland…rather than continuing misinformation…they are treating us all like Plebs !

          Whether the Union splits or not surely Scotland deserves new politics…this seems an acceptable enough request does it not (?) after all they are supposed to be working for the people not their kudos…

          I sincerely voted SNP in the last election because I wanted a change…the indy vote was not my major reason for voting SNP…a protest vote against Labours war mongering and a rejection of the Eton Boys out of touch attitude were my main drivers…
          Above all I wanted a fresh form of political leadership…what I had infact voted for was simply another bunch of pillocks driven by self image and interest…Was this to much to ask for ?

          Salmond and the SNP should have proven themselves during this term and had the indy vote in a second term… they would have won both….as it is, they are failing to govern and blaming that on Westminster….they will fail in the Indy vote and who will they blame…Westminster or the Scottish people or themselves ?

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          • I think the Greens and the Scottish Socialist Party are also looking to achieve independence and support the Yes campaign.

            You make a lot of noise but little substance. Just how are the SNP failing to govern Scotland? Just when have they not given yes/no/don’t know answers? (The problem tends to be that when they do give an answer either they are not listened to or are accused of being liars simply because other parties disagree with them).Just what “misinformation” are the SNP putting out (and again please distinguish between misinformation and opinion)? As to blaming Westminster, who controls the amount of money allocated to Scotland? Is it not legitimate to comment on this when facing criticism for spending squeezes?

            You look for new politics but I can think of no better way of achieving that than by voting yes for an independent Scotland. Although the prospect of a No vote and a Tory-UKIP Government at Westminster might also introduce some new politics but not, I think, the sort that we would relish in Scotland.

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  3. The independent fiscal commission will report on the currency and Bank of England issues in 2013. This commission includes Nobel Prize winners and a former economic advisor to the Labour Government.

    People are inclined to forget that the process to Independence is a moment in time. Who knows what the world financial order will be in 10 years time? A sterling currency union will be a temporary arrangement.

    Whatever conditions attach to it will be designed to avoid profligacy which is no bad thing given the incompetence of the Uk government and it’s agencies displayed in it’s handling of the UK economy.

    Why would anyone think the Scottish government would not be responsible with our economy?

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  4. Karl Hughes, you say that you sincerely voted the SNP in the last election in one of your postings obviously having seen their performance during the previous four years you thought, thats the party for me. Yes?
    If so, when referring to the SNP why did you state in an earlier post in this thread “they cannot govern what they already have”
    Is this a recent thing the fact that “they cannot govern” or did you vote for a party which governed us all in Scotland for a full term yet you believed them unfit to govern before doing so?
    I detect some inconsistencies in some of your statements. “a protest vote against Labour warmongering”. Which war would that be as if it was the 2003 invasion of Iraq then you had every oportunity to vote for the SNP as a protest vote in the 2007 Scottish election yet you say you voted for the SNP in the last election 2011?

    It isn’t the first time I have read posts in threads from some suggesting that posters on forums claim to have been SNP voters then reel off reasons why they are now not, a weak attempt to re-inforce their anti SNP argument when they have probably never voted for the SNP party in the first place.

    You say “HONESTY IS THE BEST POLICY”, couldn’t agree more.

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    • Hi….

      Firstly I wasn’t in the UK during the 2007 election I was in Libya…so did not vote.
      I have been in Iraq on and off since 2010…I am writing this from Basra…so believe me when I say Labour warmongering…I am dealing daily with the concequences.
      Secondly, They have messed up during this term…focused on the indy vote and in deference to governing us through the worst recession in several generations. I voted for SNP not because of their independence views…but because I thought they were ” the” new alternative…

      Hope this clarifies your Q & A and your subjective final comments.

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    • Jnr Tick and other Nats do not want to admit that many folk who voted for the SNP in 2007 are now totally disillusioned with them. As one of those who did in the hope that we were going to get open and transparent government, I now realise how wrong I was.
      There are also very many folk who admit to voting for the SNP in 2007 but have made it clear that they would never support independence / separation from the rest of the UK.
      I just wonder why we spend so much time discussing something that we all know is not going to happen.

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  5. Yes Benasheil, these folk so disillusioned after the SNP’s 4 years in power that the SNP were voted back in with an overwhelming majority in 2011 leaving individuals like yourself well and truly in the minority. Something doesn’t add up in your summing up?

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      • Hi Karl – Your quite right when you mention ‘subjective’ in your reply to my comments earlier, politics and views towards are extremely subjective. So much so that when you ask us to look at the SNP’s track record then you ask us to comment from a starting point of predjudice, to interpret outcomes in many cases by how they have directly affected us, also, ones expectations when a party is voted into power differs from the others so opinions at the end of this term will of course vary.
        We will again have a far better measure of their performance in their second term come 2016 if they are re-elected for a third term, independent Scotland or otherwise.
        I suspect your and other’s views regarding the SNP’s abilities, track record and results this term albeit a fraction into it, is on the harsh side especially if comparing to Labours, besides, Labour are a broken party in Scotland, no longer the force they were and lack the dominance and the principles the masses once expected of them with their relatively recent shift to the very unpopular ‘right’ aligning with toxic Conservatism here in Scotland.
        Where does any credible and serious challenge come from in 2016 unless SNP mess up big time? Who gets the votes you and others predict abandon SNP?
        Regarding 2014, by the sounds of things you are in the military so do not expect you to champion Scottish independence working for the British army as the staunchest, if blindly loyal, vociferous defence of the union has so far come from individuals I have spoken to with an ex-army background.
        I do not know when you last spent some time in Scotland but commenting on the impact of SNP policies from afar carries less weight Kris, the effects of SNP govenance thankfully felt right here in Scotland unlike Labour or Conservative’s governing of the UK from Westminster which for many abroad has unfortunate affects.
        Seasons greetings & keep safe

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      • KH: I asked you before to please list the deficiencies of the Scottish Government that you think are occurring rather than just constantly mouthing off vague notions that the Government isn’t doing a good job. No government is perfect but I think the current Scottish Government is doing a pretty good job despite the difficult times we find ourselves in. You shouldn’t believe everything you read in the newspapers.

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    • JnrTick, the SNP were not in power for four years up to 2011. They were a minority Government and had to work with other parties to get anything done. In their own right, they had no power.

      They are now in power with a majority Government and we now start to see their true right wing leanings coming through. We see their desperation to ignore the weak in our society and to work with those such as News Internationsl, Donald Trump, Multi Millionaire Brian Souter of the Stagecoach Group and Alex Salmond’s favourite partner for afternoon tea, Rupert Murdoch.

      We see them directing money to the upper class who can afford university for their kids but ignore those who are in true need who are deperate to get to college. We see millionaires getting free prescriptions and all the other freebies while those in true need are ignored.

      You are correct, “something does not add up” with the SNP.

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