Scotland wants the Bank of England to bail it out if there is another financial meltdown – even if the country breaks away from the UK.
Scottish Nationalists are insisting they want to keep the pound as their currency and retain the Bank of England as the ‘lender of last resort’.
But an influential committee of peers has warned it would be ‘implausible’ for the Bank to accept risks over which it had no control. It also attacked one of the main parts of Scottish First Minister Alex Salmond’s economic blueprint as ‘fanciful’.
John Swinney (left), Scotland's finance minister, had told peers an independent Scottish government would expect the Bank of England to protect Scottish institutions if needed. Peers have attacked one of the main parts of Scottish First Minister Alex Salmond's (right) economic blueprint as 'fanciful'
An influential committee of peers has warned it would be 'implausible' for the Bank (pictured) to accept risks over which it had no control
British people had a right to hear more about the debate over Scottish independence, the Lords economic affairs committee said in its report on the economic impact of Scottish independence.
Peers called for arrangements over Scotland keeping sterling to be made clear before the referendum and warned the UK could be ‘sleepwalking’ into separation ‘if the issues are not tackled head on’.
‘It would be difficult to see how the UK government could extend central banking services to an independent Scotland since the UK government would lack control over the tax and spending policies of an independent Scotland,’ the committee said.
John Swinney, Scotland’s finance minister, had told peers that an independent Scottish government would expect the Bank of England to protect Scottish institutions if needed.
But the committee said: ‘This would require the Chancellor to put at risk taxpayers’ money from the rest of the UK for the benefit of institutions based, and possibly regulated in, an independent country.
‘The proposal for the Scottish Government to exert some influence over the Bank of England, let alone the rest of the UK exchequer, is devoid of precedent and entirely fanciful.’
Mr Swinney attacked the Lords for 'peddling nonsense', saying: 'All the evidence shows Scotland is in a far stronger financial position than the UK as a whole'
Lord MacGregor, chairman of the economic affairs committee, said voters in the referendum on September 18, 2014 ‘deserve to cast their vote based on a proper understanding of the possible economic impact’. This included making voters aware that Scots would probably keep around 90 per cent of the North Sea oil and gas revenue because of where the resources are geographically located.
With the volatility of oil pricing and supply, this resource alone would not guarantee that an independent Scotland would be a wealthy nation.
The UK’s share of public sector net debt should also be allocated according to population, with Scots getting 8.4 per cent of it or £93billion out of £1,104billion.
The committee also suggested Scotland should be lumbered with its share of private finance initiative and public sector pensions liabilities. This would double Scotland’s public sector net debt to £185.4billion.
As a newly independent country with no credit history, Scotland would probably have to borrow money at rates higher than the UK does.
Mr Swinney, however, attacked the Lords for ‘peddling nonsense’. He added: ‘All the evidence shows Scotland is in a far stronger financial position than the UK as a whole.’