In the face of increasing anxiety in the markets, Sir Nicholas MacPherson, the Permanent Secretary to the Treasury, has recently re-confirmed that the United Kingdom Government stands by it’s earlier position – that it is legally responsible for all of the debts incurred by the United Kingdom as a whole until a possible Independence Day marking Scotland’s formal secession.
This assurance was originally given to calm the markets in the wake of the Scottish Government’s first threats that an independent Scotland would default on its share of the national debt if it did not get a currency union with the continuing United Kingdom.
With that threat repeated recently on several occasions and on national television by the First Minister and, perhaps even more alarmingly, by Finance Secretary John Swinney, the markets have become increasingly concerned.
Sir Nicholas MacPherson’s re-confirmation of the United Kingdom’s acceptance of its responsibilities – whether or not an independent Scotland defaulted, has been made public to quieten the markets’ characteristic fears of instability.
The existence and degree of the anxiety in the markets was signalled in recent days by a marked fall in the value of sterling, as it belatedly became widely understood that Scotland is quite likely to vote for independence, careless of how fiscally unsound is the independence prospectus for which the Firtst Minsiter has asked for a mandate an exact three weeks from today.
The ‘Yes’ spin on the re-confirmation of legal responsibility
Spokespersons for the Scottish Government and for the ‘Yes’ campaign have made statements on Sir Nicholas’s re-confirmation of legal responsibility that have been nuanced to suggest to voters that this means that the continuing United Kingdom would take the debt, rather than take the responsibility for the debt.
Reading the position as a ‘home free;’ scenario in far from the reality. In the event of independence, the United Kingdom will still expect Scotland to behave honourably and accept its share of the national debt.
Contradiction in First Minister’s debt default threat
It has passed virtually without mention in the Scottish media – but the First Minister last week publicly accepted that the pound is indeed not an asset pf the United Kingdom.
Mr Salmond’s rabble rousing and simplistic proclamations that ‘It’s our pound’ have been repeatedly heard and seen on television across the United Kingdom over the last month.
He had previously, in calmer mode, pronounced regularly that the currency is an asset of the United Kingdom, that an independent Scotland would be entitled to its share or use of that asset and that if the United Kingdom would not share the assets fairly, including the use of the pound, Scotland would not accept its share of the liabilities – the national debt.
Following the initial threat to default, several experts, including Professor Adam Tomkins, who is John Millar Professor of Public Law at Glasgow University, clarified the position of the currency as an institution and not an asset of the United Kingdom. Institutions obviously remain the functional means of the continuing United Kingdom.
Last week, on Good Morning Scotland, in the midst of questioning on currency issues by presenter, Gary Robertson, the First Minister, for the first time, accepted that the pound is not an asset of the United Kingdom.
Mr Salmond however, tried to cover his emergence into reality with one of his familiar acts of revisionism.
He actually claimed: ‘We’ve not argued it’s the currency that’s the asset. It’s the financial assets of the United Kingdom.’
He was here referring to the currency reserves of the Bank of England – which are not ‘the pound’ but ‘the pounds’; not the currency itself but the limited physical reserves in the Bank of England.
There has never been a question that these reserves would not be proportionately allocated in the event of independence.
So, apart from the nation having heard for itself the First Minister’s serial declarations, ‘It’s our pound’ [and never 'They're our pounds'], had he always been talking abut the Bank of England reserves, he would have had no reason to try the characteristic ‘big fist’ threat of a national default on a debt of honour.
The crucial change here, though, is that Mr Salmond has publicly accepted that the currency is not an asset.
Following this public acceptance he ought now to do Scotland the favour of withdrawing his dishonourable and illegitimate threat that an independent Scotland would default on its share of the national debt if it did not get a currency union.
