:00:11. > :00:15.more prosperous and fairer country. Tonight on Newsnight Scotland will
:00:15. > :00:20.have more on the debate over the currency including an interview with
:00:20. > :00:26.George Osborne. Good evening, the Chancellor's chose St George's Day
:00:26. > :00:31.to talk about sterling. His message was that the SNP's plan for Scotland
:00:31. > :00:34.to continue to use the pound after independence is deeply flawed. The
:00:34. > :00:39.Scottish Government were swift in their rebuttal as Andrew Black
:00:39. > :00:45.reports. Spoke in England today celebrated
:00:45. > :00:50.the life of St George, their patron saint, his namesake headed north in
:00:50. > :00:56.the hope of slaying a nationalist Dragon. Welcome, ladies and
:00:56. > :00:59.gentlemen. Thank you for coming... Dismissing SNP proposals to retain
:00:59. > :01:04.the pound is an independent Scotland, George Osborne said things
:01:04. > :01:09.worked fine as they are. The saying goes that if it isn't broke, don't
:01:09. > :01:13.fix it but I say, if it isn't broke, don't break it. The
:01:13. > :01:19.alternative is to the way Scotland is now uses the pound are second
:01:19. > :01:23.best. Second best, is that really best for Scotland? As the Chancellor
:01:23. > :01:27.came to Glasgow today, the Treasury published this document outlining
:01:27. > :01:31.various options for the future of an independent Scotland. Everything
:01:31. > :01:37.from a standalone currency to the SNP's preference of a sterling zone.
:01:37. > :01:41.But all of these, say Mister Osborne, would leave Scotland and
:01:41. > :01:50.the rest of the UK worse. The first Minister was also out and about and
:01:50. > :01:53.talking up Scotland's future, this time in sciences. Alex Salmond today
:01:53. > :01:59.endorsed the findings of the fiscal group set up by his own government.
:01:59. > :02:05.It just happens to support monetary union. They think that would be the
:02:05. > :02:08.best option for Scotland and for the rest of the UK so our approach has
:02:08. > :02:14.been upfront and constructive, laying out what is best for the
:02:14. > :02:18.people of Scotland and the people in the rest of the UK. Others in the
:02:18. > :02:21.independence movement encouraged the SNP to keep an open mind. In the
:02:21. > :02:26.long run, we should be looking to develop a separate currency. You
:02:26. > :02:30.cannot do that overnight, take a slower, colour separation of
:02:30. > :02:34.currency and that would make sense to me and give us the full powers to
:02:34. > :02:39.make all of our decisions for ourselves. Despite big political
:02:39. > :02:42.posturing, it is argued that if it does come to the crash, the UK
:02:42. > :02:47.Government would come to some kind of agreement. This that the Scottish
:02:48. > :02:54.Government is keen on keeping some sort of sterling connection means
:02:54. > :02:58.that it is likely that that will go forward. I can't see the UK
:02:58. > :03:03.Government being so obstructed as to put conditions in place that are
:03:03. > :03:06.unacceptable so at the minute, that looks like it would be favoured.
:03:06. > :03:16.Hopes are high that the independence debate is now turning the corner,
:03:16. > :03:16.
:03:16. > :03:21.from trading in adult -- trading insults to discussion. Thanks for
:03:21. > :03:25.coming along. As for the Chancellor, he is off back to Whitehall to plan
:03:25. > :03:31.for his next move in the fight to keep the union.
:03:31. > :03:35.This morning, I spoke with George Osborne and that was at a factory in
:03:35. > :03:40.Castlemilk. I asked him if a sterling zone could suffer a crisis
:03:40. > :03:45.like the one in the Eurozone. saying the arrangements at the
:03:45. > :03:49.moment when Scotland is part of the UK and uses the pound like all other
:03:49. > :03:52.parts of the UK, are the best arrangements for Scotland and for
:03:52. > :03:58.the UK. And anybody who wants to change that relationship, anybody
:03:58. > :04:02.who wants a separate Scotland needs to explain what they would do. And
:04:02. > :04:08.the other options, like Scotland having its own currency board
:04:08. > :04:18.joining the euro, or having a similar zone like the rest of the
:04:18. > :04:18.
:04:18. > :04:23.UK. Full. Do you worry that there is a Eurozone style crisis? It would
:04:23. > :04:27.beg also some questions about economic risks, about why a foreign
:04:27. > :04:31.government which is what the rest of the UK would have become would want
:04:31. > :04:37.to enter into this arrangement, why it would want to tie itself to the
:04:37. > :04:42.economic policies of the Scottish Government so frankly I think it is
:04:42. > :04:47.unlikely that the arrangement could be agreed with the rest of the UK or
:04:47. > :04:52.indeed would work. If this is a profound analysis rather than
:04:52. > :04:55.posturing, why don't you just say right now, as you would be the man
:04:56. > :05:05.in charge of the negotiations on this should it come to pass, why
:05:05. > :05:12.don't you say no? I am saying it is unlikely. Why not say no?I will not
:05:12. > :05:17.negotiate before the measure because my argument is that we should keep
:05:17. > :05:22.it together. It is the SNP who must answer questions. You could say this
:05:22. > :05:26.is bad for the rest of the United Kingdom and we will not enter
:05:26. > :05:29.negotiations. I think the best arrangement for both is to have what
:05:29. > :05:33.we have at the moment and it is for those who want to break up that
:05:33. > :05:40.arrangement to explain what they would put in its place and you have
:05:40. > :05:43.heard from the SNP. Let's say Scotland becomes independent, you
:05:43. > :05:47.represent the whole of the United Kingdom now, if you believe it is
:05:47. > :05:51.such a bad idea to have a formal currency arrangement with an
:05:51. > :05:56.independent Scotland, surely it is your responsibility to say to people
:05:56. > :06:02.that you say as Chancellor that he will not negotiate this because we
:06:02. > :06:06.could run the risk of a Eurozone crisis. I think the current
:06:06. > :06:10.arrangements are the best. The Eurozone style currency zone which
:06:10. > :06:17.you are asking me about, Scotland having its own currency, Scotland
:06:17. > :06:27.using the pound as John Swinney suggesting without any consent, like
:06:27. > :06:30.Panama uses the American dollar, those are second best options.
:06:30. > :06:35.have pointed out somewhere in your document that the stability pact in
:06:35. > :06:39.the Eurozone did not amount to a row of beans in the crisis. You said
:06:39. > :06:42.this morning that in a currency zone they would have to be more
:06:42. > :06:47.controlled by the UK over Scotland's budget than at the
:06:47. > :06:51.moment. What do you mean? We're not just talking about borrowing or
:06:51. > :06:55.pact, pact, what would you want to be able
:06:55. > :06:58.to control? This is one of the questions about I currency zone
:06:58. > :07:06.which is how much control do you give to a foreign government about
:07:06. > :07:10.your tax, borrowing decisions? In the Eurozone, they have to submit
:07:10. > :07:19.budgets to national parliaments and Brussels. So one question would be,
:07:19. > :07:29.but the Scottish Government have to submit its budget to Westminster
:07:29. > :07:32.
:07:32. > :07:36.before it is fitted to Holyrood for approval? That would include tax
:07:36. > :07:45.policy? All decisions that affect the economic sustainability of ink
:07:45. > :07:51.-- country. Tax is one component of borrowing. But John Swinney was
:07:52. > :07:55.saying again this morning that they would hope that Scotland had full
:07:55. > :07:59.fiscal freedom. That is not how currency zones operate and why the
:07:59. > :08:03.way, what about the question that John Swinney does not address which
:08:03. > :08:07.is who is to say that the rest of the United Kingdom, Northern Ireland
:08:07. > :08:16.and Wales, would accept any kind of decision or control from an
:08:16. > :08:20.independent Scotland over its budget policies? John Swinney says that
:08:20. > :08:23.George Osborne is playing politics, if you want allows Scotland to use
:08:23. > :08:28.the pound, then an independent Scotland will not take on a share of
:08:28. > :08:32.the British national debt. What is your response to that? John Swinney
:08:32. > :08:37.must answer basic questions about what currency Scotland would use if
:08:37. > :08:42.they became independent. I will not renegotiate the terms of
:08:42. > :08:46.independence because I wanted to remain in the UK and the best way
:08:46. > :08:56.for Scotland to keep the pound is for Scotland to stay in the United
:08:56. > :08:58.
:08:58. > :09:03.do not know how clearly you could hear that interview with George
:09:03. > :09:08.Osborne, he is quite specifically making the point that the stability
:09:08. > :09:12.pact where you have limits on stock of debt and borrowing did not work
:09:12. > :09:15.in the Eurozone crisis and if he was to consider a currency union with an
:09:15. > :09:22.independent Scotland, it would have to involve much more than that. He
:09:22. > :09:28.says it must include tax and spending. Is that something you
:09:28. > :09:32.would be prepared to contemplate? do not think it would be necessary
:09:32. > :09:37.in that level of detail. An agreement about the strategic
:09:37. > :09:41.financial framework would be. argument is that it didn't work in
:09:41. > :09:50.the Eurozone and he is not prepared to repeat it in a British Eurozone,
:09:50. > :09:55.if you like. It is about how clearly you secure that. Those requirements
:09:55. > :09:59.were not securely founded on the member states involved in the
:09:59. > :10:03.Eurozone. What is important is an approach to financial responsibility
:10:03. > :10:07.which would be implicit in this arrangement and they would have to
:10:07. > :10:13.be a very clear and rounding and well founded agreements around the
:10:13. > :10:18.levels of debt that we could incur and the level of rowing we could
:10:18. > :10:21.undertake. For example, let me give you a very basic example. One of the
:10:22. > :10:24.points the Treasury makes in its document is that they would have to
:10:25. > :10:29.be a commitment to a currency union say you couldn't have Scotland
:10:29. > :10:33.flirting with the idea of joining the euro or setting up its own
:10:33. > :10:36.currency if the rest of the UK was to agree to a currency union. Would
:10:36. > :10:42.you be prepared to give a binding commitment that Scotland would not
:10:42. > :10:49.apply to join the euro unless it was either agreed with the United
:10:49. > :10:53.Kingdom order that the same time? -- or done at the same time. What
:10:54. > :10:56.George Osborne has been saying is about his interpretation on the
:10:56. > :11:01.currency question. I could not have been clear in all of the interviews
:11:01. > :11:06.I have given for some considerable time that the Government's position
:11:06. > :11:11.in Scotland is that we want to establish a sterling zone and we
:11:11. > :11:15.reduced the currency of the pound. And that is our clear undisputed
:11:15. > :11:25.option. You would be prepared to give the option I have suggested to
:11:25. > :11:28.
:11:28. > :11:33.commitment because that is the commitment of the Scottish
:11:33. > :11:37.Government. You seem to be suggesting today that if the British
:11:37. > :11:45.government did not do what you wanted in a currency union of
:11:45. > :11:49.Scotland votes for independence, you might not accept a share of the UK
:11:49. > :11:53.national debt. Where you being serious or was it a joke? I was
:11:53. > :11:56.pointing out the illogicality of George Osborne 's position. As
:11:56. > :12:00.regards the pound and the Bank of England, he is saying that he
:12:00. > :12:04.decides what happens and is the one who will determine what will happen
:12:04. > :12:12.in that Scotland has no say at all. That cannot possibly be the case
:12:12. > :12:16.because that would mean George Osborne determines the position
:12:16. > :12:20.which has as much at stake for Scotland as the rest of the UK. I am
:12:20. > :12:24.simply making the point that if George Osborne was taking control of
:12:24. > :12:28.all of the assets then he must take control of all the liabilities and
:12:28. > :12:33.debts also. There is an asymmetry here and that
:12:33. > :12:38.is the problem. It is all very well to say your proposals for a currency
:12:38. > :12:42.union makes sense and that you have economists with Nobel Prize is
:12:42. > :12:46.backing you up. The point is, the British government will decide
:12:47. > :12:52.whether this happens or not and they are seeing that they do not see any
:12:52. > :12:58.way of making it work. Irrespective of how convincing your arguments,
:12:58. > :13:00.ultimately, it does not matter, they will decide. It was interesting in
:13:00. > :13:05.your interview with George Osborne and you give him every opportunity
:13:05. > :13:09.to say no and he did not take it. That says to me that today has been
:13:09. > :13:17.an escapade and posturing to try to make it all sounds too difficult,
:13:17. > :13:22.too hard and with too many barriers to overcome. In reality, the
:13:22. > :13:25.proposition that we have put forward and followed by the fiscal
:13:26. > :13:29.commission which has distinguished people taking part in it, it makes
:13:29. > :13:32.sense in the interests of Scotland and the rest of the United Kingdom
:13:32. > :13:38.because of the trade that goes between our respective due
:13:38. > :13:41.restrictions and because of the balance of payments.
:13:41. > :13:45.If George Osborne and Danny Alexander stick to their current
:13:45. > :13:52.idea that they do not think this will work and they will not agree to
:13:52. > :13:59.it, what is your plan B? They have not said that. They said it cannot
:13:59. > :14:06.work. You cannot possibly enter into a negotiation if you do not have a
:14:06. > :14:09.plan B. That would be irresponsible to the people of Scotland. We should
:14:09. > :14:14.argue as to what they think is the most appropriate arrangement for the
:14:14. > :14:19.people of Scotland. And to put that in front of the Scottish population.
:14:19. > :14:24.What if you do not get that? I will not second-guess and speculate about
:14:24. > :14:30.these other options. We have a proposition that we have taken care
:14:30. > :14:32.to develop and canvassed external opinion. We did that several weeks
:14:32. > :14:38.ago and gone into all of the detail, more detail than the
:14:38. > :14:44.Treasury have done. We have produced a strong and workable proposition.
:14:44. > :14:46.You must have a plan B. You are in effect asking the people of Scotland
:14:46. > :14:52.to vote for a proposition that depends on the agreement of the
:14:52. > :14:55.British government when the British government is saying it is minded
:14:55. > :15:00.not to agree to it. You cannot expect people to vote for
:15:01. > :15:10.independence on that basis. The UK and did -- the UK government has not
:15:10. > :15:13.said that. In their document they say it could be established by
:15:13. > :15:17.agreement between the two governments. If the UK government is
:15:17. > :15:20.to remain faithful to the Edinburgh Agreement that was signed in October
:15:20. > :15:25.between the Prime Minister and the first Minister, both governments
:15:25. > :15:34.agreed to work in a constructive spirit... You cannot seriously claim
:15:34. > :15:38.that the British... No, I said the Edinburgh Agreement committed the
:15:38. > :15:44.United Kingdom government to engage constructively with the Scottish
:15:44. > :15:47.government to implement the terms of a yes result in a referendum in
:15:47. > :15:52.September. If the UK government is going to remain true to that
:15:52. > :15:54.commitment, we are entitled to say that this is our preferred option
:15:54. > :16:01.and instead of posturing, they should deal seriously with this
:16:01. > :16:06.matter. Is not the problem you have, and some people going for
:16:06. > :16:14.independence would take this point of view also, is that you are so
:16:14. > :16:20.desperate for this currency union, it is so important to do, that why
:16:20. > :16:27.should you bother leaving the UK in the first place? That's back if it
:16:27. > :16:30.is so important to you, why do you want to do this? If people do that
:16:30. > :16:37.they would not have access to the full range of fiscal powers that I
:16:37. > :16:41.believe are essential... That is where I think the Chancellor is
:16:41. > :16:46.completely wrong. We must gain access to the economic and fiscal
:16:46. > :16:50.levers that are much more comprehensive and go across the
:16:50. > :16:52.whole selection of different areas in relation to the management of the
:16:52. > :16:58.economy and to strengthen the Scottish economy. Thank you, John