Scotland politics

Scottish independence: Osborne tells MPs currency union has been 'ruled out'

George Osborne Image copyright Getty Images
Image caption George Osborne was quizzed by the Scottish affairs committee on his opposition to a currency union with an independent Scotland

Chancellor George Osborne has again insisted that a currency union after Scottish independence would not work and has been "ruled out".

Mr Osborne told MPs that this was a "no ifs, no buts" position.

He said he wanted Scotland to keep the pound but this would only happen if the UK stayed together.

Scotland's Finance Secretary, John Swinney, said Mr Osborne's stance on sterling was "bluff and bluster" ahead of the independence vote in September.

The chancellor appeared before Westminster's Scottish affairs committee, which is being boycotted by the SNP, to discuss his opposition to a currency union.

Mr Osborne insisted that "there were no circumstances under which we could recommend a currency union to the people of the United Kingdom".

He said: "As Chancellor of the Exchequer it is my obligation to explain that no currency arrangement under independence will be the same as the strength and stability of one UK, with one UK pound.

"The people of Scotland deserve straight answers to straight questions and you have had straight answers from the Labour shadow chancellor, the Liberal Democrat chief secretary and from me, the Conservative chancellor.

"We have all made it clear that there will be no currency union if Scotland becomes independent, no ifs, no buts.

"An independent Scotland would not share the pound with the rest of the UK."

'Exceptional circumstances'

He denied a suggestion by committee chairman Ian Davidson that his speech in Edinburgh ruling out a currency union had been a "presentational disaster" which had diverted attention from the substance of the referendum debate.

Mr Davidson, a Labour MP, said: "It looked as if it was some English Tory coming up to tell us what we could and couldn't do."

And Mr Osborne rejected the allegation that UK ministers have engaged in "bluff and bluster", which has been made by SNP politicians, including First Minister Alex Salmond.

He told MPs: "Alex Salmond should look in the mirror when he makes those accusations because he is not being straight with the Scottish people."

He added that a currency union would not be in the interests of the UK or an independent Scotland.

"Ultimately you'd be asking UK taxpayers to provide a safety net to a separate country," he said, adding that the people of Scotland would be "tying themselves to the economic decisions of another country".

Treasury permanent secretary Sir Nicholas Macpherson joined the chancellor in front of the committee and faced questions about why he took the unusual step of making his civil service advice on currency public.

Sir Nicholas denied he had been pushed by Mr Osborne and rejected accusations he had abused his position, arguing there were "exceptional circumstances".

He said: "If I thought it was the wrong thing to do, to publish it, I simply would not have done it.

"This was very much my idea and I think it was the right thing to do."

'Completely backfired'

Commenting on the committee session, Mr Swinney said: "This was a desperate attempt from the chancellor to try and recover some credibility, after his Sermon on the Pound completely backfired and has led to a surge in support for Yes.

"It doesn't matter what George Osborne claims on currency now - the people of Scotland do not believe his bluff and bluster, and even senior UK ministers have admitted that of 'course there will be a currency union'.

"A currency union is the choice of business in both Scotland and the rest of the UK, and it is clear that the markets will expect the UK to negotiate constructively and in good faith.

"Anything else would simply be damaging to the economy of the rest of the UK."

In February, Mr Osborne and the finance spokesmen for Labour and the Liberal Democrats ruled out a currency union between an independent Scotland and the rest of the UK.

At the same time, senior civil servant Sir Nicholas made his advice on the topic public.

The Scottish government wants a monetary union with the rest of the UK in the event of a "Yes" vote in September's referendum.

When voters in Scotland go to the polls on 18 September they will be asked the "Yes/No" question: "Should Scotland be an independent country?"