Former Prime Minister Gordon Brown last night warned retention of the pound in an independent Scotland would effectively culminate in a “colonial relationship” with the rest of the UK.
Delivering the annual Donald Dewar Lecture at the Edinburgh International Book Festival, the Kirkcaldy MP said the arrangement would see an English government retaining decision-making powers over key monetary policy as interest rates became the preserve of ministers at Westminster.
The comments came as the ex-Labour leader warned handing Holyrood full fiscal autonomy – often described as devo-max – would prompt either “massive” cuts to public spending or higher taxes north of the Border.
Before an audience that included Shadow Scottish Secretary Margaret Curran and former First Minster Henry McLeish, Brown said the social union Scotland shares with the rest of the UK would be jeopardised if the “very essence of the existing union” were to be overturned in the referendum in autumn 2014.
Breaking up the union would generate regionally varied minimum wage rates, launching “a race to the bottom with one unit trying to undercut the other”, said Brown. Treatment of more vulnerable groups, such as the elderly, unemployed and disabled, would differ in what would amount to “moving backwards”, according to the former Chancellor.
Speaking less than twenty-four hours after this summer’s London Olympics drew to a close, Brown went on to suggest success in the Games’ could not be replicated without the pooling and sharing of resources across all parts of the UK, while a post-independent Scotland would be unable to rely on the Union in times of economic woe.
Amid continued debate over the prospect of a sterling currency union and the input an independent Scotland would have, Brown said: “… you could argue that it doesn’t make any sense for, particularly this new proposal that you’re going to have a Scottish independent economic policy but you’re going to accept that is going to be under an English currency.
“And so the Scottish national government has moved from wanting to be joining the Euro or wanting an independent currency to accepting – and this is an irony and it’s a colonial relationship if it were to happen – but the English government, not the Scottish or British government, would decide how the monetary policy of the country is run.
“The monetary committee would be their decision – we could ask for members of it but not necessarily get it. Interest rate decisions would be based on English calculations and yet Scotland would want to live under this English currency. It doesn’t seem to me to make a great deal of sense for your economic policy to want to have autonomy and then to say that you’re going to have the currency that is the English currency [and] effectively imposed interest rates in Scotland.”
Brown also voiced his hesitation over the implementation of fuller fiscal freedom should an independence vote fail to materialise in the upcoming referendum. “I worry about fiscal autonomy now being proposed as the next stage of devolution,” he said. “Fiscal autonomy means more taxes in Scotland but not in a progressive way at all.
“It’s simply to fill a gap that is left because you are not pooling and sharing resources in the United Kingdom and until people look at some of the aspects of what is sometimes called maxi-devolution and look at what the dangers are in that… they may feel that any form of additional devolution is good devolution. But I think we’ve got to be very, very careful. I actually favour more devolution but I don’t favour fiscal autonomy.”