Osborne asks the right questions about Scotland's currency

How would Scotland combine monetary union with fiscal independence? Don't ask the SNP.

Fortunately, and contrary to some reports, George Osborne did not claim in his speech last night that Scotland would lose the pound if it became independent. It is not within the Chancellor's gift to determine what currency Alex Salmond's country uses - that power resides with the Bank of England. Nor would an independent Scotland be forced to join the euro, as is sometimes said. The UK, Denmark and Sweden have all remained in the EU despite retaining their own currencies.

What Osborne did point out (and rightly so) is that if the SNP wants a monetary union with the rest of the UK (Salmond having abandoned his promise to take Scotland into the euro) it becomes much harder for it to argue for fiscal and political independence. The existence of monetary union without complementary fiscal union being the principal cause of the eurozone imbroglio. Osborne said:

In a world in which a separate, independent Scotland wished to pursue divergent economic policies, what mechanism could there be for the Bank of England to set monetary policy, as it does now, to suit conditions in both Scotland and the rest of the UK?

As Chancellor of the Exchequer, I have seen no such credible mechanisms proposed by those advocating independence.

I am not clear they exist.

If the SNP Scottish Government cannot provide answers to these basic questions about Scotland’s currency then the Scottish people are entitled to ask this basic question in return: what path is the Scottish Government leading them down?

A spokesman for the Scottish Finance Secretary John Swinney replied that Scotland needed "no lessons from a Tory chancellor whose disastrous economic policies are threatening jobs and investment across this country. The cast-iron position is that an independent Scotland will keep the pound — a position that the Scottish Secretary, Michael Moore, has agreed with."

None of the above is wrong (one questions the wisdom of Osborne, the Chancellor who has presided over a second UK recession, leading the charge against independence) but, as you will have noticed, the SNP answered a charge that Osborne did not make - that an independent Scotland would lose the pound -, whilst ignoring one he did make - that monetary union and fiscal autonomy are inherently incompatible. Until it does otherwise, it will have no credibility on this point.

Chancellor George Osborne addresses the CBI Scotland annual dinner in Glasgow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.