Osborne in Scotland: right message, wrong messenger

The Chancellor is on strong ground when he highlights Scotland's difficult currency options but his toxic reputation could damage the unionist cause.

Which currency would an independent Scotland use? Alex Salmond's answer to that question used to be the euro. Back in 2009, the Scottish First Minister quipped that sterling was "sinking like a stone" and argued that euro membership was becoming increasingly attractive ("the parlous state of the UK economy has caused many people in the business community and elsewhere to view membership favourably"). But that, to put it mildly, is no longer the case and so Salmond has changed tack. The SNP leader's new preference is for Scotland to retain the pound in a formal currency union with the rest of the UK after independence is declared. 

But that isn't as simple as it sounds. As a new Treasury report makes clear, the UK would only agree to a currency union were significant constraints to be imposed on Scotland's tax and spending policies, the lesson of the eurozone crisis being that monetary union is inherently unstable without fiscal union. Were Scotland to reject such restrictions, it would be left with three options: to continue to use sterling unilaterally (rather like Panama uses the dollar and Kosovo uses the euro), but without any say over monetary policy, to adopt the euro (if it is able to join the EU) or to form its own currency, a hazardous path at any time for a small country but most of all during a global economic crisis. 

George Osborne, who will launch the Treasury paper in Glasgow today with Danny Alexander, made the essential point on the Today programme this morning when he remarked that "If Scotland wants to keep the pound, the best way to do that is to stay in the UK." Why, at a time when economic insecurity is hardly in short supply, create even more? The polls suggest it is an argument the voters readilty accept. But while this is the right message, one doubts if Osborne is the right messanger.

The reputation of the man who has presided over a double-dip recession and may yet preside over a triple-dip does not improve (nay, it worsens) if one travels north of the border, where the Conservatives still have just a single MP and typically poll around 15 per cent. A recent Ipsos MORI poll showing that support for the coalition's economic policies plummets when Osborne's name is mentioned was a warning to the "submarine Chancellor" to remain below the surface. His decision to take the fight to Salmond allows the First Minister to cast himself in his favoured role as the resistance to the English Tories. 

Since the independence campaign began, David Cameron has wisely taken a backseat as Alistair Darling and other centre-left figures have led the charge. If Osborne wants to help rather than hinder the unionist cause, he should do the same.  

George Osborne addresses the CBI Scotland annual dinner on September 6, 2012 in Glasgow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.