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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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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