UK Politics

12 January 2012

Scotland would be 'worse off outside UK' - Osborne

Chancellor George Osborne has said Scotland would be worse off financially if it chose to leave the UK. Mr Osborne told ITV News he did not believe an independent Scotland would be as "prosperous" as it is now.He also questioned whether Scotland alone would have been able to bail out the RBS and HBoS banks in 2009.But Scotland's deputy first minister Nicola Sturgeon said it already "paid its own way" and would be even better off as an independent country.

The SNP administration in Edinburgh, which wants to leave the UK, has said it would prefer to hold a referendum on Scotland's constitutional future by the autumn of 2014, describing the poll as the most important decision facing the country for 300 years.

National debt

Amid a row over the timing of the poll and what question will be asked, Scottish first minister Alex Salmond and the leaders of the Conservatives, Labour and Liberal Democrat parties have all called for a debate on the substance of whether Scotland should remain within the UK or go its own way.

Mr Osborne, who chairs the UK cabinet's Scotland committee, said he believed Scotland would not benefit economically from a break-up of the UK.

"I think the people of Scotland would lose out in terms of the Scottish economy," he told ITV News. "I don't think Scotland would be as prosperous as it would be as part of the UK.

He added: "If you look at the scale of the national debt, for example, that Scotland would have to take if it became independent, if you look at the fact it has an important banking industry as we know and you ask yourself 'would Scotland alone have been able to bail out the Royal Bank of Scotland or Halifax of Scotland'.

A spokesman for Scottish finance secretary John Swinney dismissed Mr Osborne's comments, suggesting Scotland's economy would be boosted by leaving the UK.

"When all Scotland's resources are included in our nation's economic output, an independent Scotland would be ranked sixth in the world league tables of OECD nations in terms of gross domestic product per head - ten places ahead of the UK," he said.

'Paying own way'

Economists have said the financial position of an independent Scotland could hinge on several factors, including its share of the UK's existing revenues from North Sea oil, its gold reserves and national debt as well as its liabilities in specific areas such as defence and welfare.

Scotland's deputy first minister Nicola Sturgeon told the BBC One's Question Time, in an edition due to be broadcast later on Thursday, that both Scotland and England would be better off in the event of Scottish independence and would remain "close allies".

"Scotland is doing well and can do better with independence," she said. "Scotland is not subsidised at all. Scotland pays its own way and I won't hear anything else."

For Labour, shadow foreign secretary Douglas Alexander told the same programme that all parts of the UK "benefited from sharing risks, rewards, and resources".

And for the Lib Dems, former leader Lord Ashdown said a break-up of the union would not be a "happy circumstance" for all concerned.

He also suggested David Cameron had "bungled" his approach to the issue so far and could not remain as UK prime minister if Scotland voted for independence.

Early on Thursday, the Scottish Parliament backed calls for the terms of the forthcoming independence referendum to be decided by Holyrood. Mr Salmond and UK deputy prime minister Nick Clegg will both be attending a summit of Irish and British leaders in Dublin on Friday.