Why George Osborne declassified official policy advice

Richard Parry, University of Edinburgh

Richard Parry, University of Edinburgh

Why did the Chancellor move to cite policy and legal advice which is normally protected from Freedom of Information requests? The University of Edinburgh’s Richard Parry discusses George Osborne’s speech in the context of Westminster’s strategy.

Normally ministers fight to their utmost to prevent disclosure of policy or legal advice from their officials – it is exempt from Freedom of Information legislation, and governments (including the SNP’s) are prepared to fight for this right in the courts. On the occasions when they find disclosure convenient, they waive the rules but in doing so  betray a political weakness that they see in need of shoring-up by expertise or cross-party advice.

In a reminder that official advice can be forceful and explicit, Sir Nicholas tells us that he could not recommend a currency union, but his fundamental opposition is to Scottish independence, which he sees as economically sub-optimal both for Scotland and the rest of the United Kingdom.

This is the context of the most surprising feature of George Osborne’s ‘no to currency union’ initiative of 13 February 2014. Accompanying his speech in Edinburgh was not just a further ‘Scotland Analysis’ paper on the issue, but a memorandum by Treasury Permanent Secretary Nick Macpherson, a symbol of the cross-party Treasury view of affairs since being Gordon Brown’s Private Secretary (all documents are available on https://www.gov.uk/governmnet/collections/scotland-analysis). In a reminder that official advice can be forceful and explicit, Sir Nicholas tells us that he could not recommend a currency union, but his fundamental opposition is to Scottish independence, which he sees as economically sub-optimal both for Scotland and the rest of the United Kingdom. Opposition to stratagems designed to make independence seem palatable stems from this, not necessarily from the unworkability of what is being resisted. Macpherson’s sting is Scotland’s ‘banking sector is far too big in relation to its national income’ and that ‘recent spending and tax commitments by the Scottish Government point in the opposite direction…to a rigorous fiscal policy’. This is little more than reiterating that the Treasury believes in the UK single market and in its own policies, and gives us a flavour of the self-regarding impregnability of Treasury logic that observers have noted over the years. It is also significant that the Treasury’s first paper in the Scotland Analysis series, Currency and Monetary Policy (April 2013) seems much more balanced and analytical, and as such well worth a read, than Assessment of a Sterling Currency Union (February 2014).

But there is another Treasury objection that is a reminder of their opposition to the Euro and the case made on the ‘five tests’ in June 2003 in which Ed Balls had a major role as Chief Economic Adviser.  This is their aversion to loss of institutional control of the key economic levers. They could not bear the thought of the Bank of England in some way answering to the Scottish and as well as the UK Government, with a direct line between Alex Salmond and Mark Carney. ‘Currency union’ is not so much shared use of the pound as shared governance of monetary policy. Although in business 90% of the equity would be effortless control, it is Scotland’s putative 10% wedge of ‘irresponsibility’ into policy-making that worries the Treasury.

Now a strategy, including the Macpherson memo, that seeks to clinch a ‘no’ victory is already anticipating a response to a ‘yes’ victory.

The UK Government has allowed inconsistency to creep into its approach. Last year, in the first Scotland Analysis paper Devolution and the Implications of Scottish Independence (February 2013), it was almost lyrical in its case (p42) that it presently works on behalf of Scotland and could not anticipate its mindset or negotiating position if  it were representing only England, Wales and Northern Ireland. No-one was very fooled by this renunciation of doublethink, but it served to defuse detailed debate and to brand independence as not worth thinking about until voted for. Now a strategy, including the Macpherson memo, that seeks to clinch a ‘no’ victory is already anticipating a response to a ‘yes’ victory. It is a risky tactical call that cannot be repeated later and could only be justified by poll movement in the ‘No’ direction.

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2 Responses to Why George Osborne declassified official policy advice

  1. Richard Spence says:

    So why would a currency union be a good idea for the rUK. Has anyone refuted all of MacPherson’s points? You don’t appear to have addressed any of them here.

    I personally feel that the big ticket item and the first item in MacPherson’s letter is the fact the Currency Union is only viewed a “Temporary” by Scotland.

    • Gordon Jackson says:

      I broadly agree with this. It also doesn’t particularly matter for the purpose of this debate whether the SNP are “right” from an economic perspective – the fact that there is a perception the currency union wouldn’t be in the rest of the UK’s interest is enough to guarantee it won’t happen. Politically it would also be an extremely hard sell – e.g. the UKIP lobby is hardly going to rush to back the idea.

      I do think the implications of the argument are pretty dreadful from Salmond’s perspective. It doesn’t seem credible to continue to argue for seven months that the rest of the UK (and Nicholas MacPherson) are simply lying for the sake of the referendum campaign. Yet Salmond’s own speech did a pretty good job of summing up exactly why independence without a currency union would create problems for the Scottish economy. About all he’s left with is grandstanding about bullying and scaremongering.

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