If you’ve got savings, mortgage or pension, you’ll pay price when SNP scraps the pound
By Graham Grant
YOU may be planning to see the new Tolkien biopic about the creator of a fictional realm called Middle Earth.
Or maybe you thought his books and the movies were frankly far too long with no basis in reality – a bit like the SNP conference.
Party members in Edinburgh were engaged in a rather fantastical endeavour on Saturday, dreaming up hypothetical coinage for an independent Scotland.
True fans will know that Tolkien devised the ‘castar’ as a Middle Earth currency, but one of the conference delegates in Edinburgh had another idea, telling an interviewer: ‘I would take smackeroonies as long as we get our independence.’
Whether it’s the castar, the smackeroonie, or indeed the Eck (well, maybe that one’s out of the question, for now) is a matter of conjecture, though we can be sure it will be taxed to the hilt in the turbo-charged austerity drive certain to follow the break-up of the UK.
Departing from the well-worn script of craven compliance with leadership diktats, SNP members succeeded in muddying waters that were already opaque, by backing a fast-tracked move to a brand new currency after the end of the Union.
SNP top brass favour a more measured approach which stipulates passing a variety of ‘tests’ before dropping the pound – to be used without Treasury permission – leading to what former Chancellor Lord Lamont has described as the ‘Latin Americanisation’ of Scotland.
Quite why currency union – sharing Sterling – isn’t an option is anyone’s guess: true, George Osborne rejected the idea in 2014, but he’s no longer Chancellor, or indeed an MP.
It’s conceivable that Jeremy Corbyn, if he were to win power, would agree to the proposition Mr Osborne rejected, and indeed to a re-run of the independence referendum, in return for the SNP propping up a minority Labour administration.
Whatever the reason, the Nationalists have decided to focus all energies on selling the ultimate objective of a new currency on the doorsteps of homes that might well be repossessed if the plans were ever enacted.
As we reveal today, economist Richard Marsh, an expert who advised the SNP’s Soviet-sounding ‘growth commission’, has warned in trenchant terms of the devastating repercussions of the currency shake-up Nicola Sturgeon is proposing.
The negative equity trap – owing more than your home is worth – would be an immediate prospect for nearly 50,000 Scots; while another expert has said mortgage repayments would soar and pensions would plunge by nearly a third.
Property tycoon Dan Macdonald, who was a member of the growth commission, believes the currency debate is ‘almost irrelevant’: for him, it’s a group of people arguing about imaginary cash, rather than addressing a damaging economic malaise.
The Nationalists’ knee-jerk renunciation of anyone who dares criticise the fantasy worlds they are busy constructing doesn’t quite work when it’s their own side questioning the wisdom of the exercise.
The SNP was backed into a corner over macroeconomics as it convinced itself of the need to answer unresolved questions from 2014, in a bid to launch another referendum.
But imagine, ahead of indyref2, a TV debate in which Miss Sturgeon had to discuss the granular detail of ‘dollarisation’ in Panama as she defended the unofficial use of sterling.
It might even make Alex Salmond’s performances in the 2014 sparring matches with Alistair Darling look credible.
The SNP’s strategy will be to place heavy emphasis on the idea that the pound would remain in place after the end of the UK.
But in any campaign Miss Sturgeon would have to discuss the implications of sterlingisation – and the fact that eventually the pound would disappear.
And she would have to discuss how the new currency would work once the pound was ditched, as her membership have demanded; each time she did so would be another gift for the Unionists.
The reason is that it’s all very well to talk in grand, sweeping terms about economic theory, but analysing the consequences of these changes for personal finance is an entirely different matter.
Take, for example, the idea that government controls would have to be imposed to stop people taking out all of their cash from savings accounts ahead of independence.
Deposits would be converted automatically into the new currency, making bank customers a captive audience: you would have to watch online, in real time, a steep fall in the value of your life savings, unable to intervene.
There are many younger members of the pro-independence movement who may not have savings, yet.
They have nothing much to lose, although by the time indyref2 comes round, they may have started contributing to a pension, or might have taken out a mortgage.
Then there are the older, diehard members, for whom currency is a genuinely irrelevant question; if the price for the realisation of their lifelong dream was a return to medieval bartering, they would pay it.
But what about the rest of us, who aren’t ideologically driven, or don’t have a visceral hatred of the pound, largely it seems because it symbolises the power of a loathed British state?
These veteran separatists don’t care that Scotland would face one of the largest deficits in Europe if it leaves the UK, with annual payments of at least £5.3billion paid to the UK Government for an undefined period to cover national debt.
A prolonged ten-year period of savings amounting to £27billion would be needed to bring down the deficit – sending a torpedo through all of those SNP state-funded giveaways from baby boxes to ‘free’ degrees and prescriptions.
And yet a propaganda war is the next phase of the SNP’s campaign to win the hearts and minds of No voters, by bombarding all 2.4million Scottish homes with a new ‘guide’ to the economics of independence.
It is a monumental task: a YouGov poll at the weekend found the plan to introduce a new currency gradually after independence is less popular than adopting the euro (which is our eventual fate if the UK is split apart, and a breakaway Scotland were to win EU membership).
Backing is strongest for the status quo – keeping the pound in the long term (backed by 48 per cent) – but this is the one idea that is firmly off the table.
Many at the highest levels of the SNP are in no doubt that by losing ground to the radical Left in their own movement, they have tied their fate to an outcome that threatens to end all hope of winning another referendum.
As Bill Clinton once argued, if you want to win over voters, ‘it’s the economy, stupid’; but it’s not a maxim that should hold true for Miss Sturgeon and her supporters.
If she sees the argument for dropping the pound as the strongest case for ripping apart one of the world’s greatest economic partnerships, then on the evidence so far it’s already a lost cause.
*This column appeared in the Scottish Daily Mail on April 30, 2019.
*Twitter: @GrahamGGrant
