The Independence Debate – Those Questions Answered 97

Currency Union

There are over 200 nations in the world. Many became independent in the last thirty years, a large majority became independent over the last seventy years. Most have their own currencies. Some share a currency.

If every other country in the world can manage its currency options, why Better Together are allowed to pretend this is an insuperable obstacle for Scotland is beyond me. Are we uniquely stupid or lazy or incompetent? In fact Scots founded the Bank of England and the Bank of France (John Law).

The media has deliberately built u a non-question into “the thing that will stop Independence”. Yesterday Darling was allowed to bang on about nothing else for 12 minutes and then the pre-selected audience questions were on the same subject. This is a media propaganda construct not a real problem.

The problem is not the currency money in which is denominated – it is the fairness of its distribution we should be addressing.

The Scottish government’s preference is to enter a currency union with rUK. The strong attraction for rUK in that is that it avoids economic dislocation. Also it gives a strong hydrocarbon element to the economies underpinning the currency. Without Scotland sterling outflows in times of high oil prices could become a real problem for rUK.

So Salmond’s view is the rUK will agree to currency union, and there is no point in having a hypothetical argument based on an artificial Better Together propaganda construct that they will not.

My own view is that Scotland would be much better off with its own currency anyway, or could join the Euro. Either is a good option. But these are all perfectly possible post-independence options – none of them is a reason not to be independent.

Tuition Fees

Once Scotland is independent, it will have to treat all its fellow EU citizens the same on fees, including English students who currently – at the insistence of the UK government – have to pay.

Scotland will probably have to introduce some level of tuition fee post independence. BUT

a) There is no EU rule against giving student grants based on residence. So the Scottish government can give Scottish resident only students grants to pay their tuition fees. There can still be no net cost to Scottish students. This is what other EU countries do.

b) There will be no call for fees to be as high as the terrible 9,000 pounds a year charged in England. Tuition fee levels may perhaps be a third or half of that – with Scottish students given grants to pay the full amount. If the cheaper fees lead to a great rush of bright English students to Scotland, that will in the medium term give a great boost to the Scottish economy. Many of them will stay for the exciting new economic opportunities a dynamic independent Scotland will bring.


Mineral resources are the inalienable property of the State on whose territory – including continental shelf – they lie. Agreements made between oil companies and the UK for exploitation rights on Scotland’s continental shelf will be honoured on the same terms by the Scottish government. The tax revenues will come to Scotland instead of to the UK. There is no dispute over this whatsoever in legal or academic circles. It is an utterly ludicrous piece of false information to claim otherwise, put out by Better Together. The only dispute will be over the precise settlement of the maritime boundaries with England. But the area of dispute is in the region of whether 88 or 92% of British hydrocarbon resources are Scottish.

Excluding oil, Scotland’s GDP per capita is 98% per capita. The extent of the “oil bonus” on top indeed varies with the price of oil, but the total is certainly never going to give GDP per capita below that of rUK. Proven oil reserves will last a minimum of 50 years. What happens after 2070 when oil starts to run out is a problem which will face the entire world, not only Scotland. In the meantime, it is better to have it than not to have it.

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97 thoughts on “The Independence Debate – Those Questions Answered

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  • BrianSJ

    Surely the ones with the currency problem will be the oil-less English?

    It is dispiriting (if not surprising) to see UK politicians pushing the big lie again and again on all sorts of topics.

  • fool

    I agree that Scotland needs a currency. Who would want to rely on a currency which is being devalued through QE but the problem with a new currency is establishing confidence.

    Oil is of course a vital question.

    I didn’t see the debate due to STV streaming issues and so I don’t know what the questions were in the debate, but aren’t: sharing of defence; intelligence; diplomatic service; national debt; national assets all big questions particularly defence debt and assets.

  • craig Post author

    They are indeed. STV deliberately confined the chosen questions slowly to the No campaign favourite topics above. A lady in the audience who tried to raise the Gaelic language was told she was not allowed to.

  • Ed

    “My own view is that Scotland would be much better off with its own currency anyway, or could join the Euro. Either is a good option.”

    Joining the Euro would not be a good option. The single currency is a disaster for the European periphery, for goodness sake please do not encourage Scotland to join it.

    I’m very much of the view Scotland would be better with its own currency; but if you are correct that Sterling would decline if Scotland left the pound (I’m less sure but let’s assume it happens), I’d argue that would be worse for Scotland than rUK.

    Sterling down would help rUK exporters, and the Scottish economy would be hit by the so-called “Dutch disease”.

    Anyway, the question in the end is whether an independent Scotland wants full monetary independence (and thus fiscal autonomy). The question I think should answer itself.

  • j coleman

    Excellent piece. The Debate was a contrived set up by NO and its supporters in Government with an audience packed with NO people primed to maintain the Currency Union argument during the Q&A session after it had been dealt with earlier.

  • MJ

    “The extent of the “oil bonus” on top indeed varies with the price of oil”

    To be precise tax revenues vary with the profitability of the company extracting it.

    “What happens after 2070 when oil starts to run out is a problem which will face the entire world”

    It will affect Scotland/UK long before then. Most untapped reserves in the North Sea are concentrated in smaller, less accssible fields, what we might call the ‘uneconomic pits’. The high costs of extracting oil from these low-yielding oilfields will inevitably impact on profits and therefore tax revenues.

    Furthermore, the situation will give oil companies some leverage. Sooner or later they’ll have to explain, with great regret, that margins are so tight that it will be necessary to start cutting back on North Sea operations and lots of jobs will have to go. Unless of course the government can think of some way to encourage them to stay.

  • Abe Rene

    Maybe you should contact George Galloway and hold a public debate, with both speakers being able to give it their best, in a cooperative student union in London (say). I might be interested if it were open to the public!

  • Richard

    Both the Separatist and Unionist camps are making strange statements regarding currency. If Sterling still exists after separation (the currency, that is, not the town) then the Scots can use it. Why they would want to is anybody’s guess, but using it is not the same as currency union. They could, for example, use dollars, but I doubt the Americans would look too favourably on currency union with them either. So the Unionists are correct if they maintain their right to decide (accurately or otherwise) that currency union isn’t in their interests after separation. However, if my understanding is correct, the Irish Republic was in currency union with the rest of the isles until the ’70s, nobody made a bid deal of it and the sky didn’t fall in. Two or three elections ago, it was S.N.P. policy to join the Euro after “independence”. That, if anything, was even more ludicrous than their current huffing and puffing about “keeping the pound” and the volte-face itself ought to knock the scales off some people’s eyes (but I don’t for a moment suppose it will).

    It seems that Salmond pressed Darling about the viability of Scotland as a separate nation state and Darling fluffed it, refusing to give a straight answer. Well, there aren’t many things I agree with Cameron about, but if, as reported, he said that Scotland could make it alone, then I’m sure he’s right. So could Newcastle; so could East Anglia; so – I’m sure Alex Salmond would be delighted to hear – could Shetland. The whole shebang could degenerate into an array of city states if we were stupid enough, and if separatism takes hold in a big way, it might. That doesn’t mean it’s a good idea.

  • craig Post author


    All over the world the “easy” oil is being replaced by harder to get at reserves. Fortunately technology develops to take care of it. But the net result will feed into a long term trend of increasing oil prices.

    Your profound hostility to the very notion of Scottish independence, and your determination to argue over months that every single aspect would be an unmitigated disaster, is evidently motivated by some underlying rationale you don’t disclose. What is it? Is it the CP line about breaking the solidarity of the British working class movement?

  • Windy Miller

    Hi Craig,

    I hope you are well and not getting too wound up (think of the heart).

    The Issue that i am seeing and being told by large companies in Scotland is that quite a few new major projects that require financing are on hold, i have 2 (possibly for 12 months) until the currency is know. Having an independent Scotland is no problem but you can understand why large financial institutions will not lend due to risk. What will they currency be?, What will be the exchange rate?, where will the Scottish central bank be? What is the lending rates? Etc. Mr Salmond can’t say “vote for independence and it will all be ok, we’ll sort it all out later”

    All Mr Salmond has to do is clearly lay out what he will do if he doesn’t get the pound, and what he will do if he does. Uncertainty is the worst of both worlds and why will he not lay his cards on the table.

    As an Englishman that works a lot in Scotland i wish the Scottish people the best no matter what the outcome but I see a lot of false promises and unrealistic claims on both sides of the argument.

  • MJ

    “Your profound hostility to the very notion of Scottish independence”

    In principle I’m in favour of Scottish independence. I am increasingly exasperated however by the sham version of independence being peddled by the SNP.

    All I’m doing is focusing on some of the basic, nuts and bolts issues and highlighting areas that I think need a bit of attention. Your responses are invariably hostile and emotional. This is a characteristic of the Yes campaign as a whole and, if you don’t watch out, harsh reality will bite you before you can do anything about it. Forewarned is forearmed.

  • David

    I’m personally sick to death of hearing about it.

    There is a ton of rhetoric out there, most of it probably not true and attempting to get any meaningful statistics is almost impossible. The Scots claim they send money South and the English claim they send money North. Which is it ? and why is it so hard to determine ?

    Here’s the crux of the matter…. without Scotland rUK will do just fine, after all its only approx. 7% of our GDP and approx. 5 million of our population, all the talk of reduction in GDP is rubbish as it wont affect the average person. Without rUK Scotland will do just fine, it has a small enough population and enough revenue from oil and industry to support it without any major drama’s. It will need to find a replacement to oil revenues in the medium term and that could be a challenge, but as Craig rightly says it will be a global challenge.

    As for currency.. well as an English man I don’t want currency union, I simply cant see how that would benefit us in anyway shape or form – the talk of cost associated with trading with a nation in a different currency is also rubbish. It doesn’t stop us trading with France, Germany, USA or any other part of the world. The Euro would be a terrible idea for Scotland and would probably come with conditions from the EU. No harm in the scots using the pound, just don’t whinge when the rUK rates are set to benefit the rUK and not a country that just uses the currency. If Scotland becomes independent it should simply get its own currency – why Mr Salmond wont just say that is puzzling.

    If Scotland goes it will also solve the Mid Lothian question ( is that the right name for it?) Again as an Englishman it irritates me that Scottish MP’s get a vote on how laws in England are passed but we don’t have the same in Scotland.

    As to Europe, again why wont Europe just state its position clearly, as I see it Scotland is already in the EU and any attempt to drive it out should be met with resistance from rUK, although why you would want to surrender your independence to a corrupt unrepresentative body like the EU is beyond me, its time for the UK to leave that organisation and make its own trade deals globally which we ( just like Scotland) are more than capable of doing and any pretence to the contrary is nonsense.

    Nuclear Weapons – horrible things which the whole world should get rid of, but the reality is that this won’t happen, so Scotland doesn’t want them, that’s understandable, I don’t want them either, but its pretty obvious we are going to get them, so bring the bases South, I’m a lot more fearful of Sellafield than a nuclear submarine base.

    Despite all the media hype I generally don’t think that most English give a toss one way or the other, Scottish independence will make so little difference to the typical working persons life that it will be of almost no consequence. In fact from an English persons point of view a No vote will be a terrible outcome, Scotland gets devolution Max, and the arguments just carry on indefinitely with the constant cry’s of that’s not fair from both sides.

    Role on September, then hopefully Scotland will go its separate way and in 10 to 20 years from now we will wonder what all the fuss was about

  • Leslie

    This article on the currency union entirely misses the point at issue. All that you write may well be correct but what you do not write is the uncertainty contained in the SNP position. It is the uncertainty that is the problem. It is no small thing to change the management of your currency. To go before the electorate with ” we’re not quite sure what the new arrangement will be but we’re sure that it’ll be alright” is politically naïve and kack handed. And as for media manipulation, the SNP have got away with this in interviews for months. In the debate, the boos brought them up against a well deserved reckoning.

  • craig Post author


    I think that uncertainty was precisely what Salmond was attempting to remove by insisting that it will be pound sterling.

    You can’t in the same breath say “you must have certainty” and “you can’t only have once choice you must have a Plan B”.

  • fred

    “Your responses are invariably hostile and emotional. This is a characteristic of the Yes campaign as a whole and, if you don’t watch out, harsh reality will bite you before you can do anything about it. Forewarned is forearmed.”

    I think it’s characteristic of Nationalism as a whole. This tendency to make personal attacks and ascribe ulterior motives to people with a different viewpoint is typical of Nationalism everywhere. It’s no different to Zionists shouting “anti-semite” at every criticism of Israel.

  • Republicofscotland

    Totally agree Alistair Darling banged on about currency for 12 minutes because in truth, that’s all he had, in his arsenal, AD never at anytime during the debate laid out a plan for a more prosperous Scotland, in fact he couldn’t even mention any of the useless new powers we’d gain if we vote no.

    As for the debate itself over on wings, a claim has been made than quite a few yes voter were turned away from the debate due to “non processing of paper work” if in this claim holds water I wouldn’t be one bit surprised.

    Alex Salmond at least laid out a vision, after independence of what Scotland could look like, we all know what Scotland will look like, after a no vote, and its, not a pretty sight I’m afraid.

    As for the oil, well its a dwindling hindrance,in an independent Scotland, but a wonderful asset for the union when mentioned outside of Scotland, now there’s the possibility of a new large oilfield existing of Shetland, I’m sure the unionists will delve even deeper into their bag of dirty tricks.

  • Willie Hogg

    I thought that the audiance was very attentive and really seeking answers. In particular I think that some of the NO voters really wanted AS to give them the security of a plan B so that they could change their minds. See Windy Millar above.

  • Ed

    @Craig – “I think that uncertainty was precisely what Salmond was attempting to remove by insisting that it will be pound sterling.”

    The inherent problem is that an independent Scotland will have options in the future; the uncertainty won’t to resolved by a Salmond declaration.

    And I hate to harp on about this, but the lessons from the Eurozone crisis are that a shared currency without (at least some form of) fiscal union is a deeply problematic structure.

    I’m prepared to give Salmond some leeway till after the referendum, but if the vote is for independence… Scotland needs its own currency, it needs full monetary independence. Without it, sharing a currency with rUK without sharing a government, that is a worse arrangement than what exists now.

  • MJ

    “now there’s the possibility of a new large oilfield existing of Shetland”

    Independence for the Shetland Islands I say.

  • Ale Bro

    Both sides avoid talking about the monarch. If the Scots want true independence Scotland needs to either be a republic or to restore the Stuarts to the throne.

    Of course Salmond would never make this case as it would be fatal to his support.

    But if the vote goes his way, the argument will have to be held. Along with another referendum to address the point.

  • craig Post author


    Again you troll every unionist canard in the book. It is completely untrue that any substantial body of opinion in the Shetlands supports independence from Scotland. The last poll said 86% of Shetlanders support being in Scotland.

    You claim – only when challenged directly – to support independence yet you engage in continual juvenile unionist trolling like the last comment. If you support independence, where have you ever posted a comment setting out an argument for it?

  • David S

    Excluding oil, Scotland’s GDP per capita is 98% per capita“. Some typo there somewhere.

    If the plan is to negotiate a currency union, obviously there can’t be certainty and there must be a Plan B.

    It’s as if Alex Salmond etc. don’t like the idea of independence being taken seriously.

  • MJ

    “It’s as if Alex Salmond etc. don’t like the idea of independence being taken seriously”

    Yes. The subtext of the SNP message is that everything will stay exactly the same, except that Scotland will have more money because of the oil revenues.

  • Habbabkuk (La vita è bella) !

    Good, thoughtful comments from MJ, Windy Miller, Fred and David (if I may say so as a neutral observer).

    And everyone has stayed on topic as well.

  • David S

    @MJ – agreed completely. After independence, the Scottish government would have far more responsibilities than it does now. But they don’t want to talk about that. They are so juvenile, selling a ‘great idea’ and depicting everyone who asks questions as a party-pooper.

  • Ed

    David S – “If the plan is to negotiate a currency union, obviously there can’t be certainty”

    This misses what a currency union entails. There is actually very little to negotiate. Scotland can unilaterally decide to use pound sterling as legal tender, and you have a form of currency union. (will the Bank of England care about this? To the extent it impacts on the rUK economy, they will factor it into their rate-setting decisions. But that is literally all that matters to rUK for policy purposes.)

    Scotland and rUK could negotiate a whole long list of separate issues (a la Maastricht), but in reality, these are extremely minor points in defining the currency union. As long as Scotland chooses to use pound sterling, a union exists.

    The uncertainty actually arises from the question of whether a currency union is a good idea for Scotland. As an independent country, they could choose to adopt their own currency. And the pure economic argument is pretty watertight that they should.

  • fred

    “If the plan is to negotiate a currency union, obviously there can’t be certainty and there must be a Plan B.”

    If Salmond says there will be currency union and he seems determined that there will be, then we must take him at his word and assume there will be currency union.

    What the people of Scotland need and have a right to know is not what plan B is, it is what will he be prepared to sacrifice to achieve that union. I believe if the voters knew that then a lot more people would be voting against.

  • MJ

    “If Salmond says there will be currency union […]then we must take him at his word and assume there will be currency union”

    It scarcely matters what Salmond says, it’s not his decision. You can’t unilaterally declare a union. The other party has already said no thanks.

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