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Currency union civil servant defends advice

THE Treasury's top civil servant has denied claims that George Osborne ordered him to rule out a currency union with an independent Scotland.

SIR NICHOLAS MACPHERSON: Said it was an exceptional case.
SIR NICHOLAS MACPHERSON: Said it was an exceptional case.

Sir Nicholas Macpherson also insisted he was not trying to sway voters with his advice against sharing the pound.

The Coalition Government took the unusual step of publishing the senior official's two-page argument against a sterling zone in February.

The letter warned he would advise strongly against such an arrangement as it would be fraught with difficulty.

However, it triggered accusations that Sir Nicholas was acting on the instructions of his boss when it was produced alongside the Chancellor's announcement formally ruling out a currency deal.

Scottish ministers have also claimed that the UK Government is bluffing over the currency threat.

That position was given a boost last week when an unnamed UK minister said that "of course" there would be a deal on the issue after independence.

Appearing before MPs on the Public Administration Select Committee, Sir Nicholas insisted he had not been prompted by Mr Osborne to write the letter.

He said: "I would attach a high bar [to publishing a letter] and it was my decision to publish my advice."

He added, however, that he had discussed the issue with the Chancellor, saying: "This was about how we could establish, without doubt, the credibility of the Treasury's position.

"Throughout the debate on economic issues, the Scottish Government has sought to cast doubt on the British Government's position, its claim that we're blustering, bluffing, in effect casting aspersions on the UK Government's integrity.

"So my view in this case, and it's a very exceptional case, was that if publishing advice could strengthen the UK Government's position, then I should do it."

He insisted his comments were not directed at Scottish voters as part of the upcoming ­independence referendum.

He said that he had made his advice public because the UK Government wanted to make its position on the crucial issue "absolutely unambiguous, absolutely clear".

He added: "This was about convincing the British people, the wider world, the markets of the sincerity of the Government's position."

However, Sir Nicholas faced accusations from Labour MP Paul Flynn that his warning, from an "English toff", had backfired and antagonised voters.

Other MPs questioned whether Sir Nicholas felt his intervention had met the strict rules on civil service neutrality.

Last night SNP MSP Kenneth Gibson, convener of the Scottish Parliament's Finance Committee, said: "Regardless of the Treasury's actions we know the real position of the UK Government as an unnamed Government Minister admitted last week is that: 'there will be a currency union …everything would change in the negotiations if there were a Yes vote'.

"It's time for the No campaign to stop the foolish bluffing, put its money where its mouth is and back sharing the pound."

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