SCOTLAND'S credit unions, which help hundreds of thousands of people with cheap loans, could be threatened by independence, Treasury Chief Secretary Danny Alexander will say in a letter today.

Mr Alexander will also make clear, in the Coalition's formal response to the Lords Economic Affairs Com-mittee's inquiry into the implications of Scottish independence for the rest of the UK, that the Lib-Con Coalition will not pre-negotiate with the SNP.

He will say: "The Scottish Government does not have a mandate to negotiate the terms of Scottish independence unless and until they obtain one in the referendum."

The UK Government has already, in the third of its analysis papers on independence, set out how it believes Scottish firms and individuals benefit, as part of the UK, from a world-leading financial services sector with clear and effective arrangements for protecting consumers.

In his letter to committee chairman Lord McGregor, Mr Alexander will highlight the "issue around credit unions", pointing out there are more than 100 in Scotland, which help more than 250,000 people save and acquire loans at favourable rates.

The Chief Secretary is to explain how credit unions in Scotland currently have access to UK-wide initiatives, which promote the sharing of knowledge and pooling of resources; meaning they can be "competitive, while remaining small, independent entities".

By contrast, Mr Alexander will point out there is little transfer of expertise and resource pooling between credit unions in the UK and Ireland, largely because of differences in currency, legal and regulatory frameworks.

In his letter to the Tory peer, the minister will say: "The imposition of a border would impact firms of all sizes, including smaller organisations like credit unions, who currently benefit from a range of UK-wide initiatives that help them grow and remain competitive; this benefit would more than likely diminish."

In April, the committee urged London and Edinburgh to publish their "red lines" for independence talks before next year's referendum on issues such as defence, currency and the national debt.

In his letter, Mr Alexander will make clear the Coalition is not planning for a split.

This, he will insist, is "not complacency but rather based on a strong belief that the UK works and works well. Scotland contributes to and benefits from being part of the UK".