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Yes might not mean Yes: 'smooth' iScotland talks still needed, says Coalition source

A REFERENDUM Yes vote would not guarantee Scottish independence and the 'status quo' will be maintained if talks do not go smoothly, a senior ­Coalition source has warned.

The planned Independence Day of March 24, 2016, will not happen, leaving the current set-up as the "default option", unless negotiations between Edinburgh and London are completed satisfactorily, according to one of Prime Minister David Cameron's most senior colleagues.

The controversial view - dismissed by Alex Salmond as breathtaking, irresponsible and contemptuous of the democratic process in Scotland - came as the three main Westminster parties formed a united front to rule out the First Minister's centrepiece proposal for a currency union between an independent Scotland and the rest of the UK.

Steven Camley's cartoon

Setting out the case against a ­sterling-zone, George Osborne said yesterday that Treasury analysis showed "it wouldn't work"; it would cost jobs and money; and it would fail to provide economic security either side of the Border. "If Scotland walks away from the UK, it walks away from the UK pound," declared the Chancellor in a speech in Edinburgh.

But Mr Salmond sought to brush aside the Con-Lab-Lib alliance, denouncing it as a "concerted bid by a Tory-led Westminster establishment to bully and intimidate".

Yet the referendum debate is today intensified by one of Mr Cameron's senior colleagues, who indicated a Yes vote in September's poll would not be the end of the matter.

Dismissing the SNP Government's 18-month timescale for completing negotiations as "totally unrealistic", the source said: "A Yes vote in the referendum would be the start of a process, not the end of one; we would start negotiations. But if Alex Salmond made impossible demands, we would not just roll over and agree to everything he wanted. If we could not reach agreement, the status quo would be the default option."

The senior Coalition figure said one such impossible demand would be the First Minister's threat, repeated yesterday, that Scotland would not pay its share of UK debt if it were denied a currency union by Whitehall.

"It would not be a question of defying the wishes of the Scottish people. As the UK Government, we would have a duty to represent the interests of the people of England, Wales and Northern Ireland," the source said.

But Mr Salmond hit back, saying: "This is an astonishing and irresponsible intervention by a senior Coalition source. The Westminster establishment are now so worried about losing the referendum that they are threatening to refuse to respect the democratic will of the people of Scotland and rip up the Edinburgh Agreement, signed in all good faith with the Prime Minister."

He stressed that the Scottish Government's White Paper proposed "entirely reasonable arrangements that are right for Scotland and fair to the rest of the UK: sharing joint assets such as the Bank of England and the pound and paying our fair share of the UK's debt".

He said: "That is what people will vote for or against in September. It is the No camp who are standing in the way of these sensible proposals and are now apparently saying they could refuse to recognise a Yes result, which is breathtaking. It shows a worrying contempt for the process of democracy that is under way in Scotland.

"If people at Westminster were trying to drive people towards voting Yes, they could not be doing a better job than the sabre-rattling nonsense that has emerged from the anti-independence camp over the past 48 hours."

Chief Treasury Secretary Danny Alexander said today the UK Government will "totally respect" the result of the ballot on September 18, .

He told BBC Scotland's Good Morning Scotland programme: "What I would say is that the policy of the UK Government is and has been clear.

"We totally respect the right of people in Scotland who will vote in the referendum in September to make their decision. The result of the referendum will be respected, full stop, end of story."

Earlier, both Mr Alexander and Labour's Ed Balls dismissed the SNP charge of bluff and bluster on the currency union.

The Shadow Chancellor said: "Alex Salmond is saying to people that you can have independence and keep the pound and the Bank of England; that is not going to happen."

He said a currency union would place an "unacceptable burden on the UK taxpayer" and would repeat the eurozone's mistakes. "In fact worse, you'd be trying to negotiate a monetary union as Scotland is pulling away from the UK."

Mr Balls added: "It won't happen. I wouldn't recommend it. Scotland will not keep the pound if Scotland chooses independence."

Meantime, the Chief Secretary to the Treasury said: "The SNP continue to pretend an independent Scotland could continue to share the pound; it couldn't without agreement. And because a currency union wouldn't work for anyone, it simply isn't going to happen."

He added: "This isn't bluff or ­bullying; it's a statement of fact."

Mr Osborne moved from months of saying a currency union was "highly unlikely" to one of rejection based on recent analysis from the Treasury.

Sir Nicholas Macpherson, its chief official, said in a memo to the ­Chancellor that currency unions were fraught with difficulty and required a desire to see "closer union between the peoples involved"; he noted Scottish independence would create a "weakening union".

The Permanent Secretary said he was against a currency union as ­Scotland's banking sector was too big in relation to national income; the UK could end up bailing out Scotland; and fiscal policy showed signs of diverging.

He added: "There is no evidence adequate proposals or policy changes to enable the formation of a currency union could be devised, agreed and implemented by both governments in the foreseeable future."

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