By Martin Kelly
A leaked UK Treasury paper obtained by the SNP threatens to undermine a forthcoming Westminster attack on Scottish independence in which it will be claimed that mortgages will cost more after a Yes vote.
The paper entitled “Impacts on Mortgage Market” is marked “protect” and described as assisting with the “Scotland analysis programme”.
However it has emerged that the document was prepared prior to the downgrading of the UK’s credit rating by Moody’s and again by another agency Fitch. The leaked document reveals that the UK Treasury planned to base a series of scares on independence around claims that an independent Scotland would lose its triple-A status.
According to the leaked document, “wholesale funding costs for firms are linked to the credit rating of the sovereign. The expectation is that an independent Scotland would not have a AAA credit rating it currently enjoys”.
This, concludes the paper, points to the costs of mortgages rising in an independent Scotland.
However the unexpected loss of the UK’s own triple-A credit rating meant that the planned attack by the UK government was delayed. In late 2012, the UK government pledged to publish 1 paper a month in 2013 – however only two papers have so far been published despite being 5 months into 2013.
Despite the loss of the triple-A blowing a hole in the original claims, reports this week suggest the UK Treasury are still determined to press ahead with their mortgage-cost scare. Last week the Herald newspaper described the forthcoming paper on mortgage costs as “scary” and “potentially terrifying”.
The latest attack is also expected to fall back on traditional lines of attack based on the banking bailout, by suggesting an independent Scotland could be vulnerable to another crash.
The revelation comes as the No campaign continue to use the triple-A claim in their leaflets which claim that Scots save billions because of the UK’s triple-A status. The pro-Union campaign has also claimed that Scotland’s population would make it less likely to obtain triple-A despite two thirds of countries with a AAA rating having a population of less than 10m.
The SNP has urged the Treasury to abandon its attempts to “scare voters” and repeated calls for the No campaign to shred their Triple A leaflets.
The SNP’s Treasury spokesman Stewart Hosie MP said:
“This leaked working paper exposes the utter weakness of the Treasury’s case. It shows they were planning to hang their central argument on mortgages on the triple A rating.
“This was always arrant nonsense with two-thirds of countries with an AAA rating have a population of less than 10 million – but the fact that, since then, the UK has lost its own triple A status shows just how hollow this argument was.
“It is little wonder that this paper has been so heavily delayed. Their central argument has collapsed so they have now had to go back to square one.
“This week, it has been revealed that the Treasury remains determined to use their paper to make ‘scary’ claims. This is a clear case of not letting the facts get in the way of a scare story.
“The No campaign even go so far as to still use leaflets claiming that the threat to triple A status comes from Independence – months after that status was lost by the UK.
“It is just like the arguments over currency which are exposed by the simple fact that even the Isle of Man, which the First Minister will be visiting in July, uses the pound and has a AAA rating.
“The anti-Independence triple A argument has been shredded by events. It’s now time for them to shred their triple A leaflets as well.”