The impartiality of the Treasury's top civil servant was “compromised” by a decision to make public his advice on sharing the pound with an independent Scotland, MPs have concluded.
The Treasury's permanent secretary Sir Nicholas Macpherson wrote to George Osborne in the run-up to last year’s independence referendum, advising the chancellor that a proposed currency union with Scotland would be “fraught with difficulty”.
The advice was subsequently made public on the day the three main Westminster parties ruled out such an arrangement, prompting the Scottish government to accuse its British counterpart of using the civil service for political ends.
MPs on the Public Administration Select Committee (PASC) today argue that Sir Nicholas's advice should never have been published, in a report that is also sharply critical of the Scottish government's conduct.
“The circumstances of the Scottish referendum, where the very existence of the British state was at stake, were exceptional,” the committee says.
“However, the case presented in Sir Nicholas Macpherson’s advice on a currency union with an independent Scotland could have been presented in other ways and just as powerfully. The only purpose was to use the impartial status of a permanent secretary to give authority to the advocacy of a political argument.”
During their inquiry, Sir Nicholas told the cross-party group of MPs that the advice had been published because the Treasury wanted to "provide reassurance to the markets”.
But that claim is rejected by the committee, who instead argue that the correspondence was made public because it “suited ministers’ political objectives”.
“The advice should not have been published,” they add. “Its publication compromised the perceived impartiality of one of the UK’s most senior civil servants.”
PASC urges ministers to “make it clear that this will never recur”, warning that the decision to publish Sir Nicholas’s advice may have “unintended consequences” for future referendum campaigns.
Reponding to the committee's findings, the Treasury stood by its decision to go public with the letter.
"As we have made clear before, the question of whether or not the UK would agree to a currency union was an exceptional case where it was important that the arguments were exposed in full before a referendum rather than after it," a spokesperson said.
Former Scottish first minister Alex Salmond seized on the report's findings to call for Sir Nicholas's resignation.
"Sir Nicholas’s position is untenable," Mr Salmond wrote in the Press and Journal this morning. "He is totally distrusted by the Scottish Government. He has been openly criticised by a cross-party commons committee. He is unrepentant about his behaviour."
'Partisan purposes'
As well as raising questions about the Treasury's conduct during the referendum campaign, the committee's report criticises the independence ‘White paper’ published by the Scottish government in 2013.
The 670-page document aimed to set out how an independent Scotland would be governed, but the committee says that sections of the paper strayed into party political territory.
“The contents of the Scottish Government White Paper, Scotland’s Future, included a description of the SNP’s proposed programme for government that was contingent upon their winning the 2016 Scottish parliament elections,” the committee says.
“This did not uphold the factual standards expected of a UK government White Paper and therefore raised questions about the use of public money for partisan purposes.”
They add: “Civil servants should always advise against the appearance of partisan bias in Government documents—and they should not be required to carry out ministers’ wishes, if they are being asked to use public funds to promote the agenda of a political party, as was evident in this case.”
The MPs call for a revision of the Civil Service Code to include explicit reference to the role officials are expected to play during future referendum campaigns.