Prescott arrives to launch his "Yes Yes" campaign

Prescott Attacks Bank Governor Over Devolution

The attack on Sir Bruce came on Mr Prescott's first day of campaigning for a "Yes, Yes" vote in Scotland.

Reacting to the governor's comments, Mr Prescott said: "He's launched his "Yes, No" campaign. But he's just one voice in this. The people of Scotland have got to make the decisions."

Sir Bruce said it was not his place to comment on the desirability of a Scottish parliament. But he said the second question in the forthcoming referendum, on a so-called Tartan Tax, was "misleading" because it is not specific enough and it leaves the way open for a parliament to raise any taxes - not just income tax.

Sir Bruce: 'Tartan Tax' would be bad for Scotland

Telling the BBC's Kenny Macintyre what he believes Yes, Yes would mean Dur:1'26"

He said the decision to speak out was taken at a monthly board meeting on Tuesday and was not arranged to impact on Mr Prescott's visit.

The Bank has produced its own figures which showed that if a Scottish income tax was imposed, it would cost the average taxpayer an extra £6 a week.

In an interview with the Scotsman newspaper, Sir Bruce said that a "Yes, No" outcome would be better for jobs and the health of the Scottish economy. He said: "In the UK, you are going to live in a region which has a different tax regime and it is going to stick out like a sore thumb. I do not want to dramatise the situation - it will be slow and corrosive."

The Bank of Scotland: concerns for the economy if taxes rise

Sir Bruce warned: "If you introduce a higher rate of personal tax, and it is going to involve 1.67 million people who are going to find their tax bill goes up on average by £6 a week, that will get reflected in due course from employees to employers and it just does make us a little less competitive.

"If you increase income tax and the business rate beyond the levels in England, then gradually there will be some damage done to the Scottish companies," he told the Today programme. "There is a price to be paid for it which creates uncertainty, and to the businessman uncertainty is an anathema."

Darling: tax varying power may never be used

"Business supports devolution," he tells the Today programme Dur 4'20"

But the Chief Secretary to the Treasury Alistair Darling told the BBC that the Bank of Scotland had not questioned the principle of devolution. "We have made sure there is (a level playing field) because the Corporation Tax regime will be the same the length and breadth of the kingdom," he said.

A Scottish Parliament's tax-raising powers would be "a marginal power", he said. "The Scottish parliament will spend something like £14 billion a year, and this marginal power would give them the right to raise an additional £450 million only. What the Scottish people are being asked to do is give the assembly the power to do that. It may never actually do that."

And the chairman of the campaign group Scotland FORward, Nigel Smith, said Sir Bruce's concerns about the second question were "unfounded", urged him to think again and to "place some trust in the Scottish voters". Mr Smith said: "Tax-varying powers are integral to making this a responsible and accoun table parliament. Far from being a licence to behave irresponsibly, the tax-varying powers provide an encouragement to the parliament to exercise fiscal responsibility. The power, if ever used, will be very transparent, unlike many other forms of taxation.

"What is being proposed on the second question is a power, not policy. As a businessman, I know businesses have nothing to fear from the Scottish Parliament having fiscal responsibilities. The parliament would obviously not do anything which would harm Scottish businesses and jobs," he added.

Salmond: bankers should stick to banking

The SNP leader Alex Salmond said Sir Bruce "seems to be starting a 'Yes-No' campaign on behalf of the Bank of Scotland. "Call me old fashioned, but I think bankers should stick to banking and not get involved in politics," he told the BBC Radio.

SNP leader Alex Salmond tells the Today programme: "Call me old fashioned" Dur 5'18"

SNP Launches Campaign

He added: "We believe that devolution is not an end but a beginning - a step towards real independence. We hope to persuade the people of Scotland to share that view and to act on it. But to commence on any journey, we must take our future into our own hands, and we can do that only by voting positively and decisively on September 11."