PLANS BY the Conservatives to have chancellor of the exchequer George Osborne lead the campaign against Scottish independence are just “plain bonkers”, former Liberal leader and Scot Lord Steel has warned.

Despite major doubts that the Scottish government can legally call a referendum on its own, Lord Steel said British prime minister David Cameron had played into Scottish National Party leader and first minister, Alex Salmond’s hands.

“The problem with the Scottish issue is that most of the politicians here [in Westminster] don’t understand Alex Salmond. The idea that George Osborne should take on a ‘no’ referendum campaign is just plain bonkers. If I were [he] I would be rubbing my hands in glee,” he went on.

Mr Osborne, who is the most influential strategist among all of the leading Conservatives, heads the British cabinet’s Scotland committee, though the government’s public face during a recent Commons debate remains Scottish secretary Michael Moore.

Describing Mr Salmond as inconsistent and a bully, the former Liberal leader said his sharp wit – particularly where he describes Conservatives in Scotland as being as rare as pandas – is enjoyed by voters: “It gets to people. No amount of clever financial argument can overlay that.”

Senior Conservatives in London must leave campaigning to Scots, he urged. “It’s no good having so-called big guns flying in from down south, because Salmond will just dismiss it as London bullying, even though he does the bullying himself. It will just backfire.”

Surprisingly, perhaps, Lord Steel recommended that the Liberal Democrats, which has traditionally been strong in parts of Scotland, should leave the campaign against independence to “people not in politics and the Labour Party, the main opposition”.

Though he believed that Scots would reject independence at the end of the day, he warned that a two-year debate about “process” plays “entirely into Salmond’s hands”, adding: “You underestimate him at your peril.”

Meanwhile, the Scottish advocate general, Lord Wallace of Tankerness – the British government’s senior-most legal adviser on Scottish issues – expanded last night on his warning that Mr Salmond does not have legal powers to call a referendum.

“Our view is that the Scottish parliament does not have power to legislate for a referendum on independence. The Scotland Act 1998 is clear: the Scottish parliament cannot legislate on matters reserved to the UK parliament,” he said, speaking in Glasgow.

Despite its declarations otherwise, the Scottish government does not have powers, he said, to hold a consultative, non-legal binding referendum: “A referendum must do something, and mean something, otherwise it is hardly a proper use of public money. It would not have a purpose in its own right and it is not merely an opinion poll – a referendum is, or at least purports to be, a form of political decision making, where a decision is best made directly by the public rather than by their representatives in parliament,” he said.

He went on: “If, as the law currently stands, the Scottish Government were to proceed with this legislation, it would be open to challenge in the courts.”