[Pounds Sterling]4bn Blow for SNP as Experts Slash Oil Cash Forecasts

Daily Mail (London), December 6, 2013 | Go to article overview

[Pounds Sterling]4bn Blow for SNP as Experts Slash Oil Cash Forecasts


Byline: Alan Roden Scottish Political Editor

ALEX Salmond's dream of a 'second oil boom' to fuel an independent Scotland has been shattered by a new forecast for the Treasury.

Economists have downgraded the projected tax-take from the North Sea by a huge [pounds sterling]4billion over the next three years.

The findings of the Office for Budget Responsibility (OBR), which produced forecasts for the Chancellor ahead of yesterday's Autumn Statement, means there could be a devastating 'black hole' of more than [pounds sterling]7billion in the country's finances in 2016-17 - the first year of independence if Mr Salmond wins next year's referendum.

Over six years, the gap could reach [pounds sterling]29billion - equivalent to the Scottish Government's annual budget for all devolved areas such as health, education and transport.

Opponents last night said this could lead to massive tax hikes or crippling spending cuts if Scots vote for independence.

Lower oil prices are driving the downward projections, exposing the dangers of building an economy on such a volatile - and diminishing - resource. Oil revenues would account for up to 20 per cent of an independent Scotland's GDP, according to former Chancellor Alistair Darling.

A leaked document written for Finance Secretary John Swinney even admitted that Scotland faces a larger deficit than the UK from 2016-17, with a 'high degree of uncertainty around future North Sea revenues'.

But the OBR figures were last night dismissed by the Scottish Government.

Mr Salmond has claimed that Scotland is on the cusp of a 'second oil boom' and insists that revenues could be much higher than predicted by experts.

According to separate analysis by his own civil servants, revenues between 2012 and 2017 could be as high as [pounds sterling]57billion - compared with a new OBR forecast of only [pounds sterling]28billion.

Last night, Scottish Secretary Alistair Carmichael said: 'This autumn statement gives the Scottish Government an extra [pounds sterling]300million in spending, taking the total to an extra [pounds sterling]2.2billion since we came to office. The independent OBR has revised oil production figures down to half of the Scottish Government's lowest estimate in 2016-17. While they hope for a miracle, we are planning sensibly and growing Scotland's budget as part of the UK.' Scottish Conservative finance spokesman Gavin Brown said: 'The OBR has predicted a significant reduction in oil and gas revenues of almost [pounds sterling]4billion for the next three years. …

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