SINCE Independent MSP Margo MacDonald first coined the phrase in her previous life as an SNP icon, it has lost little of its clout.

Launched in 1972, the rallying cry “It’s Scotland’s Oil” quickly embedded itself in the national consciousness, summing up the sense of injustice that Scotland was missing out on the income from her own natural assets.

As the scale of the riches lying under the North Sea became clearer, the slogan and the idea behind it helped the SNP record their best-ever result in a General Election, when the party won 11 MPs and 30% of the Scottish vote in 1974.

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Now, as Treasury cuts, rising inflation and the threat of a double-dip recession suggest a miserable decade ahead, the old refrain is being revived for the SNP’s independence referendum.

“London has had its turn out of Scottish oil and gas,” First Minister Alex Salmond told his party conference last week. “Let the next 40 years be for the people of Scotland.”

So could that pitch be as successful as before? More to the point, what does it actually mean?

If Scotland were independent, how much wealth would come Edinburgh’s way from oil and gas, and what would be done with it? Would it be spent, saved, used to pay off debts, or a bit of all three?

The choice is familiar to every household; the numbers are somewhat different. Scottish oil production may have peaked in 1999, but the North Sea still yields billions in tax.

In the 1970s, the UK Government invented a new economic region, the UK Continental Shelf (UKCS), and assigned all oil tax revenues to it, rather than assign them to Scotland.

Since then, around £300bn at today’s prices has gone to HM Treasury in tax from the UKCS – around 90% of which is from fields in the seas off Scotland.

The UK Office of Budget Responsibility estimates another £230bn over the next 30 years. However, the expansion of the Clair field, west of Shetland, where BP recently announced a £4.5bn investment, means there may be even more to come.

So what would change if Salmond had his way? The most obvious SNP policy would be an oil fund. Almost alone among countries with a big, finite natural resource, the UK simply spends all the tax raised from its oil and gas rather than investing some for future generations.

In other countries, oil funds are used to smooth out economic turbulence, invest in long-term infrastructure and provide a financial legacy for when the oil runs out. But not in the UK, where the money has been used to top up revenue spending and service debt.

Nobel Prize-winning economist Professor Joseph Stiglitz, who has called for a Scottish oil fund, recently said the Thatcher-era boom was largely based on our short-term spending of oil wealth, “leaving future generations impoverished”.

Yet if just 10% of the tax take from the North Sea since 1980 had been invested, there would now be £25bn to £50bn in the kitty. By comparison, Scotland’s budget this year is around £35bn.

In July 2009, Finance Secretary John Swinney published a 60-page consultation, An Oil Fund for Scotland, as part of the Government’s National Conversation on independence, which asked a series of questions about what a Scottish oil fund would look like.

How much would be paid in and for how long? What would it invest in? How much would be withdrawn and when? What would it be spent on? Would it have an ethical investment policy like Norway?

The basic rule is the more money invested at the start, and the longer it’s left alone to generate returns, the fatter the fund and the bigger the sum which can be withdrawn annually thereafter.

Asked this weekend about what progress has been made on fund specifics, the Government would only say “work continues” on the matter.

That’s not good, because those questions are key.

Perhaps the Government has gone quiet because the dire economic picture has torpedoed its plan.

“There’s no potential for any oil fund at the moment because if we were independent, Scotland, like the UK, would be so far in debt that we would not have anything to save,” said John McLaren, an economist with the Centre for Public Policy for Regions at Glasgow University.

“Even with oil income, Scotland would be significantly in deficit. So an oil fund is irrelevant at the moment.”

However, that doesn’t mean all is lost.At some point, the public finances will return to balance, and a fund could be possible.

So what would it actually look like?

When he set out the case for an oil fund, Swinney highlighted the experience of Norway, Alaska and the Canadian province of Alberta.

Norway, as a near neighbour of comparable size, has long been an inspiration for a Scots fund. Salmond visited the country in August last year to drive the point home.

Known as the “Government Pension Fund – Global”, though it is used for far more than pensions, Norway’s oil fund is fabulously wealthy. Since the first deposit in 1995-1996, it has grown to more than £350bn. To avoid warping the economy and Norway’s currency, the krone, all the money is invested overseas – around 60% in shares, making it Europe’s largest share owner.

While much smaller, the Alaska Permanent Fund (currently £24bn) and the Alberta Heritage Savings Trust Fund

(£9bn), offer interesting alternative ways of operating such funds.

The first thing to note is that, for a variety of reasons, Scotland is no second Norway.

For one thing, Norway’s fund has two sources of income – taxation from private industry but also revenue from state-owned oil and gas assets which have no Scottish parallel.

Norway also managed to accumulate its wealth by diverting huge sums into its fund – but only when its overall national budget was in surplus. To have saved while the country was in deficit would have forced it to take money out of basic services such as health, education and roads.

But Scotland doesn’t have much cash to spare. Even between 2005-06 and 2008-09, assuming it had received its geographical share of oil taxes, the Scottish current budget would have been at its peak £787m in surplus, and £3m at its lowest.

But in 2009-10, when North Sea revenues slumped, Scotland would have had a deficit of £9bn.

And the economic outlook is bleak. With a frail economy predicted for years to come, politicians would have little appetite for raising taxes or imposing cuts to put money aside for a rainy day, even with debt under control.

As Swinney admitted in his 2009 paper, building a fund “is likely to be especially challenging during periods when there are immediate short-term pressures on the public finances”.

Alaska took a hair-shirt approach by always putting a fixed percentage of its oil income into its fund, but Alberta found things tougher.

After initially investing 30% of oil income, it dropped it to 15%, and now money only goes in on an ad hoc basis. For many years it saved nothing.

McLaren added: “There will be a big call from people saying, ‘We’ve got that money, let’s spend it now.’

“It’s difficult for politicians to give up spending money on populist things in the short-term versus saving it up for future generations. It takes a lot of self-discipline.

“At the moment, we have a lot of free universal services. That doesn’t suggest self-discipline is going to appear overnight.”

But assuming Scotland did get an oil fund off the ground, what would it invest in? Again, Scotland would be different from Norway. The latter is “relatively unique”, said Swinney, in investing exclusively overseas.

It also operates an ethical investment policy, boycotting arms and tobacco companies, and illegal loggers.

The SNP Government has suggested investing at home in green technologies, such as renewable energy and carbon capture and storage, neatly using money from dirty old oil to deliver a sustainable, environmentally friendly future. But there are no more details as yet.

How about withdrawals? Most funds limit these tightly to “inflation-proof” themselves, always leaving enough to generate a constant, minimum return from investments.

It means that although a fund could be used, as SNP ministers say, to “support macroeconomic stabilisation and address unexpected short-term spending pressures”, it’s not a panacea.

It couldn’t be emptied like a piggy bank in tough times: take too much out and it stops working.

Finally, what to spend any withdrawals on?

Norway puts money earned by its fund into general spending, while Alberta spends on ring-fenced areas such as healthcare, education, and infrastructure, plus endowment funds which help support scholarships and medical research.

Alaska is different again – it writes cheques. It gives money direct to its citizens in the form of an annual dividend payment, which over the last decade has averaged around $1700 per adult.

It all shows that, should Scotland get control over North Sea oil revenue, either through independence or fiscal autonomy, there would be many competing calls on the money.

There would also be hard decisions on how or if to save and spend. So far, the detail from ministers has fallen conspicuously short of the rhetoric.

A Government spokeswoman said: “We remain totally committed to an oil fund so that Scotland – not Westminster – gets the benefit of the next 40 years.

“The circumstances for a Scottish oil fund could not be better, with record revenues this year and over half of the value still to come, and we will publish further detail as we move towards the [independence] referendum.”