Economic case for independence lies ‘in tatters’ as the projected North Sea oil income plummets by one-third

The revised forecast comes amid dire warnings from the SNP’s own advisers about the future of the North Sea industry.

Andrew Wilson, chairman of the SNP’s growth commission, recently said the economic case for independence should now be built upon “projections that oil is producing zero revenues”.

Meanwhile, Professor Alex Kemp, a member of Nicola Sturgeon’s Scottish Energy Advisory Board, predicted the amount of recoverable oil in the North Sea could be less than half the SNP’s projections ahead of the independence referendum.

In his Budget speech, Chancellor Philip Hammond announced “a discussion paper” on possible tax incentives to make it easier for operators to sell oil and gas fields, helping to keep them productive for longer.

The SNP cautiously welcomed the move, but accused the Chancellor of “an alarming lack of urgency” on measures the oil and gas industry has been seeking for over a year.

The Chancellor said: “I have heard the calls by North Sea oil and gas producers and the Scottish Government to provide further support for the transfer of late-life assets.

“As UK oil and gas production declines, it is essential that we maximise the exploitation of remaining reserves, and so we will publish a formal discussion paper on the options in due course.”

Scotland’s opposition parties homed in on the accompanying Office for Budget Responsibility revision to oil revenues to hammer the Nationalists’ ongoing drive for independence.

Scottish Conservative finance spokesman Murdo Fraser said: “The head of Nicola Sturgeon’s Growth Commission, Andrew Wilson, has admitted this week that oil receipts were part of their spending plans, and not a bonus.

“Nicola Sturgeon and John Swinney have gone into hiding over this scandal.

“They must now admit they were wrong, and spell out how they would fill Scotland’s £15bn deficit in the event we voted for independence.”

Scottish Labour’s economy spokeswoman, Jackie Baillie, said: “The SNP’s economic case for independence now lies in tatters.

“But now the facts are clear. With a £15bn deficit, the cost of independence to our valued public services would be even more brutal.”

Labour’s shadow Scottish Secretary Dave Anderson said the Budget statement was “a missed opportunity from the Tory Government”.

“Time and time again, the Tory Government has hidden from the problems facing the oil and gas industry and kicked it into the long grass to be dealt with at a later date,” he said.

“It is time the Government took action to help attract much-needed investment to the offshore oil and gas industry.”

Former first minister Alex Salmond, who fronted the independence campaign in 2014, dismissed suggestions “the Scottish Government were uniquely wrong in trying to predict oil prices”.

“The UK Government were working on oil prices that were higher that ours,” he said on his LBC Radio phone-in.

He added: “In the run up to the campaign in February 2014… the Prime Minister said there would be a ‘£200bn oil boom bonus if Scots vote no’.

“Scots voted no and we’re still waiting for the £200bn bonus.

“In the Autumn Statement there was a huge hoo-ha in the papers when they said, for the first time ever, that oil was going to be a negative on the national accounts.

“That was three months ago, and in today’s statement that negative has turned into a positive. Minus £5 million has turned into £100m for this financial year. That’s the difficulty in forecasting oil prices.”

SNP Treasury spokesman Stewart Hosie said: “I had very much hoped to welcome a concrete package of measures for the oil and gas sector, and particularly for end-of-life fields. Instead, we have been offered an options paper... [making] exactly the same promise as the one made in 2016, so perhaps at some point the Chancellor will actually deliver the paper and set out some concrete measures.”

Callum McCaig, the SNP’s energy spokesman, said the Chancellor had moved at a “glacial pace”.

“The fact the Chancellor is just getting around to this now shows an alarming lack of urgency and a gives the industry a clear sense of where this Tory government’s priorities lie,” he said.

“Where was the Chancellor when thousands of oil and gas workers were facing redundancy, and why didn’t they listen to repeated and sustained calls from the SNP throughout this time for a more stable, competitive fiscal regime?

“Reform of decommissioning tax relief could mean that assets are in the hands of the companies best placed to boost production, but this is just one side of the coin - we still see no action from the UK government on boosting exploration, which is key to long term investment, revenue and crucially jobs in the North Sea.”

Scottish Finance Secretary Derek Mackay said the announcement of a “discussion paper” was not the “urgent action that the industry needs”.

Deirdre Michie, chief executive of Oil & Gas UK, welcomed the Chancellor’s pledge to “resolve the tax issues slowing down asset transfers”.

“The UK Continental Shelf continues to offer an attractive range of opportunities and it is vital that we draw in a diversity of investors to ensure these are realised,” she said.

“Enabling assets to transfer when appropriate to new owners is key to this strategy.

“As the Chancellor has indicated, the tax regime has presented some significant barriers to asset trading, which we have been working on with the Treasury for a number of years. These must be addressed as a matter of urgency.

“The current tax treatment of decommissioning makes it harder for existing owners to sell mature assets and leads to lengthy, complicated deals which slow down activity in the basin.

“Recent deals highlight the opportunities in the basin but more transactions could be achieved if this issue is resolved.

“We look forward to the formal discussion paper due on March 20 on the case for allowing transfer of tax history between buyer and seller. We are also ready to play our part on the new expert panel that will consider the issues.

“We are confident that this will identify the shortcomings of the tax regime and enable a swift solution that will unblock asset deals and support maximising economic recovery.”

Doug Parr, Greenpeace UK policy director, attacked the Chancellor’s “outrageous” support for the oil industry, insisting it will “encourage them to pollute for longer.

“Instead of support for modern clean, renewable energy, the Chancellor is seeking to prop up the oil and gas industry of the past,” he said. “Workers in Scotland and the east of England may be bought off with promises of short-term gain, but the oil industry is inevitably declining and the Government needs a long-term game plan that looks to support the industries of the future, not the past.”