Ken Clarke tells SNP: don't rely on oil for economic salvation

Thursday 21 March 2013

Former chancellor Ken Clarke has warned of the dangers of an economy based on oil revenues, as he attacked the SNP's predictions of a post-independence referendum North Sea boom.

Speaking in Edinburgh, the Conservative politician issued advice to the First Minister and the Scottish Finance Secretary not to "bet the ranch" on figures "pulled from the air".

His comments followed the publication of revised figures on North Sea oil and gas tax revenues by an independent economic forecaster.

Revenue will drop from £34 billion to £33 billion between 2012-13 and 2017-18, according to the independent Office for Budget Responsibility (OBR). The change appears to leave an £8.5 billion gap between the OBR's revised figure and the Scottish Government's least optimistic estimate. Commenting on the Scottish Government figures, Mr Clarke, the UK Minister without Portfolio, said: "I don't find them very convincing. Nobody believes that (oil) is an answer to our economic problems. "If we were to have an independent Scotland, it is not the case that it would not somehow have to face up to the consequences of economic crisis." Mr Clarke is also UK trade envoy for oil and gas, and is working to promote links between the UK and Brazil. The North Sea is attracting a "very strong flow of investment" but revenues are hard to predict due to the volatility of the sector, he said. The OBR figures are the best expert independent opinion, in his view. "My advice to Alex (Salmond) or (John) Swinney - if he agrees with (Mr Salmond) which I am not sure he does - is don't bet the ranch on a flow of oil revenues on figures which you seem to have pulled from the air," he said. Mr Clarke went on to criticise other aspects of the SNP's vision for an independent Scotland. He said the Nationalists' plans to keep the pound and the Bank of England as Scotland's central bank requires "quite a lot of discussion and negotiation". Meanwhile, the "uncertainty" of the independence question is a point of concern for both trading partners and EU politicians, he said. "The main thing I pick up is concern among my political friends in Europe. The average Spaniard and the average Belgian is far from excited about the prospect of having a referendum of this kind," Mr Clarke said. "Obviously (an independent Scotland) should be in the EU but they wouldn't find it easy because of the domestic politics of other countries." Mr Clarke said he is not opposed to further devolution in the event of a No vote in 2014, but it must be done in a way which does not damage the rest of the UK. "Devolution of public services should go with taking on more responsibility for raising revenues as well as spending it," he said. A spokeswoman for Scottish Finance Secretary John Swinney said: "As Professor Alex Kemp, the leading expert on North Sea oil and gas, has made clear, the predictions from the OBR for both production levels and price are pessimistic. "Unlike the comprehensive analysis published by the Scottish Government, they fail to take account of the increase in productivity expected by the industry, which Oil and Gas UK predict will see production levels rise to two million barrels per day by 2017." Commenting on inward investment, a spokesman for the First Minister said: "Based on evidence rather than scaremongering, the evidence shows that major international companies are continuing to invest in Scotland in full knowledge of the referendum." Speaking at Holyrood, Mr Salmond said Scotland's oil and gas reserves should not be considered as anything other than an asset. "I have to say the unionist parties' propositions on these matters verge on the ludicrous," he said. "Making an argument that it is somehow a liability to have massive oil and gas reserves for the next 40 or 50 years available to help rebuild the Scottish economy and ensure social justice in this country ... is one that will be laughed at for the next 18 months and for long beyond."

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Ken Clarke tells SNP: don't rely on oil for economic salvation

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