'This leaked paper shows we're serious - but we've nothing to fear'

Sunday 10 March 2013

Scotland is a wealthy country.

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BY JOHN SWINNEY FINANCE SECRETARY

That is the key fact which underlies the welter of figures, claims and counter-claims of recent days about Scotland's economic prospects as an independent nation.

The discussion paper I prepared for the Scottish Cabinet around a year ago, and which is now in the public domain, demonstrates just how seriously the Scottish Government is approaching the task of managing Scotland's finances as we look forward to the prospect of a Yes vote in the referendum next year.

The document is a serious, hard-headed look at some of the challenges and opportunities that will be presented by having control of all of our own resources for the first time in three centuries.That is a serious responsibility, and the paper shows how thoroughly we are preparing to meet that challenge. But, as the document itself says, "Scotland has nothing to fear and everything to gain" in grasping the opportunities of independence.That is because the latest official figures published this week back up that fundamental, underlying fact that Scotland is a wealthy country.The latest Government Expenditure and Revenue Scotland (Gers) statistics which came out on Wednesday show that in 2011-12, Scotland had a relative surplus compared to the rest of the UK of £4.4 billion – equivalent to £824 for every person living in Scotland.With such overwhelming evidence of Scotland's native wealth, no wonder our opponents in the No campaign were so keen to spread wilful misrepresentation about the contents of a year-old document.And it is the height of hypocrisy for any Unionist politician to question the affordability of pensions in an independent Scotland when Westminster's proposed new state pension will see cuts to entitlement. As the Institute of Fiscal Studies has observed: "These proposals imply a cut in pension entitlements for most people in the long run."But let's look closer still at what this week's official figures say about Scotland's economic prospects. When an international comparison of the statistics is run, Scotland emerges as the eighth-wealthiest country in the Organisation for Economic Co-operation and Development (OECD), compared to the UK, which is in 17th place. We are poised to be the eighth most prosperous nation in the developed world, and yet our opponents still peddle the fantasy that Scotland could not make a success of independence!But while the discussion paper shows the depth of serious work being done preparing for an independent Scotland's finances – and indeed shows a relative surplus over the UK of almost £17bn over a seven-year period – it has, inevitably, been overtaken in several key respects over the last 12 months.Firstly, we now have the publication of the report from the Fiscal Commission Working Group (a sub-group of the Council of Economic Advisers), which is a thoroughly detailed expert contribution from a group including two Nobel Laureates, presenting a macroeconomic framework for an independent Scotland.But we have also seen dramatic developments when it comes to the value and volume of North Sea oil. The oil price forecasts used in the paper are based on projections from the Office of Budget Responsibility which are well below the current price and also far less than is being predicted by the UK Government and international agencies. The OBR is currently forecasting a price of $92 per barrel of oil in 2017. But other forecasts for that year include Westminster's Department of Energy and Climate Change (DECC) predicting around $130 a barrel, and the OECD expecting $150 or more per barrel.Crucially, at the same time as this expected surge in price, the North Sea is experiencing a renewed boom, as underlined in the recent report from industry body Oil & Gas UK which says that the additional investments which have been ploughed into the sector in the last couple of years will generate an extra £3bn in revenues in 2017 when these new developments will be coming on stream.Taken together, this surge in investment and the rising price of oil mean that the early years of an independent Scotland are timed to coincide with a massive North Sea oil boom.This coming week we will publish detailed projections showing just how valuable that boom will be.The question every voter in Scotland must ask themselves between now and the autumn of next year is whether, given all these facts, Scotland can afford not to be independent.

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'This leaked paper shows we're serious - but we've nothing to fear'

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