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Alex Salmond faces oil revenue questions

Alex Salmond has faced opposition demands to explain whether he will raise taxes or cut spending to deal with a drop in oil revenues.

Labour, Conservative and Liberal Democrat leaders repeatedly asked for an explanation at First Minister's Questions in Holyrood one day after official figures showed the revenue fell by more than two-fifths in 2012-13, pushing Scotland's deficit above the UK's for the first time in recent years

Johann Lamont, the Scottish Labour leader, said the estimated £4 billion drop in oil and gas money is equal to spending on schools, while the overall £12 billion deficit is equal to all health spending.

"If Scotland were independent, how would the First Minister cope with this revenue drop? By cutting services or raising taxes?" she asked at the start of the weekly questions session.

It was the first of four attempts by Ms Lamont, and a theme later picked up by other opposition parties.

Mr Salmond insists that the electorate should focus on five years, rather than confine it to a single year's decrease which put Scotland's deficit at -5.9% compared with the UK's -5.8%

The average five-year deficit was -4.3% in Scotland compared with -5.9% across the UK, according to Gers.

The First Minister said: "Johann Lamont knows that over the last five years or indeed over the last 30 years, then the answer is that Scotland has been in the stronger fiscal position relative to the United Kingdom.

"That of course is within the context of the United Kingdom. Our case for independence is that by marshalling the great natural resources of Scotland and the great human resources of Scotland then we can build a fair and just society in this country."

Key figures in the Better Together campaign to keep Scotland in the UK have already noted that the country is economically capable of being independent, he said.

Mr Salmond said Scotland would have been £1,600 per head better off over five years.

Decisions could have been taken to borrow less or invested more, if the country had been independent, he said.

Ms Lamont said the UK now has a relative surplus and continued to push him on how he would cope with the annual fluctuation on revenue.

"The First Minister seems entirely relaxed about the fact that he'd have £4 billion less to spend on jobs, on education, on the support for young people than we'd have otherwise," she said.

"I'm not even asking the First Minister something difficult, like what currency would he raise taxes in. Because whether it's groats, bawbees or Armenian drams, in the last 12 months Scotland has lost more than £4 billion of oil revenue.

"At the moment, that loss is born across the United Kingdom because we're in the United Kingdom.

"If Scotland were outside the United Kingdom, I ask again, how would the First Minister pay for that loss of revenue? By cutting services or raising taxes?"

She later attempted to answer her own question, telling MSPs: "He wouldn't raise taxes on the rich because he ruled that out last week. He wouldn't raise taxes on banks and big business because he has committed to cutting tax for them lower than George Osborne."

Mr Salmond said there is confidence in Scotland's economic prospects.

He accused Ms Lamont of using "miserable, doom-laden" arguments in the chamber.

Conservative leader Ruth Davidson said Scotland currently has the support of the whole of the UK to keep the oil industry going.

She said: "This time last year Finance Secretary John Swinney said that there was little doubt that Scotland was moving into a second oil boom.

"Yesterday we found out that annual oil revenues dropped by 44%, leaving a £4.5 billion black hole. This is the price of funding every school in Scotland.

"But that black hole did not affect Scotland's public spending, because as part of the UK, we can absorb these shocks.

"We want the North Sea to produce more, and the UK Government is fast tracking all recommendations from industry expert Sir Ian Wood to squeeze out every last drop."

The First Minister replied: "The North Sea industry has been supporting the UK Government for the last 30 years.

"How come it is such a huge advantage for the UK but such a huge burden for an independent Scotland?"

He said high levels of investment had lowered oil revenues in the short-term, but would raise them in the long-term.

Ms Davidson went on to question the figures on the Scottish Government's plans to transform childcare.

"This First Minister would have us believe in an oil boom which doesn't exist, in an oil fund with no money, to pay for policies which he hasn't even costed," she said.

"This First Minister pretends he is holding a full house, but isn't it the case that after yesterday, his plans are a busted flush?"

Liberal Democrat leader Willie Rennie said the GERs figures showed the "stability of the broad-based UK economy" compared with the "volatility of Scottish finances".

"One year's problem on oil means £4 billion would need to be found from somewhere. Instead of searching for a crumb of comfort, why won't the First Minister answer the questions he has been dodging ... which taxes would go up and which services would be cut?"

Mr Salmond said: "Even with the £4 billion fall in oil revenues, the current budget balance for Scotland and the UK were virtually identical.

"What made the difference was an almost 1% greater increase in capital investment in Scotland."

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