Alexander raises questions over Nationalists' proposed oil fund

UK Political Editor

Tuesday 3 July 2012

THE SNP's vision of creating an oil fund in an independent Scotland could mean higher taxes for Scots and possibly even a hike in taxes for the North Sea oil industry itself, Danny Alexander will say today.

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MICHAEL SETTLE

Speaking at the Scottish Politics Explained conference in London, the Chief Secretary to the Treasury will say: "We can be proud of Scotland's oil industry, as well as a historic strength in financial services. But to cut off Scotland from the rest of the UK means to rely too heavily on these volatile sectors: to bet the economy each year on the financial markets and on oil prices.

"Indeed, the Office for Budget Responsibility are forecasting oil revenues to fall substantially as a percentage of GDP over the next 15 to 20 years."The Highland MP will claim that there are question marks about the feasibility of the Nationalists' proposed oil wealth fund."Clearly, the viability of any such fund would be dependent on the Scottish budget being in surplus in future years. But, according to the Scottish Government's own figures, an independent Scotland would likely have a significant budget deficit. "So, in the absence of significant rises in price and production, any decision to create a sovereign wealth fund may have to be supported by either spending cuts or the imposition of additional taxation, for example, on oil and gas production."Mr Alexander will insist that an independent Scotland would undermine the fundamental strength of the North Sea industry."It would damage the close ties with the rest of the UK financial industry, particularly the City of London, as well as access to the markets that the UK provides both nationally and internationally."He will add: "Unless and until the Scottish Government sets out a credible position on how to supervise and regulate a financial sector industry in an independent Scotland, it cannot be taken for granted that the industry would be content to remain in Scotland."

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Alexander raises questions over Nationalists' proposed oil fund

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