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Fresh attack on Yes case amid new oil figures

ALISTAIR Darling has accused the SNP of basing its case for independence on fantasy economics after the Office for Budget Responsibility slashed its North Sea Oil forecasts.

ALISTAIR DARLING: Warned  that 'the oil is running out'.
ALISTAIR DARLING: Warned that 'the oil is running out'.

The independent OBR ­downgraded its long-term ­estimate of oil and gas revenues by one-quarter in its latest annual assessment, published yesterday.

The forecaster said that between now and 2040/41 the North Sea would yield £61.6 billion in tax revenues, down from the £82.2bn predicted a year ago. Much of the reduction was based on a projected fall in production.

The OBR believes the long-term decline in oil production will slow down as a result of recent major investments in the North Sea but will still fall by five per cent per year on average after 2018/19.

Its report also confirmed the final tax take in 2012/13 and 2013/14 was £5bn less than the Scottish Government's own estimates.

First Minister Alex Salmond dismissed the new estimates as "stuff and nonsense". He said the projections were based on total estimate of remaining oil of 10bn barrels, less than half the industry's estimate of 24bn barrels.

However, Mr Darling, the head of the pro-UK Better Together campaign, said: "Today's figures confirm what we already know - the oil is running out and the tax we will get from it is falling.

"Alex Salmond's claims on oil have already been proven to be spectacularly wrong. We should say 'no thanks' to Alex Salmond's fantasy economics in September."

In its most recent forecast in May, the Scottish Government predicted oil revenues of £34.3bn between this financial year and 2018/19.

This was down on ­previous estimates used in the SNP's independence White Paper to justify claims an independent Scotland would start life with healthier finances than the rest of the UK.

It was also substantially below the OBR's closest comparable projection, which suggests the UK will raise £15.8bn from North Sea taxes over the next five years.

The OBR also highlighted the volatility of oil revenues, saying tax take fluctuated by 35 per cent year to year, on average, compared with a five per cent variation in income tax.

A spokeswoman for Scottish Government energy minister Fergus Ewing said: "The OBR's forecasts rest on estimates of future production which are well below those used by the industry, by leading experts and by the UK Government."

The clashes came as a fresh row erupted over power generation in an independent Scotland.

The UK's Department for Energy and Climate Change repeated its warning that average energy bills could rise by £189 if an independent Scottish Government pressed ahead with an expansion of wind and wave power without subsidies from the rest of the UK.

The warning followed the publication of an expert report on energy commissioned by the Scottish Government.

It said a single Britain-wide energy market could continue if Scotland left the UK provided there was goodwill and cooperation between the two countries.

Welcoming the report, Yes Scotland chief executive Blair Jenkins said: "Where we can sensibly and practically retain mutually beneficial arrangements, such as maintaining single markets in electricity and gas, of course, this is the best be the way to proceed."

However, a DECC spokesman said: "In the event of independence the single market for electricity and gas just could not continue in its current form, with Scottish consumers losing out on shared investment in infrastructure, transmission, and renewables."

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