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Row flares as Treasury blasts SNP oil dividend

SCOTS would each be £1 a year worse off and not £500 richer in an independent Scotland due to declining North Sea oil revenues, the UK Government has warned.

The SNP Government had claimed official figures showed Scots would benefit to the tune of £500 per head each year.

But the figure has been branded a "myth" by the Coalition in the first major referendum campaign offensive of 2013.

The Treasury examined official Government Expenditure and Revenue Scotland figures (GERS) over the first 12 years of devolution, which it says show Scots, rather than being £500 richer per head, would in fact be £1 worse off.

However, Finance Secretary John Swinney denounced the Coalition's assertions as ridiculous and insisted no-one disputed that Scotland more than paid its way.

Mr Swinney's spokesman added: "With independence, we will be able to use all of Scotland's resources to build a strong and sustainable economy."

The £500 figure was cited by Deputy First Minister Nicola Sturgeon in her party conference speech in October, when she stressed how the GERS figures showed that for 2010/11, "Scotland was better off than the rest of the UK to the tune of £2.7bn; that's £500 for every person in Scotland".

However, Chancellor George Osborne's department insists it is more transparent to take the entire 12-year period of devolution from 1999 to 2011, rather than the figure for just a single year.

"Would a golfer base his handicap on his best round of golf? I don't think so," noted one senior Whitehall source.

Using the same 12-year period, the Treasury also calculates that the average annual net fiscal balance for Scotland – the difference between what is taxed and what is spent – is -3.8% of GDP even when its geographical share of oil is included. When it is not, the Treasury claims, Scotland's net fiscal balance expands to -10.6%.

Chief Secretary to the Treasury Danny Alexander told The Herald: "Basing a case for Scotland to be independent forever on one good year of oil revenues is incredibly misleading and very foolish.

"In fact, taking an average of the Scottish Government's own figures since devolution, instead of being £500 better off, Scots would be £1 worse off. This is yet another Scottish Government assertion exposed as a myth. We are better together."

Mr Swinney's spokesman said: "No-one disputes the fact Scotland more than pays her way and it is ridiculous for Danny Alexander, who is presiding over a UK economy increasingly saddled with debt, to claim otherwise."

He argued that while Scotland had had a current account surplus in three of the last six years, the UK had spent more than it had raised in every single year.

"Scotland contributes 9.6% of UK revenues despite having only 8.4% of the UK population. The problem for Danny Alexander is he is trying to convince Scots to stick with a Westminster government that thinks it can cut its way to growth."

In October, The Herald revealed that every UK Government department has been asked to contribute to the Coalition's "manifesto for the UK", providing political ammunition to fire at the SNP Government every month in an attempt to demolish its case for independence.

The First Minister's aides and colleagues are currently engaged in their own "work streams" to bolster the case for independence ahead of the White Paper due in November.

At the time of the GERS publication last year, the SNP Government said they showed healthy tax revenues from North Sea oil had helped to limit the nation's overdraft for 2010/11 to 7.4% of Scotland's GDP, much better than the figure of 9.2% for the whole of the UK. At the time, Mr Swinney, described North Sea oil and gas as a "£1 trillion asset base" that was worth more than 10 times Scotland's share of the UK's debt.

Michael Moore, the Scottish Secretary, accused him of creative accountancy, saying the GERS figures showed Scottish public spending was £63.8bn for 2010/11 with tax revenues of just £53.1bn; a shortfall of £10.7bn.

Yesterday, experts predicted oil prices would stay at levels that should deliver good profits for producers and sustain strong investment in the North Sea throughout 2013.

However, the Office for Budget Responsibility, the UK Government's independent forecaster, recently cut its predictions for oil and gas revenue this year from £9.6bn to £7.3bn and for the period 2014 to 2025 from an annual average of £8.3bn to £6bn.

l Deputy Prime Minister Nick Clegg is to be quizzed by peers on Wednesday about whether the decision to allow 16 and 17-year-olds the vote in the 2014 referendum will impact on other UK elections.

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