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Row over 'precarious' finances of going it alone after forecasts for North Sea revenues are slashed in new figures

A FURIOUS row over the finances of an independent Scotland has broken out after forecasts for future oil revenues were slashed in figures published alongside the Budget.

The independent Office for Budget Responsibility issued new estimates suggesting the North Sea was on course to produce nearly £3 billion less in tax between now and 2018/19 than previously thought.

Chancellor George Osborne highlighted the figure in his Budget speech yesterday, saying it stood as a warning about the "precarious" state of an independent Scotland's budget.

The falling estimates were seized on by pro-UK campaigners but dismissed by SNP Finance Secretary John Swinney who said recent increased investment in the North Sea would boost production.

The OBR downgraded its forecasts each year up to 2018/19 from estimates produced in December.

The biggest single revision was for next financial year, 2014/15, which is now expected to yield £3.7bnn, £900 million less than the previous estimate.

Tax take for 2016/17, the year the SNP intend to declare formal independence from the UK, is predicted to be £3.2bn, £300m down.

In its independence White Paper, the Scottish Government forecasts Scotland's share of North Sea revenues at being between £6.8bn and £7.9bn for 2016/17.

Mr Osborne told a packed House of Commons: "The Scottish economy is doing well and jobs are being created but this is a reminder of how precarious an independent Scotland would be.

"Britain is better together."

The latest OBR figures came a week after the Scottish Government's own annual figures showed the country's deficit - the gap between revenue and spending - was worse than the UK's.

Alistair Carmichael, the Lib Dem Scottish Secretary, said: "The Budget means the consequences of our referendum decision are becoming clearer.

"Do we want to gamble our place in a UK that is working well for Scotland in return for a go-it-alone option with no UK Pound and falling oil revenues?"

His Labour shadow, Margaret Curran, said: "This is a devastating blow to the Nationalists' case."

At Holyrood, Gavin Brown, the Scots Tories' finance spokesman said an independent Scotland faced a financial "black hole from day one" of about £4bn depending on Scotland's exact geographical share of oil revenues.

He added: "It is now critical that updated figures are published by the SNP as a matter of urgency."

But Mr Swinney said: "Westminster and those opposed to independence cannot simultaneously accept in full the Wood Report with its projections of higher production and at the same time cite the OBR forecasts of lower revenues from declining production.

"Increased investment in the North Sea will lead to increased production with a further 24bn barrels of oil still to come from the North Sea."

The Scottish Government's estimates for oil revenues were issued a year ago.

According to the most cautious figures that have been included in the White Paper, Scotland would receive £34.6bn between now and 2017/18.

The OBR believe the UK will receive £18.8bn over the same period. An independent Scotland would be entitled to about 90% of that based on a geographical share.

In his fifth Budget, the Chancellor backed the recent report by Sir Ian Wood on maximising North Sea production and offered further tax allowances to encourage companies to invest.

He also announced a review of oil refineries, including Grangemouth, in a move to ensure long term energy security.

Other moves included freezing duty on whisky and cutting air passenger duty - a tax the SNP have promised to scrap altogether if Scots vote for independence.

Scotland's share of spending announcements south of the Border will give the Scottish Government a £63m windfall to spend as it wishes, a sum described as "small beer" by Mr Swinney.

The Finance Secretary said: "This was Westminster's last chance to show it could create opportunity for Scotland and reject the diet of austerity. Once again Westminster has failed to deliver for Scotland.

"This budget confirms a further squeeze on public spending and a further austerity plan

"While I entirely welcome the Chancellor's choice of whisky as his referendum tipple, sticking with the Westminster system will leave Scotland with a severe hangover.

"In just under six months' time voters in Scotland can choose to put all the decisions on taxation, spending and job-creation in the hands of the people of Scotland, not Westminster politicians, build on our success and escape from the poor decisions of Westminster governments we didn't elect."

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