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Salmond tells Alexander: listen to man who wrote the book on oil when you were just three

The North Sea oil industry has been "neglected and undermined" by successive UK governments, the First Minister has said as a row over the sector continues.

Alex Salmond said oil would be a "bonus, not the basis" of an independent Scotland's economy as he responded to a letter from Danny Alexander, the Chief Secretary to the Treasury who accused him of making plans based on "untold oil wealth beyond anything independent forecasters consider plausible''.

It comes after the UK Office for Budget Responsibility (OBR) revised down the amount of cash it expects to be raised from North Sea oil and gas revenues.

Chairman Robert Chote revealed the independent body is now forecasting revenues of £61.6 billion will be raised between 2013/14 and 2040/41 - down from £82.2 billion.

The Scottish Government argues the OBR forecasts are based on a ''very low estimate of future total production''.

Professor Sir Donald MacKay, a founding director of an oil operating company and a former economic adviser to the Secretary of State for Scotland, insisted that the OBR forecasts ''stand in stark contrast to the views of those who have lived with the oil industry over many years''.

In his letter to the Chief Secretary the First Minister said: "As you will be aware, the Scottish Government has published detailed forecasts for North Sea tax revenues in future years. These projections are based on robust assumptions.

"As Sir Donald Mackay, Economic Adviser to the Secretary of State for Scotland for 25 years, has concluded, 'there is no hole in the Scottish Government's oil predictions'.

"Moreover, Sir Donald has highlighted that 'there is a mountain of black gold missing' from your own figures. Given that Sir Donald quite literally wrote the book on the political economy of North Sea oil, when you were but three-years-old, perhaps you should acknowledge his expertise and authority in such matters rather than cite the OBR's ability to forecast the next three decades when they have patently failed to forecast accurately the last three years."

Earlier this week Mr Alexander said the First Minister was "promising milk and honey'' rather than spelling out the ''painful choices a separate Scotland would have to make''.

Mr Salmond said: "North Sea oil is a bonus, not the basis, of an independent Scotland's economy, and is a fantastic asset which will be around for many decades to come.

"In an independent Scotland our oil and gas industry will be properly supported, and not neglected and undermined as it has been by successive Westminster governments. Your letter states that the UK Government is committed to supporting investment in the oil and gas industry. However, this is not reflected in your record at the HM Treasury.

"For example, in 2011 the UK Government sharply increased the supplementary charge paid by North Sea operators on their profits.

"Sir Ian Wood's final report emphasised that 'fiscal instability has been a significant factor in basin under-performance - a factor which you have directly contributed to. Malcolm Webb, of Oil & Gas UK, also reiterated this February that the industry is still 'scarred' by the experience.

"That is something for which you should apologise."

The First Minister added: "Oil and Gas UK calculated at the time of your 2011 tax raid that it was one of 16 different tax changes in the previous decade. By contrast, fiscal and regulatory stability will be at the heart of an independent Scotland's approach to the North Sea oil and gas industry."

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