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SNP vows to take on £20bn UK North Sea promise

AN INDEPENDENT Scotland would take on the UK's £20 billion pledge to help with the cost of decommissioning North Sea oil rigs, the Scottish Government has said.

BONUS: First Minister Alex Salmond said oil and gas revenues would offer Scotland a huge advantage as he announced the report. Picture: PA Wire
BONUS: First Minister Alex Salmond said oil and gas revenues would offer Scotland a huge advantage as he announced the report. Picture: PA Wire

The pledge came in a report aimed at reassuring the industry before the referendum.

Ministers have agreed to continue tax breaks for decommissioning North Sea facilities after they cease production.

They said they would seek a contribution from the UK Government during negotiations if Scots vote Yes next year, but said "the outcome of these negotiations will have no impact on the value of relief received by operators".

The Government report, unveiled by the First Minister in Aberdeen, added: "In order to provide long-term certainty for the industry the Scottish Government will assume responsibility for meeting all existing and future obligations stemming from the tax relief associated with ­decommissioning facilities in Scottish waters. It will guarantee to underwrite these costs."

The cost of cleaning up the North Sea is an estimated £36.7bn, at current prices, between now and 2050. The cost to Government, in tax breaks, will be £20bn.

The Scottish Government's pledge marks a significant shift in policy.

Energy Minister Fergus Ewing last year told the Commons energy committee the UK had a "moral and certainly a legal obligation to be responsible for decommissioning" as successive UK governments had spent the tax revenues from the North Sea.

However, the promise will avoid a potentially damaging row in the run-up to the poll over who should pay for decommissioning.

The Scottish Government's paper – Maximising the Return from Oil and Gas in an Independent Scotland – also stressed there were no plans to increase the ­overall tax burden on the industry and promised that changes 
would not be made without consultation.

An expert commission, to be chaired by former CBI Scotland chairman Melfort Campbell, who co-chairs Scottish Enterprise's Oil and Gas Industry Advisory Group, will be set up next month to develop detailed policy on issues raised in the report.

The paper was welcomed by industry body UK Oil and Gas.

Chief executive Malcolm Webb said: "Predictability and long-term planning are what the industry requires of any government, particularly in the fiscal regime and the licensing and regulatory framework." It said it remained neutral in the referendum debate.

Oil industry expert Professor Alex Kemp, of Aberdeen University, said the promise to consult with the industry on possible future tax changes, would "provide the reassurance and predictability the sector requires".

Announcing the report, Mr Salmond said: "Scotland has been blessed with unrivalled natural resources and communities around the country should benefit from them.

"Oil and gas revenues would offer a premium advantage for an independent Scotland – a tremendous bonus to boost any diverse modern economy."

However, he faced calls to withdraw claims in a BBC interview that the £1.5trillion of untapped North Sea oil was ­equivalent to "£300,000 for every man, woman and child in Scotland".

Alistair Darling, head of the pro-UK Better Together campaign, called on him to withdraw the "misleading" comment,

He said: "For Alex Salmond to treat us like fools by deliberately confusing the wholesale value of oil with the amount we would actually raise through tax is fundamentally dishonest."

Scottish Labour's Iain Gray said the report was an attempt to "de-risk the referendum" while Scots Tory finance spokesman Gavin Brown said it failed to present future tax projections.

The report comes a week after the independent Office for Budget Responsibility downgraded its forecast for oil revenues by £11bn between 2017/18 and 2040/41, by which time it would be worth 0.03% of the UK economy compared with 0.4% at present.

At the weekend Mr Salmond dismissed the figures as "a fib". He said an independent Scotland would not be reliant on oil but the resource would be a "bonus".

However, in a briefing yesterday the CPPR think-tank, based at Glasgow University, said oil would be an "essential bonus".

Its analysis said: "While ­Scotland would not be an oil-based economy it would, initially at least, be heavily reliant on the taxes from the oil-based part of its economy in order to fund current levels of Government spending."

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