AN independent Scotland in its first year would have faced a £6.4bn "gaping chasm" in its finances, the Treasury has calculated based on the slump in the oil price.


The black hole would have forced the Scottish Government in 2016 to implement unprecedented levels of cuts in public services, according to the Whitehall department.

Danny Alexander, the Chief Secretary to the Treasury, said yesterday (fri) that the near-halving of the oil price to around $60 a barrel, showed "how wise we were to choose to keep the UK together".

But last night, the SNP Government hit back, stressing how most independent forecasters were predicting the oil price would recover next year with Opec, the club of oil producing states, forecasting a price of $110 a barrel.

"We are doing everything in our power to help boost the industry," insisted a spokesman for John Swinney, the Scottish Finance Secretary. "But Danny Alexander needs to start taking personal responsibility for what is happening on his watch and for something he has personal responsibility for, instead of refighting the referendum campaign," he added.

The senior cabinet minister said that, based on his department's analysis, the first thing in 2016 an independent Scotland would have had to face was the "catastrophic fall" in the oil price and, consequently, would have had to "implement austerity to balance the books on a scale that we have not seen. I mean massive(cuts)".

Asked if the austerity measures Scotland would have been facing would have been worse than the 1930s-style cuts opponents of the Conservatives say the Chancellor is now proposing for the years beyond 2018, the Highland MP replied: "George Osborne is going far too far in terms of austerity but, frankly, this would have knocked his plans into a cocked hat."

He stressed: "This just bears out the economic case that was made for keeping the UK together; it probably illustrates it better than anything else because people can see the impact of oil prices. People in the north east of Scotland are living with it daily at the moment in terms of the economic uncertainty it's creating for an awful lot of families and that's deeply, deeply troubling."

The Chief Secretary pointed out how, when the SNP Government's statistical analysis was published six months before the referendum vote, it predicted revenues for an independent Scotland in its first year of £6.9bn, based on an oil price of $110 a barrel.

Noting how the Treasury strongly challenged these numbers at the time, stressing how imprudent it was to base an economic policy on such a volatile commodity, the Chief Secretary said officials had this week been number-crunching on the back of the slump in the oil price.

"If the oil price stays at $60 a barrel into 2016/17, the revenues for an independent Scotland would not have been £6.9bn but £0.5bn, a £6.4bn fall; black hole barely covers it, it's a sort of gaping chasm. Six and a half billion pounds is equivalent to the total education budget in Scotland," pointed out the Highland MP.

"It just goes to show how disastrous independence would have been economically and how right we were to make those arguments at the time," he insisted.

Mr Alexander stressed he was not surprised the SNP Government had not mentioned the slump in the oil price and what its consequences would have been for an independent Scotland.

"People who support independence should over the New Year period reflect very carefully on this. This really cuts to the heart of the way in which Scotland is stronger because of the way in which we share resources across the whole of the United Kingdom," he explained.