Scotland

Scottish independence: revised figures on oil income

Montrose platform
Image caption The Scottish government argues that the Scottish economy is strong and that oil is a "bonus"

Academics at Glasgow University have claimed an independent Scotland could lose more in UK Treasury support than it would gain from extra oil revenues.

The university's Centre for Public Policy for Regions (CPPR) based their calculations on revised predictions about oil and gas production.

These were produced by the UK's Office for Budget Responsibility (OBR).

The Scottish government said the Scottish economy is on a par with the rest of the UK, even without oil.

The CPPR report said: "In effect, Scotland would be giving up the net transfer from the rest of the UK implicit in the existing Barnett arrangement, of around £7bn a year in cash terms, whilst retaining its geographic share of North Sea revenues, now estimated by OBR to be between £3.3bn to £4bn by 2015-16 and projected to fall further."

The latest forecasts suggest North Sea oil and gas revenue would provide only half the net transfer from the rest of the UK, according to the CPPR report.

It added: "If this situation were to come about then it would require higher borrowing to retain the same level of public spending (assuming no changes in taxation and spending patterns or changes to Scotland's trend rate of economic growth)."

The authors of the report commented: "Oil related forecasts are notoriously difficult to make and the UK government (or an independent Scottish government) only have a narrow range of influence (typically through various tax allowance arrangements), over the final level of North Sea tax revenues."

Autumn statement

The OBR has downgraded oil production figures by £4bn over the next three years, down to half the Scottish government's lowest estimate in 2016-17.

The revision was published as Chancellor George Osborne set out his Autumn Statement on UK finances to MPs at Westminster.

The Scottish government has responded that the Scottish economy is not dependent on the oil and gas industry.

A spokesman said: "There is no doubt that Scotland can more than afford to become an independent country. Oil is a bonus for Scotland, not the basis for our economy.

"The reality is that even without the resources of our North Sea, Scotland's economy is on a par with the rest of the UK and when you add North Sea oil and gas it is 20% higher."

He added: "The costs of remaining part of the UK are even greater with the Autumn Statement confirming that the Chancellor will now be cutting departmental spending in real terms in every year between 2010-11 and 2018-19 and Westminster parties targeting a replacement of Barnett with a needs-based measure which could result in the Scottish Budget being cut by £4bn a year."

Revenue projections

The calculations in the CPPR report have been highlighted by pro-UK politicians.

Sir Robert Smith, Liberal Democrat MP for West Aberdeenshire, said: "Another day, another piece of analysis warning that Alex Salmond's independence sums simply do not add up."

Conservative energy spokesman Murdo Fraser said: "Oil is a great commodity, but you can't base a whole economy on it.

"That's particularly true if, like the Scottish government, you aren't being completely honest about revenue projections."

Related Topics

Related Internet links

The BBC is not responsible for the content of external Internet sites