Alex Salmond says Scotland can set aside £1bn oil cash a year
Salmond: 'opportunity to establish energy fund for future generations Picture: PA
ALEX Salmond has claimed he could set aside £1 billion a year in oil cash over the first 20 years of an independent Scotland, despite claims by economists that he would need every penny from the North Sea just to pay Scotland’s way.
In a speech at London’s School of Economics last night, the First Minister argued that such an investment pot would hand Scotland a £30bn booty by 2035 to buffer itself against future economic storms.
The model copies the massive Sovereign Fund in Norway, built up on the back of the country’s vast oil reserves. SNP ministers claim that, as independence will in their view boost the economy, they will have more tax revenues to play with, and will be able to lay aside oil revenues.
However, economic experts have argued that an independent Scotland would, like the UK, have a deficit and therefore would not be able to place oil money into savings.
Instead, they argue that the country would either need oil tax revenues to pay for schools, hospitals and public services, or to help pay down the share of the UK national debt which would accrue to Scotland after secession.
In the speech last night – Mr Salmond’s third in England since the New Year – he returned to the SNP’s favoured theme of North Sea oil, claiming that, had the country become independence in 1979, Scotland would have wiped out its debts by 1983, and run surpluses from the late 1980s onwards. Scotland would have had financial assets “worth anything from £87bn to £117bn”.
Labour last night said Mr Salmond should explain what public services he would not have paid for, in order to build up the fund.
Mr Salmond said: “The debate about independence is about looking forward and creating a better future for Scotland. With that future in mind, we still have an opportunity to establish an energy fund to benefit future generations.
“Even just £1bn a year – less than 10 per cent – invested over 20 years, would create a fund for Scotland worth almost 30bn.”
On top of that, the First Minister said, wind, wave and tidal power would “be the source of Scotland’s re-industrialisation”.
Despite losing cash from North Sea oil, Mr Salmond also argued that the rest of the UK “has much to gain from the emergence of a secure, prosperous ally to its north”.
He said: “An independent Scotland would seek to make a responsible contribution on the European and world stage – and that would benefit all of the nations of these islands.”
However, Mr Salmond’s claims on an oil fund have been disputed by economic analysts. Professor John McLaren, from Glasgow University’s Centre for Public Policy and the Regions, said last night: “The country has a £20bn deficit without oil. Why would you set up an oil fund when you are massively in debt?”
A previous report by the CPPR concluded that while Scotland would have a “slightly lower” deficit than the UK, thanks to projected oil receipts, the case for creating an oil fund was “largely redundant” because of the need to use the funds to top up current spending.
Other leading economists, such as Professor Brian Ashcroft, of Strathclyde University’s Fraser of Allander Institute, have warned that the huge swings in oil revenues from one year to the next would “make it difficult” for a post-independence Scottish Government to plan its spending properly.
In a question and answer session afterwards, Mr Salmond also suggested that a Scottish banking regulatory system would deal with “future problems together” with the UK and Europe.
Mr Salmond was also asked about Donald Trump’s attack on his plans to construct new wind turbines in Scotland. He said: “I don’t see why I have to agree with him on everything, and although we’re always interested to hear the views of lots and lots of people, I think it’s best to leave it to the parliament elected for that purpose.”
It also emerged yesterday that Mr Salmond had met Bank of England Governor Mervyn King, for talks in London.
Mr Salmond has declared that, in an independent Scotland, the Bank would become Scotland’s lender of last resort.
Asked yesterday about the proposals, Sir Mervyn declined to respond, but did say he would comment on the Bank’s position before the referendum.
On Mr Salmond’s claims about an oil fund, Labour finance spokesman Ken Macintosh said last night: “If Scotland started an oil fund in the same year as Norway, the current balance would be zero, because we spend more on public services than we raise in tax. If Alex Salmond wants to change that, he needs to spell out what further cuts he is proposing because you can’t spend the same money twice.”
Scottish Liberal Democrat leader Willie Rennie MSP said: “After the latest poor Scottish unemployment figures following his failed Plan MacB, I would have thought Alex Salmond would have been more contrite about his solutions for Scotland.”
On the meeting with Sir Mervyn, a spokesman for the First Minister said: “It focused on the economic outlook, measures to boost growth and jobs, and the need for banks to meet their Project Merlin targets on lending to businesses.”
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Comments
There are 367 comments to this article
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fairfax
Saturday, February 18, 2012 at 12:37 PMIan Aberdon (366): "Liverpool suffered badly through the 70s & 80s especially under Thatcher " ---- Liverpool's primary economic raison d'etre ended many decades ago, and that maritime trade is not going to return. All that happened in the 70s and 80s, sadly, was that state subsidies began to wind down, first under Callaghan, then under Thatcher. Despite spending some money, Blair quietly came to the same conclusion as Howe: it's better to spend less money in Liverpool, and encourage people to move elsewhere.
Ian Aberdon
Friday, February 17, 2012 at 07:20 AMScousy: Liverpool suffered badly through the 70s & 80s especially under Thatcher - there was even a story recently about an orderly abandoning of the city - just ask Geoffrey Howe! Is that the UK Govt in action, helping Liverpool is it? Parts of your city still haven't recovered. Streets totally abandoned by its citizens. I think you need to look inwards before you can comment.
Maurice the Dolphin
Friday, February 17, 2012 at 01:18 AMWee Rotund Eck got the answers to the pension, military, social security, NATO and all the other questions answered yet? Nope thought not.
jaydee
Thursday, February 16, 2012 at 11:45 PM350Scouse Dave.. Oh you mean nobody from Scotland spends money there..It all comes from London.. I am glad you made the explanation why the English government will ban Scottish pounds... on separation... And it will explain why the area covers 12 out of the 15 areas of highest unemployment claimants in the United Kingdom... The other 3 are in Wales and NI... Oh and all Labour controlled.. I bet Newcastle would love a kilt making factory... It actually employs people.. I bet all those Blackpool land ladies will be delighted when they no longer have to put up with those terrible Glaswegians during the Glasgow fare arriving there en mass. And all those caravan sites from Berwick upon Tweed to Carisle to the Lake district will no longer have to put up with those dreadful Jocks and their caravans.. And of course the ones they buy as holiday homes in these area But least at last an explanation from the English government. Oh by the way feel to come north of the border.. The Scottish government will be only to happy to accept the English pound... If you have any friends anywhere in the world send them north we will accept their currency as well.. I see you are a graduate of the Ed Balls Schools of economics
Anagach
Thursday, February 16, 2012 at 11:44 PM350 Scouse Dave There is no scottish economy other than the revenue stream which flows ever north from the english taxpayer. -------------------------------------------------------------------------------------------------------- Your one of the hold outs I guess. Even the Telegraph is now accepting that Scotland is not subsidised but I guess you'll catch up later rather than sooner, thats why there is so long until the vote, to allow some to catch up.
Ron Greer
Thursday, February 16, 2012 at 11:39 PM354---World domination!
Cagey
Thursday, February 16, 2012 at 11:37 PMScouse Dave - I am not interested on slating Liverpool or anywhere else. I don't understand your gripe. Liverpool has had a tough time over the last few decades, I don't understand your antipathy to Scotland. If I were you I would focus on what's best for you.
Scouse Dave
Thursday, February 16, 2012 at 10:50 PMyep
Scouse Dave
Thursday, February 16, 2012 at 10:50 PMcagey Liverpool vibrant thank you, we have 2 car plants (2 more than scotland) big food industries (largest food importer in uk and biggest food plant in EU - heinz down the road in wigan) + banking and finance. Dont have a loch ness monster trinket factory though so......
Mark Bishop
Thursday, February 16, 2012 at 10:41 PMHere we go, boys and girls, we can finally start to make our views known with regard to what goes on to the referendum voting paper. We can also have our say on other issues like 1617 vote, spending on the campaign etc. Happy decision making!! https:consult.scotland.gov.ukscotreferendumconsultationintroview
Cagey
Thursday, February 16, 2012 at 10:40 PM355 - Maybe I am being overly optimistic but I think if the focus is right it is not so difficult. I think it is actually easier for small countries because they can be more flexible and change faster. London has done a fantastic job in building the financial services industry. It is not a great help to Scotland and in my humble opinion damages the real economy. From my experience if you have the right focus and the right systems you will succeed.
Mark Bishop
Thursday, February 16, 2012 at 10:36 PMHere we go girls and boys...... you can finally start saying what you want to be put on the referendum paper. You can also say what you want to happen in other areas. Happy decision making! https:consult.scotland.gov.ukscotreferendumconsultationintroview
davidjames
Thursday, February 16, 2012 at 10:25 PM353 Cagey. With you except for your last two points.
Danielrober2
Thursday, February 16, 2012 at 10:21 PMWe hear and read much aboout the SNP critic of other parties, indeed all the othe parties and some in other countries. Yet weeks, months and years have gone by and still the SNP put no meat on the bones of aspirations.
Cagey
Thursday, February 16, 2012 at 10:08 PMdavidjames - No problem with debate, I appreciate people being passionate. My personal focus is not on the next few years where I do not personally see a big difference for anyone. I think of the future for our children and grandchildren, I see only continued long term decline and relative failure. The numbers were bad for last year for Scotland but even then practically neutral with the rUK. With proper economic management we can easily do much much better. We are a resource rich country with a small population relative to land mass. You would have to be either incompetent or totally disinterested not to succeed. My personal opinion is London is totally disinterested.
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