Scotland would be £1.3bn in black with North Sea oil money, says SNP

Published on Wednesday 23 June 2010 23:12

A FURIOUS row over the state of the public finances erupted last night after the Scottish Government claimed official figures suggested that Scotland reported a Budget surplus of £1.3 billion in 2008-9.

Finance secretary John Swinney said the country would be 1.3bn in the black if it was assumed that Scotland received its "geographical share" of North Sea oil revenues. But Mr Swinney's claim, which was based on the Government Expenditure and Revenue Scotland report, published yesterday, was disputed by Labour politicians, who said the country was running a deficit of almost 4bn.

The sharply contrasting interpretations came as Labour accused ministers of "fixing the figures", claiming they had not taken capital spending on roads, schools and hospitals into account. With the exclusion of North Sea Oil revenues, Scotland had a deficit of about 10bn in 2008-9, the report suggested.

But with a geographical share of North Sea revenue, Scotland would have a budget surplus of 1.3bn, the equivalent of 0.9 per cent of GDP.

Mr Swinney claimed the "surplus" gave more impetus to the SNP's argument for independence. He said: "These figures reinforce the case for Scotland determining its own tax and spending decisions, and managing other key economic levers, with the powers of financial responsibility and independence."

The UK as a whole was in deficit to the tune of 48.9bn, or 3.4 per cent of GDP, with all North Sea revenues included, in 2008-9. But the figures, compiled by Scottish Government statisticians, also set out the fiscal deficit which includes building on capital projects like roads, schools and hospitals.

Yesterday's fiscal figures also made allowances for the impact of the 700 million bail-out of the financial sector in 2008-9. When cash spent on capital investment (5.05bn) was taken into account, the 1.3bn surplus was reduced to a deficit of almost 3.8bn.

The SNP said that the 3.8bn deficit was 2.6 per cent of GDP and compared favourably with the UK's deficit of 96.1bn, which was 6.7 per cent of GDP.

But Labour pointed out that when the oil money was discounted and capital spending included, the total deficit was 15.5bn (13.5 per cent of GDP). Labour finance spokesman Andy Kerr argued an independent Scotland would be "dangerously dependent on volatile oil prices".

He said: "There is only a surplus if you don't include spending on schools, hospitals and roads. Are the SNP proposing to close down the NHS and educate children at home?"

Liberal Democrat finance spokesman Jeremy Purvis also went on the attack, saying: "This is fantasy economics. For the government to put out a statement that public finances are in a healthy position is insulting.

"SNP ministers are fast becoming ridiculous, sitting in their ivory towers and fiddling their figures to suit their policy of independence."