Scottish independence: Explain your oil fund, expert tells Alex Salmond
Alex Salmond: urged to set out plans for oil fund. Picture: PA
THE SNP Government should set out how it intends to pay for its proposed £1 billion a year oil fund prior to holding a referendum on independence, the country’s most respected economist on the North Sea economy has said.
Alex Kemp, Professor of Petroleum Economics at the University of Aberdeen, said the SNP should offer the public a clear idea of how the proposal could be afforded in an independent Scotland, in the run-up to their proposed 2014 vote.
His comments come a day after a report by a separate think-tank, the Centre for Public Policy and the Regions (CPPR), suggested that either spending cuts or increases in borrowing would be required to allow a newly-formed independent government to salt Scotland’s oil money away.
Prof Kemp said that, with such details still needing to be resolved, the SNP was right to argue that the referendum should be held in 2014, allowing a full two and a half years to develop the debate.
He also laid out the principled case for an oil fund saying that, even now, a separate investment should be made from North Sea oil revenues, with or without independence. Referring back to the mid 1980s, at the highest point of oil production, he said that the country had allowed its oil booty to be consumed in unemployment benefits rather than be used up as an investment for the future.
Prof Kemp – who was praised yesterday by First Minister Alex Salmond for his “magnificent” academic work – said more studies now needed to be done to show how a Scottish oil fund would work, and how it would be afforded by a government.
“They [the SNP Government] should do that so we have a more informed debate.”
He said ministers needed to show “how will it relate to the Scottish budget” prior to a referendum to show people how it would work before they vote on independence.
His call comes after Mr Salmond used a lecture at the London School of Economics last week to announce plans to set up an investment fund on the back of Scotland’s oil revenues. He said he would like to put aside £1bn a year of oil taxes for twenty years, saying that the country would eventually build up a £30bn cushion.
His plan copies similar funds pioneered by Norway and other oil-rich nations which have built up huge multi-billion pound funds on the back of their own oil reserves.
Mr Salmond said, by contrast, the UK Treasury was one of the few oil producing nations which had not built up a fund on the back of its natural resources, ensuring the country was left with little to show in return.
However, the CPPR – an independent body of economists based at Glasgow University – warned earlier this week that, in an independent Scotland, there was “little prospect of any fiscal surplus becoming available” to help set up such a fund.
Tax revenues from the North Sea would be needed to “help close the budget deficit that emerges from maintaining existing levels of public services”.
Prof Kemp told The Scotsman that taxes which accrued from the nation’s “capital stock” should not have been used to fund current spending. He said: “Oil revenues are part of the nation’s capital stock. Therefore, you have to do something to ensure that the capital stock is maintained and, therefore, we need to make sure that the revenues are invested rather than consumed.”
A spokesman for the Scotland Office said: “On the oil revenues, the economic truth is that you simply cannot both save and spend the same money at the same time. The Scottish Government should set out how it would afford this fund.”
A Scottish Government spokeswoman said: “We welcome Professor Kemp’s support for the establishment of an oil fund for Scotland, and for holding referendum in 2014. As the leading expert on the North Sea industry, his support for an oil fund is extremely important.”
Email to a friend
Print this page- Family mourn death of Glasgow ‘fight’ schoolboy
- Rangers takeover: Duff & Phelps threaten legal action against BBC
- Today’s youth not fit to be employed, says car firm Arnold Clark
- Rangers administration: Fans fear Duff & Phelps claims could scare off Green
- Rangers takeover: triple penalty punishment enough, says Johnston
- Alistair Darling leads ‘No to independence’ fight over tea and biscuits
- Scottish independence: SNP flip-flops over Nato
- Scottish Independence: SNP ‘won’t be Yes campaign’s only voice’
- Scottish independence: Alex Salmond’s pledge to sign up 1m voters
- Today’s youth not fit to be employed, says car firm Arnold Clark
Looking for...
Featured advertisers
Jobs
Search for a job
Motors
Search for a car
Property
Search for a house
Weather for Edinburgh
Sunday 27 May 2012
Today
Sunny
Temperature: 10 C to 22 C
Wind Speed: 12 mph
Wind direction: North east
Tomorrow
Sunny
Temperature: 9 C to 21 C
Wind Speed: 12 mph
Wind direction: North east
Comments
There are 505 comments to this article
Page 1 of 34
JHLondon
Sunday, February 26, 2012 at 09:36 AMIf you choose to leave a club, you don't get to keep half the furniture and to pick and choose which membership benefits you retain. Why does anyone think the rest of the UK would allow an independent Scotland to be treated differently? Whether you stay in the pound after independence will be up to the UK government. And the UK government will not be compelled to give up any assets that aren't based in Scotland. (and if you think we'd pay towards the £30+ billion in decommissioning cost for the oil rigs, as the oil runs out, you're having a laugh).
Markmywords
Saturday, February 25, 2012 at 09:31 AMJaydee. Before we start spending our Scottish pounds, shall we first check whether or not we'll be using the Euro, given that the nation will have to apply for EU membership ?
Royster
Saturday, February 25, 2012 at 08:39 AMMaybe a library ticket would help.
Royster
Saturday, February 25, 2012 at 08:37 AMJaydee. Please study more.
jaydee
Saturday, February 25, 2012 at 01:41 AM494Simonsaid... It did 5.5million of them in England.. It also paid £100grand a year in housing allowance for the subsidy junkies in London... .... In Scotland you lost the house..
jaydee
Saturday, February 25, 2012 at 01:34 AM325Royster.. Very good hang on while I burst into Rule Britannia, and Land of hope and glory... Scotland is not going to use the English pound.... It is going to use the Scottish pound sterling which will have nothing to do with England... It value will be based on Sterling... That is not set by the BofE... They come about 7th or 8th in he world when it comes to setting currency value..... The BoE can set the interest rate in England to what they like.. Which it will do to suit the subsidy junkies of London..What would that have to do with Scotland ... So what's you beef about a Scottish pound sterling... Give you a feeling of superiority or something... And what do you suggest Scotland should use?... A bet will be won on this one..
jaydee
Saturday, February 25, 2012 at 01:23 AM323fairfax... If you mean on separation that when a English government builds Hadrian Livingtons wall and threaten under pain of death that will be the fate of those who use the Scottish pound Sterling.. That is a matter for a English government to answer not a Scottish one... If you mean using a pound because it sounds English... That is is about as batty as the Ed Balls School of economics... But who is going to laugh because Scotland will use Scottish Sterling.. It will be called money...Do you pee yourself laughing at the Canadian dollar...
jaydee
Saturday, February 25, 2012 at 01:13 AM320rider000... Oh I can remember it well... House prices going through the roof.. negative equity in London...all bailed out...with the £100grfand a year housing allowance that applied there... Every body in Scotland who fell by the wayside had the houses repossessed...But what has that to do with Scotland or the SNP... It was called a UK government... And like Mr Cameron thanks for the reminder of what independence isn't
jaydee
Saturday, February 25, 2012 at 12:48 AM274Tibially Challenged Douglas Bader.. There is nothing to split up.. The oil is Scottish the debt is Englsih.. Oil has paid more than is fair share of he Enlsih debt... And now it has took of again..£1.3trillion
flyinngscott
Friday, February 24, 2012 at 11:53 PM#488 wpd, your entitled to your opinion, and who knows for sure, you may be right, or thereabouts. I say that this is a country run by a tiny ruling elite, aka the establishment. Westminster, old money & big business.Think back over the last decade or 2. In no particular order (i'm tired, bed becons) , illegal unjustified war; expenses; cash for questions; the multicultural experiment; cosy connections between the govt ,media & police; unregulated financial systems ; deregulated utilities bleeding us dry ;closing down industries for bankrupt political ideologies, fear of the unions & just plain spite ; the rise of the PPE career politician ; ex politico's getting non -executive directorships for accomodating whilst in office (yes, that means you Mr Robertson you weasel) ; London & the SE doing quite nicely thankyou, while the rest are forgotten (until election time) ; Slab & the remaining Scot tory afraid to sneeze without asking London first ; the advent of condemlab, where they all vie for the centre ground & middle englands vote ; parts of Scotland having the lowest life expectancy in europe...... .... "already excellent country... can't do better". I don't think so. A bag of lobotomised monkeys wouldn't have made this much mess.
peter58
Friday, February 24, 2012 at 10:41 PMAlways a good point - saving the unwaged and ill fom destitution is by no means a waste of resource.
Simonsaid
Friday, February 24, 2012 at 10:09 PMProf Kemp needs to revisit his statement where he said that the country had allowed its oil booty to be consumed in unemployment benefits rather than investment for the future. I think there is something fundamentally wrong with that statement. Surely one of the main reasons for investing any oil booty is so that it could be used to ease the blight of mass unemployment
Ayrshireguy
Friday, February 24, 2012 at 09:18 PMSame old scaremongering and lies from all these nasty unionists. I am still waiting to hear from any of them ..one good thing about this abhorrent union. Only those with vested interests or the blinkered want to see it continue. Anyway I hope you keep on telling all these lies, you are doing the same job a The tory cameron..turning more people towards the SNP..... nobody believes you any more,, so keep it up.
El C
Friday, February 24, 2012 at 09:17 PMMr Miliband has shown he understands the need to repair the damage caused by the bankers, brokers and risk takers!! .. The Labour party stands for liberty and justice. ... After me now. Hip! Hip! Hooray!!! Hip, hip hooray! . Hip, hip hooray! .
Col.Blimp III
Friday, February 24, 2012 at 08:53 PM488 wpd ▬ "We British..." ,,,,,,, The only other person I heard use that line was Rangi Ram, the Uncle Tom in a turban from " It Ain't Half Hot Mum" ..... rather appropriate, wouldn't you say ?
Page 1 of 34
Your view
Please sign in to be able to comment on this story.