NORTH Sea oil has been catapulted back to the forefront of the referendum debate with the Yes and No sides clashing over the viability of setting up an oil fund in an independent Scotland.
Yesterday pro-Union group Better Together launched a scathing attack on Alex Salmond’s plans to establish an oil fund, claiming that it could only be done by borrowing money to put in it.
At a press conference in Glasgow, Alistair Darling, the leader of the No campaign, and the Chief Secretary to the Treasury, Danny Alexander, likened the SNP’s plans to taking increased debt on a credit card and putting it a savings account.
Darling pointed out that Scotland had been running a deficit for 22 of the last 23 years. He claimed the deficit in Scotland at point of independence will be greater than that of the UK. According to the former Labour Chancellor, Scotland’s fiscal position in 2016-17 is forecast to be five per cent of GDP in deficit while the UK’s deficit is less than half this amount.
With the Scottish Government expected this week to publish its own oil bulletin containing oil revenue predictions, Darling also pointed out that past forecasts produced by Salmond’s administration had been hugely optimistic.
The Scottish Government’s least optimistic forecast for 2012-13 was £6.7 billion in oil revenue. The actual figure was £5.58bn. Similarly in 2013-14 the least optimistic forecast produced was £6.2bn, when the actual figure only came to £4.7bn.
Darling argued that the SNP’s plans for an oil fund would have to be financed by either raising taxes or cutting spending.
He said: “Because you are spending more than you are getting in, you would have to borrow the money to establish the fund. It makes no sense whatsoever to start borrowing money to put into a fund. It is one of the most expensive things that you can possibly do. You are not actually establishing an oil fund you are establishing a borrowing fund, which would cost you far more.”
He added: “It is like taking additional debt on your credit card and putting it in your savings account. It doesn’t make any sense. It is not negative campaigning, it is reality campaigning.”
The Scottish Government disputed Better Together’s analysis saying that Scotland would have the option of investing in an oil fund from the first day of independence.
The Scottish Government said that Scotland has on average accounted for 9.5 per cent of UK tax receipts – higher than our 8.4 per cent of the UK population.
The Finance Secretary John Swinney said: “The debate over Scotland’s future is now firmly between those who choose to talk down Scotland’s potential and those of us who know that with the wealth creating powers of independence we can take our natural resources and our human talent and build an even stronger nation.”