Leader: First skirmish sees exchange of statistical munitions

BARELY had the applause subsided on finance secretary John Swinney’s weekend declaration at the SNP conference that Scotland would become the world’s sixth-richest country if it controlled a geographical share of North Sea oil, than Scottish Secretary Michael Moore struck back.

If Scotland had control over oil revenues over the past 30 years, he declared, the Scottish budget would still have run a deficit of £41 billion. Allocating every single penny of oil and gas revenue to Scotland over 30 years – equivalent to £156bn – would still fall about £41bn short of the £197bn spent in Scotland by various administrations over this period. The SNP’s counter-salvo also lost no time. A spokesman for Mr Swinney claimed the same figures showed the country was better off than the UK as a whole, and that Scotland had a surplus of £19bn relative to the UK as a whole between 1980-81 and 2009-10. Over the same period, the UK’s deficit was £715.5bn. Now it is a fair assumption that this is the first exchange of many that will dominate relations between the SNP administration and the Westminster coalition in the long approach to the independence referendum.

Indeed the only surprise about yesterday’s spat is that it has come so early. This battle – and its withering exchange of statistical munitions – is set to rage between now and the referendum vote.

Those already suffering a wearisome sense of déjà vu can draw this comfort at least: the debate has taken on a new lease of life due to significant discoveries in the North Sea that bring the prospect of handsome oil revenues for years to come.

The decline in reserves is neither as steep nor exhaustion as imminent as some have feared. A combination of a high oil price, exploration in new areas and enhanced exploration and drilling technology has worked to extend the life of many fields and make viable some new ones. So this is not at all a backward-looking argument over what might have been – providing the price holds up.

The calculations by the Scotland Office do throw up a worryingly large deficit figure. But this figure is conjured up over 30 years – and there is no end of frightening statistics to be had if all the public finances were calculated on this basis.

It would be equally valid for the SNP to counter that, even if it accepted the basis of Mr Moore’s calculations, the annual deficit would amount to barely £1.3bn – which, over a period encompassing three recessions – would be comfortably within the ability of an independent Scotland to finance.

Equally, however, it is fair to note that Scottish public spending has been high over this period, and that for an independent Scotland to begin to accumulate an oil fund on the Norwegian model would require a severe curtailment of current public spending: oil revenues cannot stretch to both.