Leaders: SNP must not dismiss fracking opportunity

To FRACK, or not to frack. That is the multi-billion dollar question facing the United Kingdom, and Scotland, in the very near future.

The answer, however, is far from clear as the process of hydraulic fracturing, to give fracking its Sunday name, to produce oil or gas is extremely controversial.

Yet, it is a question to which we will soon have to have an answer, and a report published today by the PwC financial services company helps to explain why. According to the report, Shale Oil – the Next Energy Revolution, fracking could increase the UK’s GDP by around 2 per cent, to 3.3 per cent by 2035, adding between £30 billion and £50bn to the economy.

It is thought that could mean up to £5bn for Scotland over the same period. Globally, it is estimated that fracking could cut the price of oil by 25 to 40 per cent, a reduction of about $33 to $50 per barrel.

The potential gains for Scotland are significant, the report states, making the obvious point that with our expertise in oil and gas already established, Scottish companies would be well placed to exploit the fracking revolution, prolonging the life of the North Sea industry. So, to use the modern idiom, what’s not to like?

Quite a lot, say fracking’s opponents. As professor of public health, Dr Madelon Finkel, says in this newspaper today, there are a large number of possible problems.

Fracking uses special mixes of chemicals in the extraction process. These need to be properly monitored or they could become dangerous if they leak.

There is the potential to release methane, a greenhouse gas, in the process and, with such large amounts of water used, there might be a depletion of the water held in rocks below our countryside, which could have serious long-term environmental effects.

It is claimed that the fracking process can cause earthquakes, as it is said to have done in the north-west of England.

Set against that, there is the PwC report adding to evidence from the United States, where fracking has reduced the price of oil, created large numbers of jobs – something said to have helped Barack Obama retain the presidency – and cut the US’s dependency on Middle-Eastern oil. The US’s use of fracking has significantly altered its economy and the global oil trade.

So, how should we proceed? The answer is with neither undue haste, nor hesitant timidity. What is required is what might be called cautious ambition, beginning with some large-scale tests in Scotland to see whether fracking is both sustainable in terms of the scale required to produce a viable amount of gas or oil, and environmentally safe.

To that end, it is disappointing the SNP government has no plans to do so in the immediate future. If the party is, as it says, ambitious for Scotland, the SNP should not immediately dismiss something that might help sustain our prosperity in the future.

Wake-up call over public spending

To THOSE who might adapt an old Edinburgh adage and apply it to the Scottish public-sector finances, declaring sniffily “you’ll have had your austerity”, the report out today from the Centre for Public Policy for Regions will deflate such hauteur.

The CPPR says the Scottish budget faces a real-terms cut between 2010 and 2018 of £6.3 billion. Half the reductions will be made by 2013, leaving cuts of £3.2bn to come. Cuts this year and next will be milder, but there will be deeper budget reductions in the final three years.

Bleak though it is, this forecast is no surprise. Earlier this week the Fiscal Commission, set up by the Scottish Government, concluded that Scotland faces “a challenging fiscal envelope for at least the next five years”.

Leaving aside a debate on whether an envelope can be challenging, the message from the SNP’s experts was that there are tough times ahead. And they said that applied “irrespective of the constitutional framework” for Scotland.

Which brings us back to the CPPR. After explaining the figures, it says that both the UK and Scottish governments should be starting to take a fundamental look at what we spend public money on. Should we, for example, continue to ring-fence health spending? Might benefits be cut further? Would it make sense to increase taxes so we can mitigate the effects of the cuts? All of these questions, and more, deserve answers. Neither government appears to want to provide them in the run-up to the independence referendum.

These two reports are a wake-up call to politicians. We cannot spend the next 18 months just debating the constitution. We need a serious discourse on public spending priorities in Scotland, and we need it now.