Carmichael: Don’t devolve oil and gas revenues

SCOTTISH Secretary Alistair Carmichael has warned that if oil and gas revenues were devolved to Holyrood £8.7 billion would be wiped off the amount the Scottish Government has available for public services.

Alistair Carmichael has warned against the devolution of oil and tax revenues to Scotland. Picture: PA

Mr Carmichael said that the £18.6 billion expected by the Scottish Government between 2016/17 and 2018/19 would have to be reduced by £8.7 billion to £9.9 billion - a reduction in 47 per cent in the expected oil and gas revenues.

He pointed out that the loss was the equivalent of one third of the money handed to councils in Scotland for local services or a quarter of the Scottish health budget.

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His comments came as UK Oil and Gas, the body which represents the industry, called for a change in the tax regime because of the falling price of a barrel of oil.

Mr Carmichael said: “Had Scotland been independent today, the Scottish Government would have had billions less to spend on essential public services.

“This is not a dry argument about oil revenue: these numbers represent the ability – or otherwise – of an independent Scotland to pay for doctors, nurses, teachers and other services on which the public rely.”

Labour committee chairman Ian Davidson reminded him that the SNP is pushing for all oil and gas revenues to be devolved as part of the negotiations on more powers for Holyrood being discussed by the commission chaired by Lord Smith of Kelvin.

He added: “No doubt Lord Smith, in his wisdom, will reflect upon the impact of a 25 per cent cut in health budget as a result of a cut in the oil price and come to an appropriate conclusion.”

But the Scottish Government accused Mr Carmichael of “gloating” over a loss of revenue.

A spokesman for SNP Finance Secretary John Swinney said: “These are bizarre comments from a UK cabinet minister, gloating about a fall in his own Government’s revenues. This is also a boomerang attack from Alistair Carmichael, coming on the same day that the oil industry has attacked the UK Government’s damaging North Sea tax regime, which continues to threaten jobs and investment.

“The fact is, oil is a fantastic asset for Scotland and will be for decades to come, with as much in value still to come as has already be extracted – what is needed is the stable fiscal set-up the sector is calling for.”

In a letter to Chancellor George Osborne the chief executive of UK Oil and Gas Malcolm Webb appealed for an end to the increase in the oil and gas supplementary charge introduced in 2011 and tax breaks for the industry because of a 30 per cent decline in revenues.

Mr Webb said: “Last year total industry expenditure exceeded post-tax revenues; this year it is heading in the same direction. This is not a sustainable situation. Without swift action, capital investment is set to halve by 2017. Urgent tax reform is now needed for the North Sea to remain globally competitive and attractive for investors.”

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