FMQs: We were all “wrong” about oil

The First Minister came under fire yesterday from political opponents at Holyrood who warned that the Nationalists’ economic plans would leave Scotland facing billions of pounds more in cuts.

It came as the Office for Budget responsibility (OBR) slashed its estimates for the tax take from the North Sea in coming years after the recent collapse in the oil price. The OBR now says about £600 million will be generated by the sector in 2016-17 – less then 10 per cent of the £6.8-7.9 billion predicted by the SNP.

Chancellor George Osborne unveiled a series of tax breaks in his Budget this week aimed at reviving the beleaguered industry.

Ms Sturgeon told MSPs at First Ministers Questions yesterday: “When the Scottish Government was projecting an oil price of $110 a barrel, the OBR was projecting a price of $100 a barrel and the UK government’s Department of Energy and Climate Change was projecting a price of upwards of $120 a barrel.

“I think it’s fair to say everybody’s projections about oil were wrong.”

Her predecessor Alex Salmond famously claimed that the North Sea was on the verge of a “second oil boom” during the referendum campaign. He missed First Minister’s Questions in parliament yesterday as he was signing copies of his new book in Glasgow.

Ms Sturgeon accused Labour of “gleefully pouncing” on bad news about Scotland’s economy.

She added: “The fact is that the projected decline in oil revenues for the next few years is dwarfed in every single one of these years by the projected onshore non-oil revenues.

“In other words, our revenues as a country are increasing, our public finances are improving.”

Energy giants have announced hundreds of job losses in Scotland’s crucial North Sea gas sector, after the price of oil plunged from $110 a barrel to about $60 now. And as firms cut costs, it has placed grave doubts over future investment and production levels which were already under threat.

Labour deputy leader Kezia Dugdale said even the revised OBR oil figures mean the SNP’s plan for full fiscal autonomy would result in public spending cuts in Scotland worth £7.6bn, exposing the “dodgy sums” at the heart of the SNP’s general election economic strategy.

“The SNP’s plan for full fiscal autonomy within the UK would be devastating for Scotland,” Ms Dugdale said.

“Last week their own figures exposed the £6.5bn worth of cuts that would be needed because of the SNP’s plan to scrap Barnett and rely on oil revenues. Now we know the figure is even higher at £7.6bn.

“Scots appreciate straight talking. What we can’t stand is when our government tries to cover up the truth about the impact of its policies.”

Public cash is currently distributed across the UK using the Barnett Formula, but the SNP wants Scotland to have full fiscal autonomy – meaning it would have to raise enough in taxes and borrowing to cover all its spending.

Ms Sturgeon told Holyrood the Scottish Government would publish a new bulletin setting out its latest forecasts for oil revenues “as soon as possible”.

She said the Scottish Government would “take the time to analyse the fiscal changes” for the oil and gas industry that Mr Osborne announced as part of Wednesday’s Budget.

BP announced 300 North Sea job losses earlier this year, following on from Shell and Chevron, which last year unveiled plans to axe hundreds of jobs.

The oil and gas industry is worth £35bn annually to the UK economy, but a recent Scottish Parliament report suggested the current crisis could see the axe fall on 15,000 of the 200,000 jobs north of the Border.

The Chancellor unveiled measures aimed at delivering a £1.3bn boost to the North Sea oil industry in his Budget.

Conservative leader Ruth Davidson attacked Ms Sturgeon over her advice this week for English voters to vote Green in the election. The Tory chief quoted the Green Party south of the Border describing the £1.3bn support for the oil and gas industry as “huge tax breaks for the fossil fuel dinosaurs”.

Ms Davidson said: “When she’s in London she urges people to vote for a party that says that we should stop drilling altogether and give hundreds of thousands of North Sea oil workers the sack.”

FMQs: We were all “wrong” about oil - Sturgeon