Oil and gas revenue estimates ‘roughly right’

Sir Donald Mackay called North Sea predictions from the OBR 'hopelessly at sea'. Picture: Getty
Sir Donald Mackay called North Sea predictions from the OBR 'hopelessly at sea'. Picture: Getty
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THE Scottish Government has got it “roughly right” with its higher estimates of oil and gas revenues in the coming years, a former economic adviser to the UK’s Scottish Office has said.

Professor Sir Donald MacKay, who also chaired Scottish Enterprise, said lower North Sea predictions from the UK economic watchdog the Office for Budget Responsibility (OBR) were “hopelessly at sea.”

The intervention has been welcomed by First Minister Alex Salmond who called on the No campaign to acknowledge oil and gas has a “bright future.”

The value of oil and gas reserves are at the heart of the independence debate and official figures yesterday showed revenues tumbled by £1.5 billion to just £4 billion in 2013/14. The SNP Government had predicted double this.

But Sir Donald today insists in a new analysis that revenues will be worth £31.4 billion in the five years to 2019 - twice the OBR estimate.

“I would suggest that this scenario is likely to pass the Keynesian test of being `roughly right’ while the OBR’s forecasts are likely to be `precisely wrong’” Sir Donald said in a letter to Mr Salmond.

“The OBR is hopelessly at sea when it comes to forecasting the price of oil.”

Mr Salmond said it shows the Treasury has consistently under-estimated the value of oil revenues.

“It is ever clearer that next month the people of Scotland have a choice between continued austerity with a No vote, or new prosperity and opportunity with a Yes vote,” the First Minister said.

“Instead of continuing to talk down Scotland’s oil and gas sector, the No campaign should acknowledge that the sector has a bright future ahead of it.

“With a Yes vote in September we will be able to ensure that the sector benefits from a more stable taxation regime instead of being subject to surprise Treasury tax grabs – maximising the jobs that the industry creates and ensuring that Scotland’s resources are used to the full benefit of the people of Scotland.”