Scottish independence: Alexander in Salmond blast

Alexander said Salmond  persisted in offering a fantastical picture of a separate Scotland's public finances. Picture: Contributed
Alexander said Salmond persisted in offering a fantastical picture of a separate Scotland's public finances. Picture: Contributed
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ALEX Salmond is being unfair to voters in the referendum by “promising milk and honey” when he should be spelling out the “painful choices a separate Scotland would have to make”, the UK’s chief treasury minister has claimed.

Danny Alexander, Chief Secretary to the Treasury, said the First Minister was promoting a “fantastical picture of a separate Scotland’s public finances” in the referendum campaign.

The cabinet minister made the claim in letter to Mr Salmond after the UK Office for Budget Responsibility (OBR) revised down the amount of cash it expects to be raised from North Sea oil and gas revenues.

Robert Chote, chairman of the OBR, this week revealed the independent body is now forecasting revenues of £61.6bn will be raised between 2013-14 and 2040-41 – down from £82.2bn.

Mr Alexander yesterday said Mr Salmond was “still making plans based on untold oil wealth beyond anything independent forecasters consider plausible”.

The Lib Dem MP challenged Mr Salmond to “provide the electorate with a clear plan for how you would fill this black hole in a separate Scotland’s public finances” ahead of the referendum on 18 September.

Mr Alexander said in the letter: “This stage in the referendum campaign should be about presenting the people of Scotland with the facts about what separation would mean. Instead you persist in offering a fantastical picture of a separate Scotland’s public finances.”

The Scottish Government has claimed the OBR forecasts are based on a “very low estimate of future total production” and had published higher forecasts for oil and gas income. It said this could be between £2.9bn and £7.8bn in 2016-17 – the first year of an independent Scotland if there is a Yes vote in September.

Scottish ministers have further predicted that revenues could then amount to £34.3bn over the next five years – equal to almost £7bn a year.

The row over Scotland’s oil reserves has become a key battle ground in the referendum debate, as it is closely tied to future spending plans if it leaves the UK.

The First Minister has already dismissed the OBR’s figures as “nonsense”.

However, Mr Alexander insisted the revisions by the OBR made Scottish Government forecasts “look even more incredible”. He said: “It is clear to every independent expert that there is no boom in oil revenues on the way, and because extraction is expected to become more expensive, we have to be realistic about tax revenue projections.”

He added: “This is unfair to the electorate – it is incredible that so close to the referendum you are still promising milk and honey when you should be laying out the real facts about the painful choices a separate Scotland would have to make.”

Professor Sir Donald MacKay, a founding director of an oil operating company and a former economic adviser to the secretary of state for Scotland, insisted, though, that the OBR forecasts “stand in stark contrast to the views of those who have lived with the oil industry over many years”.

He said: “Unless the oil price falls out of bed in the next two years, the tax revenue accruing will be much higher than that estimated by the OBR.”

A spokesman for Scotland’s energy minister Fergus Ewing last night attacked Mr Alexander as an “apologist for Tory cuts”.

He said: “Danny Alexander must apologise for the Treasury’s ‘dodgy dossier’ on the finances of an independent Scotland, just as he should apologise for his leading role in Westminster’s 2011 tax grab on the North Sea, which he boasted about before being forced to scrap it.”