Scottish independence: Oil fund clash at FMQs

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ALEX Salmond has been challenged by opposition leaders over private advice he received warning that an independent Scotland would have to raise taxes, cut taxes or borrow more to invest in a new oil fund.

At a stormy First Minister Questions - during which Labour leader Johann Lamont was twice asked to withdraw claims that the SNP Government was “dishonest” - the First Minister was questioned over the affordability of his plan to save North Sea oil revenues.

Advisors for the Scottish Government have warned tax hikes or spending cuts would be needed to establish an oil fund. Picture: PA

Advisors for the Scottish Government have warned tax hikes or spending cuts would be needed to establish an oil fund. Picture: PA

Last week, SNP Ministers pointed to a new report by the Scottish Government appointed Fiscal Commission which declared that cash for an Oil Fund could be salted away without disrupting the public finances, as soon as debt was on a “downward path”.

However, it has now emerged that a private paper written last year by the office of the Scottish government’s chief economic adviser, and released under Freedom of Information legislation, warned SNP Ministers that “if the Scottish government had wished to establish an oil fund, it would have had to reduce public spending, increase taxation or increase public sector borrowing.”

Mr Salmond insisted in parliament yesterday that the Government paper, published last year, represented the Government’s “early thinking”, and that Ministers now stood by the advice of the Fiscal Commission.

He also attacked the way oil resources had been spent by the UK over the last thirty years.

But the independence of the Fiscal Commission report was then challenged by Scottish Tory leader Ruth Davidson who revealed that parts of it were cut and pasted from the previous Scottish Government paper, but with “the bad stuff in the bin”.

“It’s the Alistair Campbell school of dodgy dossier writing,” she told Mr Salmond.

Both she and Ms Lamont claimed the SNP were “deceiving” voters into thinking the Oil Fund could be afforded.

The Scottish Labour leader said: “This Government says one thing in private and another in public. Will the First Minister come clean with the people of Scotland? Will he be raising taxes or cutting spending and when was he going to tell us?”

However, Mr Salmond replied that the warning had formed part of the Government’s “early thinking”.

He added: “What the Fiscal Commission pointed out was that the criteria for marshalling Scotland’s enormous oil resources should be two oil funds, one a stabilisation fund to take advantage of windfall gains and two a long terms savings fund.”

He said this was an “entirely sensible thing to do, and if we had these criteria while these resources were being mismanaged by the UK Government then we would be in an entirely better place.”

He went on: “Scotland has the opportunity over the next 40 years and we are not going to make the same mistakes again.”

Ms Lamont continued: “Honesty is not something this government deals in.” That prompted an interruption from Presiding Officer Tricia Marwick who declared: “Ms Lamont I think you should withdraw that.”

Ms Lamont replied: “I don’t know what word to use to describe a Government that says one thing in private and something different in public.”

Ms Davidson then said she had compared the two reports using computer software. “And what did I find, whole sections cut and pasted. Entire paragraphs on debt interest and notional borrowing costs - all the good stuff made the grade, all the bad stuff hit the bin. It’s the Alistair Campbell school of dodgy dossier writing.”

Mr Salmond replied that the Fiscal Commission had been given access to “the Civil Service” research which was “common to both reports”.

However, Ms Davidson said: “Isn’t it the case he has no wish to be straight with the people of Scotland he would rather try and hoodwink them to a Yes vote with half truths and incomplete analysis.”

• The Scotsman Conferences is hosting a series of events capturing the many facets of the Scottish independence debate. 3 December sees a formidable line up of expert speakers tackle “The Independence White Paper: A Business Plan for Scotland?” For more details on this and other great events please visit