Scottish independence: Vince Cable’s oil warning

BUSINESS Secretary Vince Cable last night warned that an independent Scotland’s reliance on revenue from oil would result in savage public spending cuts or tax rises, as he addressed the Liberal Democrat Scottish conference.

Mr Cable criticised Alex Salmond for banking on a £57 billion oil windfall predicted in a Scottish Government document published this week.

Speaking to delegates at the West Park conference centre in Dundee, Mr Cable suggested that it was impossible to predict the price of oil and those who did so were telling untruths.

The Business Secretary reminded Lib Dem activists that he had been an oil economist with Shell before he entered politics. “One of the things that I learned working there is that you cannot predict the price of oil,” he said.

“The first day I took up my job as the chief economist at Shell I was given a plaque which had an Arabic saying and when I pressed for a translation, they said ‘All those who claim to predict the future are lying, even if they are later proved right.”

He then referred to the Scottish Government’s Oil and Gas Analytical Bulletin published on Monday, which forecast that Scotland’s share of North Sea revenue from now until 2017-18 would be £57bn.

Mr Salmond used that document to suggest that Scotland would benefit from a second oil boom over the coming years – boosting his argument for independence.

But Mr Cable compared the Scottish Government’s estimate with that forecast by the independent Office for Budget Responsibility which claimed that only £31bn would be generated in off-shore oil and gas fields over the same period.

Mr Cable conceded that Mr Salmond’s predictions could come true, but suggested it would be an “unmitigated disaster” if the more conservative estimate favoured by the OBR turned out to be the accurate scenario.

“When the Scottish Government says in 2017-18, there will be £57bn of oil revenue, which would allow an independent Scottish Government to provide a Norwegian nirvana. It is possible,” Mr Cable said.

“But, equally, we have to look at other scenarios including the Office for Budget Responsibility who said in another scenario it may be only £31bn. That would be an unmitigated disaster for the Scottish Government because they would have to savage all public spending or raise taxes. But the key point here is there would be massive uncertainty.

“What is happening with the Scottish Government and its demand for independence is that it is creating another tier of uncertainty.”

He added: “The thing businesses worry about more than anything else is the uncertainty of separation. That worries and I think those who believe in the Union and in Scotland within the Union have to keep reminding everybody of the dangers of creating massive uncertainty at a time when the economy is already suffering.”

Earlier, the party leader Nick Clegg claimed the Lib Dems would “win again” in Scotland as he tried to rally his troops.

Mr Clegg was resolutely upbeat, despite a study of marginal constituencies across the UK by millionaire Tory donor Lord Ashcroft yesterday suggesting that the Scottish Lib Dems face being virtually wiped out at the next general election.

The poll suggested the Lib Dems could only be left with two seats – its strongholds of Orkney and Shetland, held by Alistair Carmichael, and Charles Kennedy’s Ross, Skye and Lochaber seat.

Mr Clegg said the party could take heart from its victory in the Eastleigh by-election, which had been achieved despite the party engulfed in the Chris Huhne speeding ticket scandal.

“Scottish Liberal Democrats, I have a different message for you – win,” Mr Clegg said. “Get back out there. Tell our side of the story and we will win again. On the doorstep, in town halls, in Holyrood and in Westminster. The Liberal Democrats are winning again and we will win again in Scotland too.”