SNP prepares for battle over North Sea cash

THE SNP Government is demanding talks with Westminster on transferring billions of pounds of annual North Sea oil and gas revenues north of the border.

In an escalation of cross-border hostilities, Finance Secretary John Swinney has also written to Chancellor Alastair Darling arguing that Holyrood should set its own levels of petrol duty and road tax.

Drivers and hauliers have backed the move but Treasury sources dismissed the demands, saying major changes were unlikely. Swinney's letter, which details the Nationalists' response to the Chancellor's budget statement earlier this year, also cites a motion agreed by the Scottish Parliament earlier this month which voices "disappointment" at some of the decisions taken in the budget and regret that measures to tackle fuel poverty are insufficient.

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On the transfer of valuable oil and gas revenues, Swinney says: "Such a change would mean that we could finally invest these revenues in the future wealth and success of Scotland after decades of unfortunate policy decisions by the UK Government that have seen oil revenues directed towards filling the black hole in Britain's finances rather than being invested in the sensible manner that has been adopted elsewhere.

"The transfer of oil and gas revenues would form part of discussions between officials on a move to greater financial independence for Scotland."

Swinney also criticises the "consistent failure" of the UK Government over decisions on fuel and vehicle excise duty.

He adds: "There is the need to recognise that people living in rural areas are disproportionately affected by increased fuel prices because of the greater distances involved and fewer alternatives to the car.

"While those who live and work in urban areas have the choice of which vehicles they can use, such choice is not available to farmers and others who live in rural areas.

"I request that in the future you agree for decisions on fuel duty and vehicle excise duty to be taken in Scotland given that we would take greater consideration of the rural impact of such policy levers, and the impact on our haulage industry."

The Finance Secretary previously wrote to Darling prior to the UK budget statement in March calling for a meeting between officials to discuss a move to greater financial independence for Scotland. He added: "I would be grateful for your confirmation that you are content for such meetings to now take place".

Road users backed the move. Phil Flanders, the Scottish director of the Road Haulage Association, said: "It's a very positive idea and it's right that the decisions on road tax and fuel duty in Scotland should be taken according to Scottish needs. Bring it on, as they say in politics.

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"Our Northern Ireland colleagues have the option to go south and fill up and save a few hundred pounds a tank. We don't have that here."

Neil Greig, head of policy in Scotland for the Institute of Advanced Motorists, said: "It's an interesting idea and I can imagine it being very popular. It will be very relevant to drivers in rural Scotland. It is a sad fact that the people who have little or no option to choose public transport and who are the ones most reliant on cars are the ones who must spend most to drive."

He added: "However, the question will be what the money is spent on. Right now, little of the money raised from drivers is spent on roads."

A Treasury spokesman could not confirm whether Swinney's letter had been received but added: "We will be replying to Mr Swinney in due course."

A source at the Treasury signalled that Whitehall would be unlikely to give the SNP what they wanted.

He said: "The position on taxation is already set out very clearly in the existing legislation. I don't think we should be expecting any changes."

Scottish Labour reacted with scorn. The party's finance spokesman Iain Gray said: "This is nothing short of political posturing from the SNP and it's a blatant attempt to divert attention away from their statement this week that exposed the party's lack of ideas to take Scotland forward."