SNP under-estimated deficit by £3bn, says Treasury

THE Scottish Government has under-estimated Scotland’s deficit by more than £3 billion and relies on over optimistic predictions on oil and gas revenues which are already out of date, a Treasury analysis paper has confirmed.

SNP Finance Secretary John Swinney. Picture: Michael Gillen
SNP Finance Secretary John Swinney. Picture: Michael Gillen

The paper has come ahead of publication of the Scottish Government Expenditure and Revenues analysis as Treasury officials forecast that the Scottish deficit will be higher this year for the first time than the UK as a whole in terms of a percentage of GDP.

But SNP Finance Secretary John Swinney has hit back saying that the Organisation for Cooperation and Economic Development puts scotland as the 14th wealthiest nation in the world.

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But the Treasury analysis claims that the debt per head in Scotland will be between £880 and and £1,000 more per head than the UK in 2016/17, the year the SNP propose independence would happen.

SNP Finance Secretary John Swinney. Picture: Michael Gillen

Treasury officials estimate that by 2016/17 the deficit will be 5.3 per cent or £9.1 billion, the equivalent of £1,690 per head.

Scottish Government estimates suggest that the deficit would be just 3.2 per cent or £5.5 billion at £1,020 per head.

But the Treasury points out that independent analysis has the figure much closer to their own.

The Centre for Public Policy for Regions (CPPR) estimates 5.1 per cent or £8.8 billion, the Institute for Fiscal Studies puts it at 5.2 per cent or £8.9 billion and CitiGroup suggests it will be 5.4 per cent or £9.3 billion.

And while the forecast for the UK deficit for 2016/17 from the independent Office of Budget Responsibility puts the deficit for the UK at about £750 per head, the estimates for an independent Scotland range from £880 to £970 more. Even the Scottish Government’s estimate would mean each Scot would have £270 of extra debt.

The paper also notes that the Scottish Government is still using oil and gas revenue forecasts for 2012/13 of at least £6.9 billion when the actual figure was £6.5 billion.

Lib Dem Scottish Secretary Alistair Carmichael said Alex Salmond’s position was “bereft of any credibility” as he urged the nation not to “walk away from one of the most successful political, economic and social unions that the world has ever seen”.