SNP cautioned over oil forecasts

Mar 15 2013

The Business Secretary has cautioned the SNP for relying too heavily on best estimates for oil revenue to help fund an independent Scotland.

Previous reliance on windfalls from banking in the UK should be a warning about making predictions, Vince Cable said at the Scottish Liberal Democrats' spring conference.

A best-case scenario, outlined in a Scottish Government analytical bulletin this week, predicted oil tax revenue could be as high as £11.8 billion by 2017-18 - enough to fund a third of the Scottish Government's current annual spend.

The Office for Budget Responsibility (OBR) predicts oil tax revenue will drop from £6.7 billion this year to £4.1 billion by 2017-18. The Scottish Government suggests the industry could generate as much as £57 billion in tax revenue over the six years to that point.

Mr Cable said that when he was an oil economist, his employers told him people who claim to predict the future are lying, even if by chance they are later proved right. He said: "When the Scottish Government says in 2017-18 there will be £57 billion in oil revenue, which of course would come to an independent Scottish Government and provide you with a Norwegian nirvana, they may be right.

"It's possible, but equally you have to look at other scenarios, including the Office of Budget Responsibility - and of course they're not political, they're completely independent. On another scenario, they said it may not be £57 billion, it may only be £31 billion. That would be an unmitigated disaster."

Taxes would have to rise or services would have to be cut, he said.

When the Scottish Government analysis was published, First Minister Alex Salmond said: "When the expected increase in production to two million barrels a day is taken into account, there can be little doubt that Scotland is moving into a second oil boom."

Mark McDonald, MSP for North East Scotland, said: "Vince Cable is simply adding his voice to the chorus of anti-independence politicians who try to con people into thinking that it's bad for Scotland to have access to the tax revenues from our own oil and gas resources, but good for all the revenues to go to Westminster. The No campaign must think the people of Scotland were born yesterday.

"In fact the Scottish Government took the mid-range estimate for North Sea tax revenues, which forecasts approximately £48 billion in revenues over the six-year period to 2017/18. Instead of Westminster wasting more of our North Sea revenues, we need independence so that they can be used for the long-term benefit of the people of Scotland."