Koyal Group Forum Osborne in warning over SNP pl..
Osborne in warning over SNP plans for oil fund10 Years AgoSource
the koyal group, Osborne
in warning over SNP plans for oil fund
ALEX
Salmond's hope of establishing a Norwegian-style oil fund in an independent
Scotland would result in £12.5 billion of spending cuts or tax rises, George
Osborne has warned. The
Chancellor, launching the Treasury's
fifth analysis paper on independence, also rubbished the First Minister's
assertion that there was £1.5 trillion worth of revenues still in the North
Sea, noting how the Office for National Statistics valued it at £120bn. Speaking
to the Offshore Europe oil and gas conference in Aberdeen, the Chancellor
argued Britain's integrated economic union worked well for Scotland.
The
SNP hit back, saying the UK Government's mismanagement of the oil and gas
industry showed it could not be trusted.
John
Swinney, the Scottish Finance Secretary, claimed the Treasury paper actually
showed "there is no doubt Scotland can not only afford to be an
independent country but has the means to thrive" after independence.
Stressing
how oil and gas revenues were the most volatile that existed, Mr Osborne in
his speech warned the SNP on overstating its case for independence on black
gold.
He
said: "To suggest that spending can be increased, tax bills cut, an oil
fund established, household energy bills kept down and investment in renewables
increased simply doesn't add up."
The
analysis paper points out that, if oil revenues are excluded, then public
spending in Scotland since the start of devolution in 1999 was around 10%
higher, £1200 per person, than the UK average.
Had
Scotland received its population share of spending over this period, the paper
states, then it would have received £74bn less, or £6bn a year.
But
it then notes that if oil revenues are included, Scotland's contribution to UK
tax revenues increases substantially, with Scotland's fiscal balance being
"very similar" to that of the UK as a whole and, while Scottish
spending would still be 10% higher, its revenues to the Exchequer would be 10%
higher too.
The
paper's central attack is on creating a Norwegian-style oil fund in an independent
Scotland, which the SNP
has long championed. The Scottish Government has said it plans to establish one
"when fiscal conditions allow".
Since
1990, Norway has invested profits from its oil industry into coffers for the
nation's future when its budget has been in surplus. It contains £475bn - 40%
bigger than the value of the Norwegian economy - making it the world's largest
sovereign wealth fund.
The
Treasury paper stresses how setting one up post-independence might not be
straightforward, noting how production was due to decline and projected returns
might be over-optimistic.
The
analysis points out if an independent Scotland wanted to set up a
Norwegian-style oil fund, then in 2016/17 it would need to find £8.4bn to
balance its books, implying 13% spending cuts or 18% tax rises. If
Scotland received its geographic share of oil revenues on independence, £4.1bn,
putting it into the new fund, then this would mean the fiscal consolidation
would rise to £12.5bn with spending cuts of 19% or tax rises of 27%. |
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