Danny Alexander: Alex Salmond’s portrait of Scottish finances ‘fantastical’
Chief secretary to the Treasury’s letter circulated a day after OBR’s oil and gas revenue projections lowered by a quarter.
Danny Alexander has accused Alex Salmond of offering a “fantastical picture” of what Scotland’s public finances would look like after independence.
In a letter to the first minister, the chief secretary to the Treasury writes: “With voting on the referendum just weeks away, you are still making plans based on untold oil wealth beyond anything independent forecasters consider plausible.”
He added: “Your unrealistic oil forecasts lead to implausible expectations of a separate Scotland’s fiscal position. This is unfair to the electorate – it is incredible that so close to the referendum you are still promising milk and honey when you should be laying out the real facts about the painful choices a separate Scotland would have to make.”
The letter has been circulated a day after the Office for Budget Responsibility (OBR) lowered its projections for North Sea oil and gas revenues by a quarter, the equivalent to £21bn less revenue over the next 26 years.
Salmond dismissed these estimates as “stuff and nonsense”.
A spokesperson for the Scottish energy minister, Fergus Ewing, said: “North Sea oil is a bonus, not the basis of an independent Scotland’s economy, and is a fantastic asset which will be around for many decades to come. But in an independent Scotland that oil wealth will be properly invested, not squandered as it has been by successive Westminster governments.”
He added that the OBR’s forecasts were based on estimates of future production that were well below those used by the industry, by leading experts and by the UK government.
At the end of May, the Scottish government revised its own, more optimistic, oil forecasts downwards by as much as £12bn for the next three years. According to its analysis, fluctuations in price, production and investment mean North Sea oil tax receipts by 2018-19 could be anywhere from £3.2bn to £8bn a year.
A Guardian investigation into Scotland’s wealth cast doubt on Salmond’s claim that Scotland is one of the richest countries in the developed world, when it found that major industries are dominated by foreign and London-based firms. Nearly all Scotland’s North Sea oil and gas production is licensed to foreign companies. Only one privately owned Scottish business, First Oil, can be identified as holding licences. It produces just 6,000 of the total 1m barrels of crude produced from those oil fields every day.