Scottish independence: saving oil money would hit public spending, says think tank

A think tank has said less would be spent on public services if
Scotland creates oil fund

Scottish independence: saving oil money would hit public spending, says think tank

by Róisín O'Brien

The SNP’s plan to set up a separate oil fund for an independent Scotland has been questioned by a Glasgow think tank.

The Institute for Public Policy Research (IPPR), which has close links with the Labour Party in Scotland, argues that setting up the oil fund by taking money from the mainstream budget for the scheme would lead to a larger government deficit in three years’ time, despite Scotland’s current situation as currently more economically stable than the UK as a whole.

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The report stated it: "[A Sovereign Oil Fund] will allow greater certainty and consistency of revenue streams for budgeting purposes...Doing so, however, leaves open the challenge of how to deal with the resultant widening of the Scottish deficit.”

Report author John McLaren, a former advisor to former Labour first minister the late Donald Dewar explained that: "If the idea of having some sort of oil fund is a good idea, especially when something is so erratic, it produces a short term gap in funding while you build that oil fund up and how you do that and how much oil you put into that fund, all of these sorts of questions need to be further explored."

Norway with a population similar to Scotland has a $680bn sovereign-wealth fund, the world’s biggest, is currently planning to buy stakes in 195 properties in 11 European countries, including Spain, Italy, Poland, the U.K. and France.

Alistair Darling, head of the Better Together campaign, weighed in by commenting: "What this report shows is that [the SNP] would be looking to set up this fund at exactly the same time that the revenues from oil and gas would start to steeply drop.”

"This would leave Scotland with a large deficit and would mean that some very hard choices would have to be made on public spending and public services."

The Centre based its report forecasts from the independent Office for Budget Responsibility, which had downgraded estimated tax revenues from North Sea oil and gas in the next few years.

A range of factors, such as accidents and increased maintenance, have contributed to the basic depletion of North Sea reserves, the centre has argued.

While the Scottish government has disputed the figures, the centre has pointed out that they are “roughly consistent” with an independent report from Aberdeen University.

A Scottish government spokesman also stated however: "With 24 billion barrels of oil still to be recovered with a wholesale value of £1.5 trillion, the North Sea oil and gas sector has a bright future.”

In the past decade, oil revenues has comprised 21.3 percent of Scotland's annual income.

The government spokesperson added that the CPPR’s forecasts "which are pessimistic relative to many others, should not be seen as the definitive picture, with the UK government's own energy department expecting oil prices of $120 in 2017.”

"An independent Scotland will be able to face the difficult financial choices ahead from a stronger position than in the UK and use the full range of economic levers to support growth, boost revenues and deliver public services."

Oil Fund

Alex Salmond revealed in February his plans for an independent Scotland to create an ''oil fund'' to help future generations.

Mr Salmond stated that putting aside about a tenth of oil and gas tax revenues, estimated at around £1bn a year, would create a £30bn fund in the first 20 years of Scottish independence.

The model is influenced by one currently operated by the Norwegian government.


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commented 2012-12-20 18:32:44 +0000 · Flag
Typcial Labour economic incompetance. If you are going to compare
Ruk with an independant Scotland then at least take out of the Scottish
expenditure that which is forced on us by membership of the UK
like Trident and Associated infrastructure, Other Nuclear Submarines, Aircraft Carriers, Foreign Military Base, Wars, Massive Interest Payments,
Imperialistic Embassies wordwide,Share of English Courts/Prisons and
scores if not hundreds of other costs imposed upon us
And for anybody to seriously argue that the Oil price is going to
plummet in the foreseable future is beyond a joke.
Its about time we started calling these people what they are
and Quislings about sums them up
published this page in News 2012-12-20 16:48:31 +0000