The Scottish government’s oil revenue forecast for the first three years of independence is £15.5bn wide of the mark, according to the latest analysis produced by the UK government following the crash in oil prices.
According to figures from the Scotland Office, instead of generating the £20.2 billion predicted by the Scottish government between 2016 and 2019, the falling oil price would have provided only £4.7 billion for the exchequer of an independent Scotland – a nearly 77 per cent reduction on pre-referendum predictions.
Alistair Carmichael: Serious questions need to be asked of the Scottish government.
The “independence funding gap” is now the equivalent of a £155 million loss for each of the hundred days that have passed since the referendum on 18th September, the government department claims.
The figures prompted Scottish secretary Alistair Carmichael to ask the Scottish government to explain how “they could have got it so badly wrong” and to “take steps to restore trust in any future oil data they produce”.
The analysis published by the Scotland Office shows the shortfall an independent Scotland would have faced with a current oil price of $60 per barrel compared to the revenue predictions of the Scottish government based on an oil price of $110 per barrel.
The paper also maintains a larger United Kingdom tax base makes it easier to manage the fluctuations of a volatile oil price and the tax revenues it brings in.
Oil revenues would have represented a much larger percentage of overall independent Scottish tax revenue.
Mr Carmichael said: “On referendum day Nicola Sturgeon and John Swinney were predicting ‘a second oil boom’. Scottish government economists were telling us the oil price would be $110 per barrel. Now, just 100 days later, with the oil price actually standing at $60 there is a £15.5 billion hole in the finances of independence. That is a £155 million mistake for every day that has passed since the referendum on September 18th.
“Serious questions need to be asked about how they could have got this so badly wrong on this vital referendum issue. We were making a decision that Scots were going to have to live with forever and the Scottish government are sticking to wildly optimistic oil predictions that have not even made it to the new year.
“This is totally unacceptable and steps need to be taken to restore confidence in any future oil analysis provided by the Scottish government. I know this is something that members of the Scottish Parliament and others will wish to pursue in 2015.”
He added that the UK government was continuing to work closely with industry to address the challenges it faces and to maintain Britain’s energy security by maximising the economic recovery of domestic oil and gas resources.
“The package of allowances and tax reliefs the UK government unveiled as part of the Autumn Statement were the result of the close and productive working relationship with the oil and gas sector in this country. A level of support which is only possible because we can draw on the combined strength and resources of the United Kingdom,” Mr Carmichael said.
Before the referendum stock market analysts Investec backed the SNP’s claim that North Sea oil was a bonus rather than the backbone of an independent Scotland’s economy.
The London firm said it was a “misconception” that Scotland is poorer than the UK as a whole.
In a detailed investors’ note, they said they believed that even without the vast amount of hydrocarbons around its shores, Scotland’s per capita GDP was “roughly equal” to the rest of the UK.