The Scottish government has been accused of trying to bury a report that predicts North Sea oil revenues could be £40bn less than the SNP’s most optimistic forecasts by releasing it the day before Holyrood’s summer recess – and after the deadline for emergency questions.
The oil and gas bulletin published by John Swinney, Scotland’s finance minister, reveals that revenues are expected to plummet to well under a quarter of recent forecasts, falling to as low as £2.4bn in total over the next four years.
The bulletin shows a vast gulf between the most optimistic figures given to Scottish voters before last year’s independence referendum by Alex Salmond – then the Scottish National party leader and first minister – who said a future oil boom would underpin a surge in productivity and national wealth after a yes vote.
The disclosure led to immediate charges from opposition parties that the SNP had repeatedly misled voters about the risks of independence and the cost implications of its current quest for full fiscal autonomy within the UK.
Murdo Fraser, the Scottish Tory enterprise spokesman, said Scotland had “dodged a bullet” by voting no to independence, while Jackie Baillie, Labour’s finance spokeswoman, said the figures “blow the SNP’s policy of full fiscal autonomy out of the water”.
The Scottish government’s independence white paper, which based its forecasts on a $113 a barrel oil price, claimed oil revenues for Scotland could hit £7.9bn in the financial year 2016/17 alone. Its oil and gas bulletin in March 2013 predicted a range of revenues in Scotland’s waters of between £31bn and £57bn for the five years from 2012/13 to 2017/18.
The latest bulletin, which follows extremely gloomy downwards forecasts from the UK’s Office for Budget Responsibility, and with the oil price now at $63 a barrel, discloses that Swinney’s officials now believe tax receipts in 2016/17 will actually be between £500m and £2.8bn.
The most pessimistic prediction for the next four years puts the overall tax income at £2.4bn, or at the very best £10.8bn over four years – but only if oil rises in price to $100 a barrel. By comparison, Swinney’s bulletin two years ago was predicting annual revenues for an independent Scotland hitting a high of £11.8bn in a single year.
James Kelly, Scottish Labour’s parliamentary business manager, or chief whip, raised a point of order at the end of first minister’s questions, accusing Nicola Sturgeon’s government of deliberately suppressing debate about the new figures, by releasing them just before the recess.
Opposition parties had been pressing Sturgeon’s ministers to release its bulletin for months, he said; in previous years it was published in March. Swinney had previously said his officials needed time to assess the implications of changes in oil taxation in George Osborne’s March budget, when the chancellor slashed tax revenues to help the industry cope with the collapse in global oil prices.
As the Lib Dems accused ministers of contempt for parliament, Kelly said: “This bulletin has been asked for for months across this chamber, and has now released it in the last day of the session. It has profound implications for the Scottish economy with projected North Sea oil and gas tax receipts at £40bn less than the white paper.
“I note that the first minister said that the publication was made two hours ago. That’s not a coincidence, because it was published after the deadline for lodging emergency questions.”
In a press statement on the bulletin, Swinney acknowledged that the industry had faced “a very challenging year”. The bulletin pointed out that none of the world’s major forecasters and economic agencies had predicted oil prices collapsing over the past year.
He blamed the UK government for failing to do enough to stimulate investment and profitability.
The finance secretary said the right incentives could boost production by an extra 3bn to 4bn barrels; if the oil price rose and production became more efficient and more profitable, more oil fields now at the margins of profitability could be productive.
“It is not acceptable for the UK government to sit back and accept low revenues. Both governments and the industry must continue to work together to improve efficiency, production and deliver better results for the North Sea,” Swinney said.
“The critical issue is that the UK government needs to deliver on its commitment to consult on incentives to boost exploration in the North Sea, and this consultation must be launched urgently – so that firm proposals can be announced in the [chancellor’s] autumn statement.”
Baillie supported the calls for more far-reaching action by the Treasury, but added: “We know cutting ourselves off from UK-wide taxes would blow a £7.6bn hole in Scotland’s finances.
“Last week the SNP trooped through the lobbies [at Westminster] with the extreme right wing of the Tory party to vote for full fiscal autonomy. It is as clear as day now that they knew the policy would be a disaster for Scotland – the SNP government’s own figures prove it.”
This article was written by Severin Carrell Scotland correspondent, for theguardian.com on Thursday 25th June 2015 15.27 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010