£41bn row over true cost of independence

THE SNP is facing fresh demands to set out the cost of independence, after figures showed Scotland had run up a financial black hole of more than £40 billion in recent decades.

The UK government released figures stretching back 30 years, as the gloves came off in the row over Scotland’s ability to stand on its own two feet, with a referendum looming in the coming years.

However, the Nationalists insisted the figures showed the nation was in better shape than the UK as a whole, pointing out that the UK had a £715bn debt over the same period.

Scotland had a deficit of £13.4bn in 2009-10, even taking into account its share of North Sea oil and gas revenues. The total deficit stretching back to 1980 is £41bn, according to figures released by the Scotland Office yesterday. This compares with an annual budget of about £30bn for Alex Salmond’s government.

The latest salvos between Holyrood and Westminster came the day after finance secretary John Swinney claimed Scotland could be the world’s sixth-richest nation with control of all its natural resources after independence.

But Scottish Secretary Michael Moore insisted Mr Swinney had to explain the £41bn deficit the country had accumulated over the past three decades, according to the latest analysis of the Government Expenditure and Revenue in Scotland (GERS) figures.

Without oil receipts, this deficit reaches almost £200bn and peaks at £20bn in 2009-10.

Mr Moore said: “It is time for straightforward answers on the Scottish budget and oil and gas revenues. We have seen a raft of claims about those figures recently, but the people of Scotland deserve to have the numbers at their disposal and an understanding of what independence would mean for Scotland’s budget.

“Many supporters of separation point to North Sea oil and gas revenues when they start talking about how an independent Scotland would be financed.

“But the truth is that the facts don’t back up this logic.”

Shell has announced plans for fresh exploration in the North Sea, which should see the oil industry continue to thrive for the next 40 years.

Mr Salmond was quick to seize on this as a springboard to independence as he addressed delegates at the SNP conference in Inverness at the weekend.

But Mr Moore said the latest official figures put North Sea revenues into some “proper context”.

The Liberal Democrat minister went on: “If you had allocated every single penny of oil and gas revenues to Scotland over the past 30 years – a figure of £156bn – then you would still fall £41bn short of what both governments have actually invested in Scotland.

“The oil and gas sector is absolutely vital for Scotland and Britain. Let there be no doubt about that. But when we start talking about how a separate Scotland will be financed, then we should also stick to the facts.

“The Scottish Government has to tell us what the financial cost of independence would be for Scotland. They must provide answers.”

But the Scottish Government insisted the figures showed a rosier fiscal position in Scotland that the rest of UK, with a £19bn relative surplus north of the Border between 1980 and 2010.

A spokesman for Mr Swinney said: “Over the same period, the UK’s deficit was £715.5bn – Michael Moore’s figure of £41.4bn for Scotland is thus £19bn less than Scotland’s per-capita share. Thanks to Mr Moore’s boomerang statement, it is now the official UK government position that Scotland is in a financially much stronger position than the UK as a whole, which is an extremely welcome admission by the Westminster coalition.

“Scotland has run a current budget surplus in four of the five years to 2009-10. The UK was in current budget deficit in each of these years – and hasn’t run a current budget surplus since 2001-2. The Scotland Office suggests that between 1980-81 and 2009-10, there were nine years when Scotland had a net fiscal surplus.

“Official UK Treasury figures show that over the same period there were only six years when the UK as a whole had a net fiscal surplus.”

Labour said the issue raised wider questions about the importance of the UK Treasury to Scotland and called for “honesty” from Mr Swinney.

Finance spokesman Richard Baker said the banking crisis had underlined this role. “It was thanks to being part of the United Kingdom that Royal Bank of Scotland and HBOS were able to be saved and along with them the savings, mortgages and pensions of millions of Scots,” he said.

“Mr Swinney also said the ‘squandering’ of £300bn of North Sea revenue had nothing to do with independence, yet there was no acknowledgement of the higher levels of spending per head of population in Scotland and the investment in infrastructure like new roads, rail links, schools, hospitals and houses.

“It’s also worth pointing out that only four years ago, the Republic of Ireland was the sixth wealthiest country, and look what happened to them.

“Basically, all the SNP want people to hear is what they want to tell them through their separatist propaganda. All other points of view or statistics are in their eyes simply wrong. That is no way to conduct the most important debate Scotland has ever faced.”

Scottish Liberal Democrat leader Willie Rennie said: “The benefit to Scotland of being part of the UK family is clear.

“The SNP needs to explain what services would have been cut to pay for the £41bn cut to Scotland’s budget over the last 30 years. How many nurses, doctors and teachers would be sacked, and how many hospitals and schools would be closed if the SNP had their way?”

BP last week announced a multi-billion-pound offshore investment in the North Sea and said reserves would last until at least 2050.

It confirmed that, with its partners ConocoPhillips, Chevron and Shell, it had been given the go-ahead to develop the second phase of the massive Clair Field on the Atlantic frontier, west of Shetland, as part of a £10bn investment over the next five years.

The 2050 estimate by BP chief executive Bob Dudley, and his assertion that the North Sea now had the potential to maintain production up to 250,000 barrels a day until 2030, was far more optimistic than recent forecasts.

However, also last week, a report by industry body Oil and Gas UK suggested the North Sea could run out as early as 2028 if production continued at its current rate.