Budget 2014: Fall in oil revenue underlines 'precarious' nature of an independent Scotland’s finances, says Chancellor

 

A steep drop in the expected tax receipts from North Sea oil and gas fields underlined the “precarious” nature of an independent Scotland’s finances, George Osborne said.

In his last Budget before September’s referendum, the Chancellor told MPs that revenues from oil and gas production were forecast to decline by almost 50 per cent in four years.

He pointed to revised projections from the Office for Budget Responsibility suggesting receipts will fall from £6.1bn in 2012-13 to £3.2bn in 2016-17, the first year in which Alex Salmond hopes Scotland will be independent.

Mr Osborne said: “The Scottish economy is doing well and jobs are being created, but this is a reminder of how precarious the budget of an independent Scotland would be.

“These further downgrades in the tax receipts would leave independent Scots with a shortfall of £1,000 per person - Britain is better together.”

The OBR calculations will be exploited by pro-Union campaigners as evidence of a “black hole” in the Scottish government’s economic plans. The Scottish Secretary, Alistair Carmichael, claimed that independence would be a gamble between a “place in a UK that is working well” and “go-it-alone option with no UK pound and falling oil revenues”.

But John Swinney, the Scottish Finance Secretary, pointed to a report last month which urged the exploitation of large reservoirs of untapped oil. He said: “Increased investment in the North Sea will lead to increased production with a further 24 billion barrels of oil still to come from the North Sea.”

Mr Swinney added: “This was Westminster's last chance to show it could create opportunity for Scotland and reject the diet of austerity. Once again Westminster has failed to deliver for Scotland.

“This Budget confirms a further squeeze on public spending and a further austerity plan.”

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