Scottish independence: George Osborne warns on oil fund

 

Scotland would have to make large cuts to public services if it wanted to create an oil fund after independence, according to Chancellor George Osborne.

The Conservative MP, who is visiting Aberdeen today to address the oil and gas industry, said it would take £8 billion out of the budget to divert revenue into a fund.

Scotland can "go it alone", he said, but as part of the UK it has a broader base to "absorb" fluctuations in the revenue.

He dismissed the idea that Scotland could set up an oil fund, like in Norway, without making severe public spending cuts.

"By our calculation you'd have to make some very substantial cuts - £8 billion of cuts - to Scottish public spending," he told BBC Radio Scotland's Good Morning Scotland programme.

"Even if you were getting all the money from Scottish oil, you'd have to make big, big cuts - 5% of the GDP - to your education budget, to your health budget, before you could even start putting money into an oil fund."

The Scottish Government is "all over the place" with proposals for such a fund, he claimed.

"The industry has a bright future if we invest in it, if we work with the industry to make sure we've got skilled kids coming out of our schools, the right graduates and people from our technical colleges, if we've got the right tax regime," he said.

Defending criticism of the UK Government's tax increase on the industry in 2011, he said tax relief has helped offshore exploration.

"The oil industry representatives that I've been talking to in Aberdeen, they're very encouraged about the future and about the tax environment," he said.

"They made the point that the UK Government is working closely with them to try and maximise the amount of oil and gas which is to the benefit of all the people in Scotland and all the people in the UK."

Mr Osborne will make a speech at the Offshore Europe conference on the day he launches the Treasury's analysis paper on Scotland's macroeconomic and fiscal performance.

His visit to the north east comes 10 days after four people were killed when a helicopter carrying workers from an offshore vessel crashed into the sea as it approached Shetland.

The Chancellor is also expected to pay tribute to "brave" offshore professionals who carry out their jobs in "an inherently dangerous environment".

Meanwhile, the Treasury analysis will say that there would be two "fundamental fiscal consequences" if Scotland became an independent country.

Firstly, Scotland would need to rely on a narrower and more volatile tax base to fund spending on public services, according to the Treasury.

Secondly, independence would result in the break-up of the UK tax system. A separate tax system would need to be implemented in Scotland with potential implications for business, individuals and both Governments, it will say.

Mr Osborne will also unveil the final decommissioning deed - a contract which gives oil and gas companies certainty over the level of tax relief that they will receive for decommissioning.

Scottish Finance Secretary John Swinney said: "North Sea oil is a bonus, not the basis for Scotland's economy and, with up to 24 billion barrels of oil left worth an estimated £1.5 trillion, it will continue to contribute to the wealth of Scotland for a long time to come.

"Leaving decisions at Westminster has cost Scotland 30 years of an oil fund and it was only the vociferous arguments of the industry and the Scottish Government that prevented investment being set back by years.

"The Scottish Government has made clear commitments to the industry that demonstrate the benefits of decisions being made in Scotland and that means a Yes vote next year will secure a strong future for Scotland's oil industry."

PA

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Jamie and Emily Pharro discovering their friend's prank
video
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Life and Style
fashion
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Junior DBA (SQL Server, T-SQL, SSIS, SSAS) London - Finance

£30000 - £33000 per annum + Benefits + Bonus: Harrington Starr: Junior DBA (SQ...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Senior Project Manager

£60000 - £90000 per annum + Bonus: Harrington Starr: Global leading Energy Tra...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment