An independent Scotland would be forced to choose between large income tax rises or severe public spending cuts because it has overestimated the amount of oil left in the North Sea, the UK’s Chief Secretary to the Treasury claims today.
Danny Alexander said that when revised oil and gas estimates from industry expert Sir Ian Wood were taken into account, Scotland would either have to introduce a basic income tax rate of 30 per cent or make cuts to public spending of around 5 per cent to balance its books.
Sir Ian, the billionaire founder of oil services firm Wood Group, warned last week that 15-16.5 billion barrels of oil equivalent were likely to be recovered from the North Sea – far less than the Scottish Government’s official prediction of 24 billion barrels.
Mr Alexander said the Treasury had updated its forecasts of the Scottish deficit in 2016/17 – the year it would go independent – in light of the new estimates and had concluded it would stand at around £700 per head higher than the rest of the UK.
“It undermines the case that the SNP has made, which is built on fantastical over-optimistic oil predictions in order to pretend that somehow in an independent Scotland various policies could be afforded,” Mr Alexander said. “An independent Scotland from day one would have no choice but to make substantial cuts to public services or substantial increases to income tax.”
However, a spokesman for Alex Salmond described the calculation as “fantasy stuff”, adding: “Oil is the bonus and not the basis of Scotland’s economy. Without oil, our economy is on a par with the rest of the UK and, as global ratings agency Standard & Poor’s said, even without the North Sea’s resources we are a wealthy country which would qualify for their ‘highest economic assessment’.”
Meanwhile, a ComRes poll for The Independent on Sunday published today shows that Scots feel more positive about the English than the English and Welsh do about them. In Scotland 65 per cent said they felt favourable towards the English – whereas in England and Wales only 52 per cent said the same about the Scots.
Opinions of Mr Salmond were also low in Scotland, with 40 per cent of those questioned feeling unfavourable towards the SNP leader and 36 per cent feeling favourable. ComRes questioned 2,058 adults across the UK, of whom 170 lived in Scotland.