SNP North Sea oil figures ‘should carry a health warning’

25 Jun 10
Claims by the Holyrood government that Scotland would have a budget surplus of £1.3bn if it received a geographical share of North Sea oil should come with a 'health warning', a leading public finance expert has said
By David Scott

28 June 2010

Claims by the Holyrood government that Scotland would have a budget surplus of £1.3bn if it received a geographical share of North Sea oil should come with a ‘health warning’, a leading public finance expert has said.

Arthur Midwinter, visiting professor of accountancy at Edinburgh University and an adviser to Labour in the Scottish Parliament, questioned the Scottish National Party administration’s interpretation of figures showing public expenditure in Scotland against the amount raised in tax.

According to the Government expenditure and revenue Scotland report for 2008/09, released on June 23, Scotland would have a budget deficit of £10.5bn after its share of the money spent on bailing out failing banks was taken into account.

However, when a geographical share of North Sea oil is included, there would be a surplus of £1.3bn.

Finance Secretary John Swinney claimed the ‘surplus’ gave added impetus to the SNP’s argument for independence.

He said: ‘These figures reinforce the case for Scotland determining its own tax and spending decisions and managing other key economic levers, with the powers of financial responsibility and independence.’

Midwinter, a former adviser to the Scottish Parliament finance committee, said the SNP had a history of ‘accounting errors’ when assessing the Gers figures.

He told Public Finance: ‘There should be a health warning around these statistics because the SNP over the past ten years has made accounting errors when calculating Scotland’s fiscal position.

‘It is widely acknowledged that the only time Scotland has any surplus based on these calculations is when North Sea oil is attributed and when the price of the oil is high.

‘In most years, even including oil revenues, Scotland has remained in deficit. Under fiscal autonomy this would be a real problem for Scotland as the UK Treasury does not allocate oil revenues to different parts of the country.

‘It would leave us with a major fiscal deficit on top of the major spending cuts expected over the next few years.’

A body of business leaders and others campaigning for increased tax powers for Scotland argued that the figures – prepared by government economists and statisticians – demonstrated that proposals for fiscal autonomy were ‘realistic’.

The Campaign for Fiscal Responsibility added: ‘All the main Scottish and UK parties agree that the Scottish Parliament should have greater financial powers. The debate is now about which powers should be devolved and when.’

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