DEPUTY First Minister John Swinney yesterday led a strong Scottish Government defence of its plans for full fiscal autonomy in the face of opposition attacks and a new wave of warnings about falling oil revenues.
Swinney said control over Scotland’s money would help transform the country’s economy rather than face years of Westminster-imposed austerity.
“Where we can exercise distinctive economic policies in Scotland, we can transform the economic performance of our country,’’ said Swinney.
‘‘For me, that is what fiscal autonomy is all about. It is about enabling this Parliament to take the decisions that are right for Scotland, not to be at the mercy of a Tory chancellor who comes along one Thursday and takes £100 million out of our budget”.
Late on Wednesday night SNP MPs revealed an amendment to the Scotland Bill to allow the Scottish Parliament to deliver full fiscal autonomy.
If passed by the House of Commons, the SNP amendment would see the Scottish Parliament effectively take control of taxation, borrowing and public spending north of the Border.
The Institute for Fiscal Studies warned that full fiscal autonomy would mean the Scottish Government either finding “bigger tax increases or spending cuts than those currently planned for the UK” to avoid debt rising rapidly.
The Institute added: “In the longer-run, full fiscal autonomy might, or might not, lead to better policies that could generate higher economic growth in Scotland, and thus allow at least some of these additional tax rises or spending cuts to be reversed”.
At First Minister’s Question Time yesterday at the Scottish parliament, Labour deputy leader Kezia Dugdale unveiled ‘‘research’’ by her party that suggested the oil price would need to increase to $200 a barrel to “balance Scotland’s books”.
“This is less about North Sea oil and more about the SNP’s snake oil” said Dugdale. “The Deputy First Minister is trying to punt us something that he knows to be dodgy. For the sake of Scotland’s schools and hospitals, should the Deputy First Minister not just abandon this disastrous plan for full fiscal autonomy?”
Swinney dismissed Dugdale’s claims, saying: “Fiscal autonomy is about building on the powers of this Parliament – powers that, over the past 16 years, have seen an improvement in Scotland’s economic performance that has taken our gross domestic product from sixth in the United Kingdom to third, behind London and the south-east, and an increase in productivity from 96 per cent of UK levels in 1999 to being in line with UK levels in 2012.
Gordon MacIntyre Kemp, from Business For Scotland said: “Full fiscal responsibility represents a great opportunity for Scotland to exercise as near as possible to home rule, to make decisions based on the needs of Scotland’s economy rather than the one-size-fits-all Westminster strait-jacket that is holding Scotland back.”
Later that afternoon, a report suggesting that oil receipts in Scotland would be significantly less was met with scepticism by SNP Deputy Leader Stewart Hosie.
The report from the Office of Budget Responsibility suggested that only £2.1 billion would be raised from oil and gas tax receipts between 2020 and 2040.
Last year the body had suggested that the figure would be closer to £36.6bn.
This new forecast, the OBR said, was down to the lower prices for oil and gas and expected production falling substantially.
Its Fiscal Sustainability Report said: “North Sea revenues have been the most volatile receipts stream and are subject to large forecast errors, even over the short term”.
Hosie, the SNP’s spokesperson on the economy said: “This is quite peculiar. It’s almost like trying to forecast today’s oil price in 1989. But of course it gives the pretence that Scotland’s economy is all about oil. It isn’t.”
A spokesperson for the Scottish Government said: “The OBR themselves state that these projections are ‘subject to considerable uncertainty’ – and the figures reflect recent low oil prices, which some forecasters have predicted will bounce back to higher levels over the longer term. Oil & Gas UK estimate that there are up to 23 billion barrels of oil and gas still to be recovered from the North sea. The key to supporting the industry in the long term and maximising the recovery rates of remaining reserves is ensuring a stable and supportive fiscal and regulatory regime is put in place and maintained.
“That is why it is important that the Emergency Budget in July retains and builds upon the measures announced in the March Budget.”
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