The biggest oilfield discovery in the North Sea for nine years was announced yesterday and was immediately hailed by the SNP as proof that Scotland could be financially independent.
EnCore Oil, based in London, said that recent drilling on its Catcher prospect, 110 miles east of Aberdeen has suggested the oilfield held 300 million barrels of oil. The discovery is the largest since the Buzzard oilfield in the outer Moray Firth with 550 million barrels of recoverable oil was located in 2001 and easily outstrips recent finds which have averaged about 20 million barrels.
Brian Adam, the SNP MSP for Aberdeen North, called for an oil fund to collect North Sea taxes. “Scotland’s resources should be funding employment, education and our NHS — not nuclear weapons, not illegal wars and not ID cards,” he said.
He said that recent figures on government spending and tax revenues in Scotland showed that in 2008-09, when a due share of oil taxes is included, Scotland had a £1.3 billion surplus, compared with a £48.9 billion UK deficit. “The case for financial independence couldn’t be any stronger,” he added. The oil discovery came as a political debate continued on Scotland’s economic future.
A report by economists yesterday said that the case for Scotland raising and spending its own taxes could not be stronger. It criticised the Calman Commission’s plans, which envisage partial financial devolution to Holyrood, saying that they had been undermined by the latest figures on government tax revenues and spending.
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Professors Andrew Hughes Hallett and Drew Scott, of St Andrews and Edinburgh Universities said that last week’s Emergency Budget had brought into focus “damaging” flaws in the commission’s proposals to devolve control of about half of income tax to Scotland “No one can expect to escape the effect of the huge cuts in UK government spending set in train by last week’s Emergency Budget. But in Scotland, if the much-vaunted Calman proposals are adopted, the impact is bound to be even more severe,” they argued. The recent government figures had shown that in 2008-09 income tax revenue raised in Scotland fell by £549 million on the previous year, they added.
Under the Calman model, the total revenue accruing to Scotland’s budget would have been approximately £275 million lower than it actually was if departmental spending were untouched. Such potential cuts were “simply the consequence of proposals that tie Scotland’s budget revenue to receipts from income tax, and they will leave the government no alternative but to slash spending or raise — by close to 2p — the rate of income tax applying in Scotland.”
But Iain McLean, Professor of Politics at Oxford University, said that giving Holyrood more responsibility for raising revenues was to expose Scottish politicians to the consequences of both falling and rising tax revenues. The alternative put forward by Hughes Hallett and Scott, to make the Scottish government responsible for raising nearly all taxes in Scotland, was even more dangerous. “If their numbers are right, yes Scotland would be forced to make spending cuts under Calman, but it would be forced to make even bigger cuts under their plan because Scotland would be taking the full force of any fall in income and under taxes,” he said.