Scotland under either independence or Full Fiscal Autonomy would be dangerously reliant on oil and gas revenues, argues GREG WILLIAMS

 

Full Fiscal Autonomy (FFA) is gaining some traction in the Scottish Labour party. But are people backing it because it’s the right thing fiscally for Scotland, or because it provides us with a convenient niche between separation on the one hand and siding with the Tories and Lib Dems on the other? With the aid of a novel concept called data, we can try and get to the bottom of what FFA or separation means for Scotland economically. You may not be surprised that a fiscally independent Scotland, whether under the Saltire or the Union Jack, would be placing a hefty bet on black. Black gold.

Earlier this year, the SNP used the latest Government Expenditure and Revenue in Scotland (GERS) figures to argue that an independent Scotland could balance its own books. Much was made of the fact that, by incorporating a geographic share of North Sea Oil and Gas (O&G) revenue, Scotland had a net budget deficit of 10.6 per cent of GDP, comparing favourably with a deficit of 11.1% across the UK as a whole. [1] Without that share of revenue, the budget deficit would be an eye watering 18% – even the SNP would agree that is unsustainable, and FFA would be a non-starter under that basis. So let’s assume for the sake of this article that the GERS figures are comprehensive [2] and that an independent Scotland would gain a geographic share of North Sea revenue. What would a fiscally autonomous Scotland look like?

The North Sea generated £6.5bn of tax revenue in the financial year 2009-10. Approximately 83% of this is located in parts of the North Sea closer to Scotland than the rest of the UK [3]. As the graph below shows, this geographic share of this contributed 13% of Scotland’s government revenue, compared with all North Sea revenue accounting for 1% of the UK’s revenue.

Source data: Government Expenditure and Revenue Scotland 2011. http://scotland.gov.uk/Topics/Statistics/Browse/Economy/GERS

The key point is that even with a geographic share of North Sea oil revenues, a fiscally autonomous Scotland can only reach a position of budget deficit parity with the rest of the UK. To reach that position of parity, Scotland is reliant on North Sea oil revenues to balance the books – ten times more than the UK as a whole. GERS shows this dependency is not unique to the tax year 2009-10:


This is the grand irony – an independent Scotland, a green and prosperous Scotland – would have an economy more dependent on hydrocarbons than it does being part of the UK as a whole. As a party we must ask ourselves whether it is wise to take Scotland to a place where its books are balanced on O&G taxation.  Hydrocarbons are a volatile commodity and consequently an unstable revenue source. Recent years have been a comparative boom period, when looking at the historical oil price adjusted for inflation:

North Sea revenue figures from GERS table 5.1. Oil price per barrel adjusted for inflation. Source:
http://inflationdata.com/inflation/inflation_rate/Historical_Oil_Prices_Table.asp 

The SNP may dismiss this analysis as outmoded and negative. They will rightly point out that, in spite of the volatility of revenue, over the last five years Scotland (with a geographic share of North Sea revenues) and the UK as a whole are in relatively similar position in terms of budget deficit as a % of GDP. Both figures were around 2-3% before the recession.[4] However the picture for an independent Scotland gets worse once the forecast production output for the North Sea is brought into the equation:

Reproduced from Prof A. Kemp, ‘The Short and Long Term Prospects for Activity in the UK Continental Shelf: the 2011 Perspective’

Even with favourable economic conditions, production will continue to decline – halving over the next twenty years.

So there are some big questions for advocates of FFA as well as separation to answer. Referring back to the graph of taxation breakdown, when O&G revenues drop as forecast, the only significant revenue levers left are income tax, National Insurance and VAT. Which one would a fiscally autonomous or independent Scotland put up to keep the nation solvent? Fortunately for Scottish Labour, the SNP are in a worse political position on balancing the books. They have already banked oil and gas revenues to cut fuel prices,[5] cut corporation tax[6] and also to create an Oil Fund.[7]

Regardless of the SNP’s romantic enthusiasm, we have a duty to make sure we are advocating a sound fiscal position for Scotland, not the most convenient political position for our party. The figures suggest a fiscally autonomous Scotland would be dangerously reliant on O&G revenues. So is this the right direction to take Scottish Labour policy?

My own thoughts, for what they’re worth, are that we should not rule FFA out. On a purely comparative basis, it’s more than uncomfortable to argue that Scotland should not have at least the same sort of fiscal powers as a US state or one of the regions of Germany. Our credibility in the debate gets even harder when the ability to delivery Labour priorities like social justice is patently constrained by a Tory economic straight jacket. We should cast the net further afield and look at how fiscal autonomy works elsewhere in the world – not confining ourselves to the parameters of debate the SNP have set for us. Then we can decide whether the powers within the Scotland bill sufficiently enable Scotland to chart its own path within the Union and Labour to deliver its social priorities. Ultimately, if we decide as a party to argue for more than what the Scotland Bill will deliver, we must ensure that our plans to not leave Scotland excessively dependent on black gold. We are a responsible party and, unlike the SNP, we would not march Scotland of an economic cliff for our own self interest.

Greg Williams was Scottish Labour’s candidate in Aberdeen South and North Kincardine in May and works in procurement for an oil exploration company. He tweets as @greggerswilliam.


[2] It should be acknowledged that GERS figures do not apportion a share of UK government debt.

[4] Note – GERS did not calculate net fiscal balance as a percentage of GDP including a geographic share of oil and gas revenue until the SNP came to power.

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114 thoughts on “Putting it all on black

  1. and tell me what the UK Government has been dangerously reliant on and used as a constant income rather than an asset….oil and gas! Also, these figures don’t take into account that a lot of folk’s wages, income tax and national insurance are paid from London and therefore count as English taxes and income. They also don’t take into account the ever decreasing, lower defence spend in Scotland and share of the TV license fees. We also have the vast resource of wind energy which is predicted by the well known Labour supporting newspaper, The Guardian, to be running without subsidy by 2016. The technology for Wave power will also become better during this time and as the supply of oil decreases the price will increase so the value of the oil will be greater.

    Just saying….

    1. Also, unlike Norway, the British government never saved for a rainy day. Yet another Union dividend!

      1. Due to the high annual rainfall in Britain, it would be pointless saving short term.

  2. Where is renewable energy in this projection? It appears to be missing along with other rapidly growing sectors like food drink and agriculture not to mention engineering and technical services. Scotland is more than oil Mr Williams.

  3. However we spend the Revenues we should certainly collect ALL our own Revenues. Have workers in Scotland collecting it and workers in Scotland allocating it, whether it be direct or via the Treasury.

  4. “Full Fiscal Autonomy (FFA) is gaining some traction in the Scottish Labour party.” Completely ruled out of the equation by all three aspiring Labour candidates at last night’s hustings on Newsnight who remain firmly embedded in maintaining the status quo and firmly in bed with David Cameron’s entrenched unionism. When asked what extra powers should be transferred from Westminster to Scotland Johann Lamont replied ‘Housing benefit’ Greg, how does this vision, from the person we are informed is the leading candidate for the leadership accord with your own position as articulated in your penultimate paragraph “we have a duty to make sure we are advocating a sound fiscal position for Scotland, not the most convenient political position for our party?”

  5. This might sound like a silly question but, if you believe that the Scottish economy is over-reliant on oil and gas, why do you only seem to think that is a problem under fiscal autonomy or independence? If that is a problem, wouldn’t it be a problem that needed addressing under any constitutional arrangement?

  6. Greg, the SNP have not set parameters for the fiscal debate, that has been done by all the other Scottish Parties. They were the ones who set up Calman and limited his remit. I watched the leadership debate on Newsnicht and was dumbfoonered by how low the candidates ambitions were for Scotland and how much Alex Salmond overwhelmes their view of the world.
    They run this race hobbled and blinkered, but its of their own making.

    1. Gavin, would you care to elaborate on the low ambitions the three candidates have for Scotland?

      What did they say that is of low ambition or should it be what high point of their vision was so low for you?

      Lets have some detail rather than some vague attacks that mean pretty much hee-haw.

  7. If reliance on hydrocarbons is ‘dangerous’ have you explained that to the Norwegians? Or even the Saudi Arabians? There is an important issue here around managing resources, but the key point, surely, is that, with independence, Scots could make much better decisions about how they should be managed.
    And I nearly fell off my chair last night when all three candidates in a Labour Party leadership contest confessed that they would build new nuclear power stations.

    1. The Norwegians and the Saudis don’t have the strongest economies in the world. They have strong economies in some respects but not on a broad base.

      The UK is not entirely reliant on one part of the economy the way an FFA/Independent Scotland would be.

      The points raised above regarding the Green industries and how much they will contribute to the economy in future is worth investigating but I don’t see it playing as big a part economically as O&G which means there is still a gap in future that must be filled.

      The independence debate isn’t just about the next 50 years; it’s about the future without timescale and therefore the questions must be asked about plans beyond O&G. It is irrespnsible to avoid those questions.

      ‘All in good time’ is not good enough.

      1. Are you saying the UK economy is stronger than the Norwegian or Saudi economy.

        I would swap the Scottish economy for the Norwegian one in a minute.

        1. Yes the Scottish and UK economies are stronger than Norway and Saudi Arabia. If you want ot pay higher taxes and still have to pay for your health care separatley then why don’t you go and enjoy the economy of Norway?

          We are different from the countries the SNP hold up as a yardstick and although there are many good sides to each of those countries we are in a stronger economy just now with greater potential also.

          1. Correction:
            Norwegians pay slightly more tax but on average earn alot more. More than double a Uk salary. Plus they get the benfits of the tax in return. No taxpayers money for bailing out banks.

            Health Care in Norway is free. Adults pay a nominal (subsidised) sum for a GP visit but only to discourage people from not showing up for appointments, no one complains about it. All hospital treatment is free for all.

      2. Who does have the strongest economy in the world then? It can’t be the UK. Doesn’t the UK have one of the highest levels of personal debt in the world – not government debt, but the debt owed by households?

        I read the other day that if you look at all the debt owed in the UK, household debts, company debts, government debts and bank debt – it is 492% of GDP, which is higher than it was in 2008 and higher than other countries.

        So I think in reality we should start the debate about the economics of independence from the basis that the UK economy is screwed, and Scotland’s economy as part of the UK is screwed. So it’s not a question of saying would we be in trouble if we were independent. We’re in trouble now. Therefore shouldn’t the debate be about the best way to get out of trouble.

        1. I didn’t say the UK had the strongest economy in the world. Right now I believe we are the 6th largest economy.

          Yes we have economic troubles just now but they would be worse if we were independent. Why do you believe that being independent will solve all our ills? We played our part in creating high levels of personal debt that wasn’t because of big bad Westminster so how would being independent stop that? What would being independent do to stop higher personal debt that we couldn’t achieve working with our partners in the UK?

          1. 6th largest economy but with highest level of debt – and it is the level of household debt that is surely the most worrying thing. Because basically the banks own us,, to a ridiculous degree. They own our houses, they own our cars, they probably own the shoes on our feet as well. UK citizens have been spending well in excess of what they earn for decades – and government has allowed that. Because it suited them to mask the decline in what old fashioned types see as real economic activity e.g. makings stuff with an artificial prosperity bubble created out of easily available credit for all and artificially high house prices. And, as it has all collapsed, the Tories have got back in because people down south think that they are more reliable and less profligate than Labour (and in your heart of hearts you must know it will be a wee while before the English are ready to vote Labour again).

            Now the chickens have come home to roost and we are up the old creek aren’t we? So it’s not a question of saying I think independence will solve all our ills. What I am saying is let’s look at the scale of how ill we really are. And the question is what is the best route to recovery – independence or staying in the Union.

  8. I saw the debate on Newsnicht – it brought me in mind of Jack McConnell’s ” do less better”. This was all the Candidates were promising.

    I think the challenge for the Candidates should be to make a presentation for 15 minutes on their vision for Scotland without mentioning the SNP once.

    1. Please provide an example of where any of the candidates said anything like “do less better”.

      One example I can think of which is in contrast to your hazy comment was Ken Macintosh saying we should aim for full employment. Where in that is there negativity and a lack of vision for Scotland?

      Where in that does he say we should “do less better”?

      I think you hear what you want to hear to be perfectly honest.

      1. Yes Ken Macintosh said we should aim for full employment. He did not however explain what he would do to achieve that, so where is the vision.

        The trouble with saying things like full employment is that between 1999 and 2007 Labour held all the levers of power, both at Westminster and Holyrood. People are entitled to ask “where was the full employment then”

        How would Ken Macintosh achieve full employment in Scotland with the torys holding the purse strings at Westminster, something that Labour supports, as they support rule from Westminster, when Labour could not do it when Labour controlled the purse strings at Westminster.

        The years up to 2007 were supposedly the good years, remember “no more boom and bust” What was the unemployment rate then, and why was their no commitment to full employment then?

        The trouble for Labour is 1999 to 2007 happened, people remember what happened or did not happen then.

        1. Labour were working towards full employment across the UK but we had many fires to fight after taking over from the Tories in 1997.

          The NHS was at it’s strongest when Labour were in power with record low waiting times, record high satisfaction, record doctor/nurse/midwife/consultant numbers. Some are under threat from Tories and some under threat from the SNP.

          Talking about Westminster holding the purse strings shows no ambition, no innovative thinking. Even with the powers we have in Edinburgh we can achieve our aims, although more powers in key areas would help – the SNP talk down our potential constantly because any admission that powers being offered by Westminster are acceptable doesn’t fit with their agenda of separation.

          No changes to Calman are enough for the SNP as they want independence so of course they don’t like Calman!

          The problem we have as a party is we are too ashamed to boast about our achievements. We are proud of what we did in goverment and the SNP don’t even come close to matching us on our record.

          1. Are the Uk Government offering any changes to the Scotland Bill aside from bringing forward borrowing??

    2. Indy
      I was not happy about all the mentions of the SNP.

      But then almost every question asked by the interviewer was about the SNP…

      how many questions on the SNP’s “independence” refetrendum?

      are you strong enough to stand up to the SNP leader?

      which SNP policy do you agree with?

      It should have been about the candidates and their strengths/weakneses, but the whole debate was led to discussing the nats….

  9. Then what a sorry state our membership of the union has left us in Gavin… An over reliance of jobs in the public sector… Scraps of a once mighty ship building industry… No steel or other heavy manufacturing industry worth speaking of… I read recently that the cables that hang across the Forth Road and Erskine Bridge were manufactured in Scotland… I guess that’s why so many of our young people dont have any jobs… So now we have to rely on the oil while we try to rebuild… Oh we can’t do that… After all we are not like the semi autonomous region of Iraq called Kurdistan which is about to rebuild itself using it’s oil resource after years of neglect and indeed worse under Sadam… Wait a minute Iraq that sounds familiar… Was there not a war fought there to free provide freedom for people so they can make their own decisions or was it always about oil? Besides in Government documents available I can’t find all revenues related to oil direct or indirect gathered by the UK government it is certainly not in the
    GERS report. So back to the truth all information about Scotland’s revenues and contributions needs to be laid on the table so the Scottish people can make an informed choice and we need a little less scare mongering… It doesn’t work any more.

  10. The candidates actually said very little, it’s as if they are afraid to differ or state any real policy in case it rebounds on them

  11. Aiming for full employment is a worthy ambition but sadly it’s pie in the sky as long as Labour continue to support a Tory Government over Independence or FFA. Remember unemployment in the North is a price worth paying to have economic growth in the south east.

    1. Again this is just your opinion and not borne out by any evidence.

      The choice before the electorate in Scotland is not between Tory governments and independence/FFA it is between Devolution and independence. In an independent Scotland there would be a centre-right party that would inevitably be voted into power at some point – who would you blame for that then? The central belt?

      Maybe if that situation came about you would advocate the Highlands and Islands splitting from rScotland?

      Full employment is something we should always aim for and it is MORE likely to occur in a strong economy, not in an economy based mainly on one industry that will die out in the next century.

      1. The SNP have identified the following critical sectors for our economy:
        Oil & Gas; renewables; food & drink; Tourism; Financial services; Creative Industries; Life Sciences.

        My understanding is that they will encourage Private, Public and education focus on these industries to get leadership where possible and to feed off each other in clusters of expertise and job creation.

        You may not agree with these sectors but there is a vision and an action plan. What is Labour’s vision – saying job creation is not enough

        take Renewables as an example – although there are no guarantees the SNP have stated their belief that this is the future for scotland, have followed up with action on a range of fronts and have already attracted world-wide interest and investment. Jobs are being created.

        Labour does not share this vision. On energy it would appear to be Nuclear – so spell out how this will happen. With Nuclear as with renewables there are downsides as well as up. Can you enthuse Scotland that Nuclear is the way to go.

        By implying that Scotland can only survive with Oil you get on to the discredited too wee too puir line and I think Scottish voters have shown the have had enough of that

        1. Labour believe in a mixed energy policy. This is the smarty vision for Scotland’s future energy needs. It provides flexibility and the ability to increase energy supplies in times of greater demand. The SNP are pinning all their energy hopes to one sector of the energy industry.

          Labour promised to create more Green sector jobs than the SNP in May. Off the top of my head we would have created 100,000 green sector jobs. The SNP have said by the end of their term there will be 130,000 green sector jobs. That sounds like Labour were trumped, however the 130,000 jobs the SNP promise are not all new jobs. More than 30,000 green sector jobs exist and therefore the SNP have promised to create fewer green jobs than Labour.

      2. ‘In an independent Scotland there would be a centre-right party that would inevitably be voted into power at some point’

        An interesting statement – unfortunately Labour, the Tories or the LibDems have very little chance of being voted in anytime soon (given their present performances) and these three ARE the centre-right parties of Scottish politics.

        1. Salmond is the free-market ecomomist in charge of the country is he not? Did he not also say people didn’t mind Thatcher economically? Or did he just mean that HE didn’t mind her economic policies?

          1. Since the context of this statement has been explained countless time, I can only assume you are deliberately misconstruing the meaning of it to make a cheap jibe.

            For the hard of thinking, here is the full statement again:

            “One of the reasons Scotland didn’t take to Lady Thatcher was because of that [a strong social conscience]. We didn’t mind the economic side so much. But we didn’t like the social side at all.”

            Now, perhaps if we change the terminology a little, you’ll get it:

            Rangers were beaten by Dundee Utd and Celtic last season. If you spoke to a Ranger’s supporter about that, he’d probably say:

            “I didn’t mind us getting beat by Dundee Utd so much, but I hated getting beat by Celtic”.

            Now, does that statement mean that he’s really a Dundee Utd supporter, happy at Ranger’s defeat, or is this just another example of Labour making mischief out of what is a fairly common turn of phrase in Scotland?

      3. “Unemployment in the north is a price worth paying for economic growth in the south east” is not my opinion but was that of the former govenor of the bank of England, Eddie George.
        If the people of Scotland want a centre right party that is their choice. I believe Scotland is one country not a union of 3 and a bit different countries and as one country has the right of self determination.
        It seems to be your opinion that Scotland will fail to develop or change over the next century. Our economy over the last cenury did both before and after the discovery of Oil.
        Last year, Scottish tourism out perfomed the financial services, this is not something we would have envisaged ten years ago let alone 100.

        1. That may be the case but the fact remians we are still very much dependent on oil and gas and that hasn’t changed since oil was extracted on an industrial scale.

          The economy will develop, it will in the UK and it will independently. I believe we increase the opportunites as a part of the UK to reach out to new sectors and that this would be hampered by being independent.

          That isn’t to say we are too poor etc it is saying that we can either focus on one or two areas well or be a jack of all trades master of none economy.

          The SNP want to push the idea that would could be world leaders in every field imaginable, and as noble as that aim may be, it is not realistic. As part of a larger economy we open ourselves up to greater opportunities to excel in many fields.

          1. Hi G McM,
            Could you tell me in what way you believe independence would hamper our ability to reach out to new sectors?

      4. It’s interesting that you think a centre right party would inevitably be elected in Scotland at some point. Does that suggest you think that Labour’s dominance of post war Scottish politics was just based on Scotland voting differently to England for the sake of it? Or in other words, if Scots are as likely to vote for centre right parties why haven’t they? Why have the Tories failed to make the same kinds of gains in Scotland as they have in England?

        1. No, the point I’m making is that circumstances change and support for parties will shift over time. It is foolish to believe an independent Scotland would be a socialist utopia where all the parties sit between centre-left and left. There is still a level of support for the Tories and in 1997 a lot of their previous support switched to Labour in central Scotland and to the SNP in the north. An independent Scotland would have centre-left and centre-right parties and at some point people would lose faith in the centre-left party and elect a centre-right government.

          Just as the SNP (in Scotland) and Tories (England) have managed in recent years to convince the electorate they’re not as right as they are by saying the right things, a party of the right in an independent Scotland would say all the right things to get into power and then bring forward centre-right policies in power.

  12. greg,
    in the latest attitudes survey two thirds of people said they would support independence IF it would make them better off.That figure shows how important it is for the Tory/Lab/Libdems to make sure the Scots dont start believing the SNP line that an independent Scotland could work away fine like other similair countries.If the voters start believing they are as capable as everyone else around the world it could prove difficult to convince them they need to be supervised by London.

  13. Ian Lang the Scottish Secretary who set up GERS said.

    “The booklet I have had prepared and printed, setting out the details of the Government’s expenditure and revenue in Scotland, I judge that it is just what is needed at present in our campaign to maintain our initiative and undermine the other parties.”

    As the treasury have never had there accounts independently, sorry should that be separately, audited and have said that they don’t separate individual tax takes from different regions within the UK and as such I presume alot of those percentages are guesstimates rather than factual.

    Guess Which Country Has Debt Of Nearly 1000% Of GDP…

    Since the financial industry is carrying over 600% of UK GDP in debt and the majority of that enterprise is based in London and that debt as far as the treasury is concerned is on the income side!

    PRESENTING: The Rosetta Stone Of The Entire Sovereign Debt Crisis

    In short, the UK has one of the most detestable economies you can imagine.

    It’s got no resources, it’s incredibly service-based, and oh yeah, it keeps missing its deficit targets.

    So the real question is “Can Scotland afford to keep propping up the UK?”

    1. CH

      ‘the UK has one of the most detestable economies you can imagine.’

      Strange many Scots work and live quite happily all their lives within the UK economy.

      Or is this just another in a very long line of your Nationalist hyperbole I suspect it is

      1. Since the quote in italics which you wish to highlight came from the author of that article and Scots work in various countries throughout the World. What is your point?

        1. That’s an interesting article. Can’t quite get my head round what he is saying when he suggests the UK borrows in its own currency, which makes all the difference in the world. It’s almost like he is saying that the difference is that the UK can print its own money.

          1. It’s almost like he is saying that the difference is that the UK can print its own money.

            Yes just like the FED but what it does is devalue the currency putting up inflation allowing banks to gamble more on the money markets so that they can pay themselves bonuses. If you have a couple of hours watch The Secret of Oz (by Mr Bill Still) and read THE HISTORY OF MONEY PART 2 should open peoples minds into how we are being taken to the cleaners.

  14. GMcM-Sorry I’ve been out. The lows for me of the three candidates were their unwillingness to spell out how they will fund the policies they claim to believe in. If they do not want fiscal powers then they cannot grow the Scottish economy to the required degree( and growth has historically lagged Englands for decades).If they are content to live on a fixed budget which will certainly decline to our population share, then claims of full employment, eliminating poverty, building schools and hospitals etc-etc cannot be substantiated. They are also determined that they people who live in Scotland will not be given the chance to decide on their constitutional future. The most popular option will not be on the ballot if labour get their way FORDS dictum comes to mind.
    The inability to name any extra powers they wanted for the Parliament would have been funny if it wasnt so pathetic.

    1. Gavin

      “then claims of full employment, eliminating poverty, building schools and hospitals etc-etc cannot be substantiated.”

      Is this the reason the SNP aren’t building very many schools? It never stopped Labour when we were in power. Yet somehow Labour lack ambition?

      The largest school building program in Scotland, news hospitals built all over the country, unemployment at low levels, employment at high levels. All of this was achieved with Labour in power in Scotland.

      We also managed to bring Scotland up to at least the level of the UK average in terms of growth.

      It is not Labour who talk Scotland down but the SNP. Constantly telling Scots that we’re not good enough to achieve what we want within the UK. We are. We have achieved a lot and will continue to achieve more in future – the people of Scotland realise this and want it this way.

      The Labour leaders have not ruled out further powers. It is disingenuous to claim the contrary. All three want a strong Scotland in a strong UK. Ken calls himself a Devolutionist and wants to see that process strengthened in future and Tom want an independent body set up to review the transfer of powers between Holyrood-Westminster on a rolling basis to make devolution more fluid.

      Labour also recognise the will of the people of Scotland. The SNP have a mandate for an independence referendum and while we don’t want independence we would like the referendum out of the way just now to remove any possibility of uncertainty over our future during these tough economic times.

      The most popular option is ill-defined and therefore will not be on the ballot paper. Devo-max means whatever you want it to mean and therefore whatever way Labour were to define it would disappoint people.

      I think once the referendum is over with (but possibly before) we should look at what we want devolution to look and put the proposal forward to the people of Scotland in our 2016 manifesto. No party has a mandate for devo-max. Labour were voted for on a ticket of Calman in May and the SNP on independence (although I don’t believe that is why people voted for the SNP in the main).

      1. I could be wrong but Labour used PFI to get schools and hospitals built none of which are in public ownership and costing a fortune to rent for the next 30 years.

      2. “The largest school building program in Scotland, news hospitals built all over the country, unemployment at low levels, employment at high levels. All of this was achieved with Labour in power in Scotland.”

        But it has all collapsed – you don’t seem to realise that or to acknowledge that Labour has any responsibility for it. And even if you are looking at boasting abut what has been achieved why don’t you look at how many schools and hospitals Labour built with PFI, incurring credit card levels of debt repayment. Just another example of profligacy. Spend now, pay later.

        You give the apearance of just not understanding the extent to which trust in Labour’s economic competence has been undermined. That’s why you lost the UK election down south and why I think it will be many years before the UK electorate as a whole will be ready to trust Labour again. And it’s also part of the reason you lost in Scotland.

        I think it’s interesting that the issue of economic competence has not even figured in Scottish Labour’s leadership election because it is a factor. Yes its less of a factor in Scotland than in England because the political culture that has grown around devolution has been mainly focussed on spending public money, not making it. But even so Scottish Labour constantly harping on about how they would spend more money on this, that and the next thing without cutting anything else when you would have a finite budget which you cannot change just comes over as more pie in the sky.

  15. This whole article is nonsense built on a series of false premises. As the Scottish economy operates without the benefit of its oil and gas revenues at this moment I don’t know how valid any comparisons can be.
    As the economies of such as Finland, New Zealand, Denmark and so on work perfectly well without oil or gas revenues at all I can only imagine the writer holds the Scots to be uniquely incapable of ordering their own affairs if he thinks we can’t do the same.
    However any sensible overview would indicate that the Scottish economy is far better balanced than the UK economy as a whole which suffers from a South East corner which is over-populated, under powered, largely underproductive, substantially overpayed and is completely incapable of feeding itself in any manner whatsover
    As the UK is the most indebted state in Europe (fact) and probably the world and entirely reliant on Scottish oil revenue as collateral for its huge debts I would expect the biggest discussion should, be how can Scotland choose to remain part of it.

    1. Denmark is actually Europe’s third biggest producer of Oil – after Norway and Scotland.

  16. “Scotland under either independence or Full Fiscal Autonomy would be dangerously reliant on oil and gas revenues, argues GREG WILLIAMS”

    Yes we’ve seen the dangers enjoyed by Norway, Qatar, and Saudi, I’ll take my chances.

  17. I thought that this old lie had been nailed 35 years ago, but after reading Greg Williams article I was clearly mistaken. The following is the first two paras from Wikipedia.
    The McCrone report was a dossier written in 1974 by Professor Gavin McCrone, a leading government economist, for the Conservative UK government into the viability of an independent Scotland.

    The report concluded that North sea oil revenue would have given an independent Scotland one of the strongest currencies in Europe and a large tax surplus. It went on to say that officials advised government ministers on how to take “the wind out of the SNP sails”. The incoming Labour administration classified the document as secret over fears it could give a further boost to the SNP’s policy of Scottish independence.

    In the mid 70s it was thought North Sea Oil would last for 50 years. Now we know it will last until at least the 2050s and that more lies off the west coast.

    So come on Greg you are conspicuous by your absence.

  18. The UK government is dangerously reliant on the finance sector, which has proved itself lamentably incompetent, considering that the UK is the most indebted nation in the G10.

    Scotland is working hard to become the leading nation in green technology. And as others have said, there is a great deal more oil under the sea, and with every year the technology for getting it out makes it a more attractive prospect.

    I think we could manage.

    I wonder why people think that Denmark or Norway, Sweden or Finland, Estonia or Latvia can manage, and the Scots would be unable without being kept afloat by the English.

    Now I appreciate that the English are very clever. They took over 1/4 of the world, taught them English and Christianity. And I appreciate that as soon as the English left they, for the main part, dissolved into anarchy and civil war along tribal lines, so I accept that there is a chance that there will be a clan war, but it’s a risk I’m willing to take.

    1. Why should we just ‘manage’ though? Have you spoken to people from any of the countries you listed and talked to them about the way of life there? I have friends from four of those countries and they all recognise the strength of the economy here and their main problem is the difference in culture. We have a strong economy and you don’t want to admit it because you think it would weaken your argument.

      The only reason the SNP want to accuse those against independence of calling Scotland ‘too wee, too poor and too stupid’ is because it allows them to lower expectations fior their own argument.

      If they can get people believing that all those against independence are talking the country down then they more easily convince them that we can ‘manage’.

      The argument against independence isn’t whether Scotland could ‘manage’ on it’s own but whether we would be better off being independent. I don’t believe that is the case.

      The SNP don’t want to get into detail because they need a vague debate to win.

      The only reason Salmond is going to wait until the end of the Parliament is because he hopes 1) he can create enough bad blood between Holyrood and Westminster in that time 2) he can continue to stop any dissent from the backbenches as long as they believe they are moving towards their goal.

      If they realised they won’t achieve independence they would be all over the place. He is hoping that by not outlining the question and date it appears to the ‘fundamentalists’ and ‘gradualists’ that his plan is working in sending the ‘unionists’ into disarray.

      His plan isn’t about wrong-footing those against independence but is a smoke and mirrors tactic to keep those who DO support independence dissenting.

      Also – it was the British who had 1/4 of the world in an empire not the English. We played our part in the good and bad of the empire and you should not try and diminish the part we played. Again, talking the influence of Scotland within the union down.

  19. “Frustrated Socialist says:
    December 6, 2011 at 3:31 pm
    The candidates actually said very little, it’s as if they are afraid to differ or state any real policy in case it rebounds on them

    It is of course vitally important that our three excellent candidates (can we not get on with it) say as little as possible as this would give the dreaded AS more than enough ammunition to use against them at FMQs. On previous occasions, past leaders of the Holyrood Labour Party group have been quoted in order to embarrass that fine upstanding Mr Gray (He was a teacher, you know), and it would not be beyond AS’s fiendishly clever mind to make use of the various gaffes, solecisms and gaucheries that eventually bedevils anyone who takes on the grand mantle of Scottish Labour Leader.

  20. GMcM Any influence individual Scots had within the Empire was for their own personal benefit, was 50+ years ago and usually meant the individual concerned became thoroughly Anglicised. The Scots working-class has nothing to gain by looking back on past times and neither does the Labour movement. The Labour establishment has a narrative to tell, but that’s all about the “stronger together, weaker apart” lie.
    Please tell me why Labour activists should go out and knock on doors to convince people to vote “No” when the consequence is continued Tory rule. England voted Labour on its own and we got 13 wasted years of Thatcherism-Lite. Our people need better than this and it’s time to work out just exactly whose side you are on and where your loyalty lies. To the Scottish people? To a socialist government elected by all of the UK?

    If it is the latter, we have spent a long time waiting for that particular bus, with no sign that it had ever left the depot, let alone being just around the corner.

    1. Davy, I was only correcting the statement made previously by another commentor that it was British and not English people who ran the empire.

      My loyalties lie with Scottish people; however I am not so narrow minded to believe that the Labour movement can only benefit the population of one country in the UK. I’m a member of the only party in Britain that wants to make lives better for the majority of people and not the minority. That is regardless of the country in which they live, their colour, religion, gender, sexuality or even their politics.

      Labour are the only party who can deliver that. The SNP want to put Scottish interests first regardless of who suffers. Look at the situation with the HE university funding debacle. The SNP don’t put the interests of Scots first in a principled, socially democratic way. They put the interests forward in a protectionist, discriminatory and Tory way.

      They want to create a society where you can only get help if you’re Scottish. That’s not the country I want to live in where people are turned away at the door simply because of their nationality. Or if they are to come in they must suffer financially.

      You say we had 13 wasted years of a Labour government. What country were you living in if you thought it was wasted? The country was greatly improved in our time in office both at Holyrood and at Westminster. As I said in another comment previously – the SNP are nowehere near matching our record of delivery for the people of Scotland. For you to say it was wasted says more about your loathing for Labour than anything else.

      The reason we have not achieved the kind of society we long for is because we live in a democracy! The assumption that Scotland would just start voting Labour in an independent Scotland is fanciful and also the belief that all our problems could be solved by independence is absurd.

      1. And in those 13 years the inequality gap got bigger. Mandelson is “exceedingly comfortable about people becoming filthy rich.” He proved that as he rubbed shoulders with the filthy rich on his freebie Mediterranean cruises.

        The reason that Labour are behind the 8 ball in Scotland, is because they try and maintain they care about every one in the UK, and view the UK through the Westminster prism, a prism that is very distorted in Scotland.

        I don’t loath Labour. I do despise some of their lies and the people who perpetrate them. Scotland has quite obviously decided that they have been magnanimous enough to the UK now it is time for Scotland. We deserve so much better, and the SNP are (deliberately) providing the answers to that equation.

        1. Anonymous Mr Indy (whoever you are) says “And in those 13 [Labour] years the inequality gap got bigger.” Mmmn – not exactly. Methinks that’s a little bit of political prejudice talking.

          As the OECD said earlier this week, the gap between rich and poor grew until 2000, dropped between 2000 and 2005 and grew again after 2005. The really big increase happened between 1980 and 1991 under Thatcher and Major when the measurement of inequality – the GINI coefficient went up from a fraction over 1.0 to nearly 1.5. By 2005 it had dropped to just over 1.3.

          I don’t care for Peter Mandelson’s attitude either and Labour’s record wasn’t as good as I would have liked it – but your reinvention of history is not at all helpful.

      2. “They want to create a society where you can only get help if you’re Scottish. That’s not the country I want to live in where people are turned away at the door simply because of their nationality. ”

        A quite disgraceful slur. You should withdraw that remark.

      3. “They want to create a society where you can only get help if you’re Scottish. That’s not the country I want to live in where people are turned away at the door simply because of their nationality. Or if they are to come in they must suffer financially.” ??????

        I beg your pardon!, you see when you come out with this nonsense it is difficult for people to take the rest of your argument seriously.

        1. Good. I assume you now think that English students should receive the same free university education as their Scottish counterparts. Unless I misunderstood what you meant about disagreeing with “if they are to come in they must suffer financially”.

          1. What English domiciled students pay for their tuition is a matter which is decided by English MPs. That was the case when Labour were in power and it is the case now. Labour brought in tuition fees for English domiciled students and the Tories raised them, which they have a democratic mandate to do. If you disagree with the level of tuition fees that English domiciled students have to pay take it up with the UK Government not the Scottish Government cos it’s a matter for the UK Government, not the Scottish Government.

          2. But it IS a matter for the Scottish Government. The Scottish Government could decide to charge the same for students from all parts of the UK.

            For instance, did you know that Scottish students who go to english universities have to pay tuition fees? Thats because in England, under Labour, the same rules applied to everyone. Thats fair.

            Charging someone more (and it is a conscious decision of the Scottish Government) because of where they live, isnt.

            And of course, that means that the originall commentor was right to claim that the Scottish Government was charging people different rates because of where they lived, and it wasnt fair. Which your comment completely failed to address. As per usual.

  21. I run a small business, consulting to oil & gas. Corporation tax, VAT and income tax are sent south to London, then a portion comes back to Scotland. Every financial transaction has a cost. How can it be in Scotland’s interest to have every penny of taxation sent through London to be dispensed back to us in accordance with someone else’s (a coalition of the not elected in Scotland) view of what is good for Scotland.?

    1. I have always paid my taxes diect to London(PAYE), I asked if I could pay in Scotland and was told NO!

  22. Too many graphs for my taste I’m afraid. It seems to me that in order to reach a conclusion over the merits of FFA vs the present devolution settlement there’s really only one question you need to ask yourself. Do you feel more comfortable with a degree of reliance on a general upward trend in oil prices or would you rather depend on Westminster’s continuation of the Barnett Formula. I’ve never seen any very credible forecasts of long term falls in oil prices. The end of Barnett, on the other hand, is regularly predicted.

  23. So under FFA or independence Scotland’s economy would be heavily reliant on oil. What’s the problem with that? It doesn’t seem to worry Norway, Saudi Arabia and Dubai, to name but three.

    Providing we use the rewards of this natural lottery jackpot win wisely we can plan for the necessary diversifiction and transformation of our economy – instead of squandering it like successive British governements have done.

    However, all this talk about FFA or DevoMax is now largely irrelevant as far as Labour is concerned. It’s very clear that the party will be campaigning for the Union in the forthcoming referendum – when they could have been campaigning for something better for Scotland. This is regrettable and will, I fear, not go unpunished by the people.

  24. The question separatists must ask is what would our economy look like without oil?

    Will other sectors have enough potential to fill the void left by oil and gas revenues?

    The point the post is making is that the economy of Scotland would be more dependent on oil and gas revenues than at present where we are part of a larger economy with oil and gas making up a little over 1% of our economic base.

    It’s ok to say that tourism overtook the financial sector but is tourism going to overtake oil and gas? Or will oil and gas just keep falling until tourism is bigger by default?

    The SNP don’t have an answer for that question because their entire economic plan is based on the back of oil and gas.

    1. That simply is not true. The latest news on the trip to China should be a wee clue, despite BBC Scotland’s sad attempts at undermining it.

      Have you read the white paper on independence?

    2. The first couple of sentences say it all about Labour. Total lack of vision. They don’t seem to realise that Scotland has other industries besides oil and gas, and is attempting to create new ones. They also don’t seem to understand that, with independence, Scotland can grow other areas of its economy, as it will have the power to tailor economic policies to its needs, and not have to find the best work around to policies that are clearly geared to a different economic environment.

      Loved these sentences, GMcM:

      ‘The question separatists must ask is what would our economy look like without oil?’

      and

      ‘The SNP don’t have an answer for that question because their entire economic plan is based on the back of oil and gas.’

      You really should have done your research, or at least watched the news, before you posted these gems. As Duncan points out, AS was in China to secure investment in renewables.

      Do you know why he was doing that? Because he wants to diversify Scotland’s economy, because he knows oil and gas is running out.

    3. Scotland has been in decline for the, nearly, 50 years I have been voting and we need to change this partnership or we will, be left with Calman versus Independence.

    4. What would the UK economy look like without the strong financial sector in The City? The UK has all its eggs in one basket to a much greater extent that an independent Scotland would.

  25. I’d call no attempt to reverse ANY of the Tories anti trade union legislation a waste of 13 years.
    I’d call the gap between rich and poor growing wider a waste of 13 years.
    I’d call sending working-class guys from all parts of the UK to die in illegal foreign wars a waste of 13 years.
    I’d call letting the bankers run riot and destroying the UK economy a waste of 13 years.
    I’d call starting the raid on public sector pensions to try to cover up for Brown’s ballsup a waste of 13 years.
    I’d call selling off the UKs gold reserves at the lowest point of the market and telling the scumbag currency traders what you were going to do so they could plenty time to get it even cheaper a waste of 13 years.
    What country were you living in if you thought it was wasn’t wasted? It was only not wasted if you were picking up handsome salaries and expenses at Westminster. Are you an MP by any chance or someone financially dependent on one? I can’t be bothered trying to decode your initials.

    The HE university funding “debacle”?!?! For you to call it a “debacle” says more about your loathing of the SNP than anything else. Labour introduced tuition fees. The Scottish Government made sure that residents of Scotland, no matter what their country of origin, their colour, religion, gender, sexuality or even their politics were able to study without the burden of fees. Dunno how your warped mind transmutes that into a “debacle”. Sounds good in a headline or a soundbite. Does not survive the most cursory of examinations, though. Dunno how that translates into “anti-English” either. Any English person wishing to take advantage simply needs to come here and live for a couple of years. As increasing numbers of them are doing because they recognise the benefits of living in a country where the administration actually cares for its residents. To try to describe that as “anti-English says more about your loathing for the SNP than anything else.

    The reason we have not achieved the kind of society we long for is because we live in a dysfunctional Union where the dominant partner manifestly does not share our aspirations. I think they call that the “democratic deficit”.
    Independence will NOT solve all our problems. Nobody EVER claimed that. Nobody. I challenge you to find any quote that says so.
    What independence will do is give us the OPPORTUNITY to START to solve our problems, on our terms, not doing what is best for the City of London bankers and the selfish desires of the SE of England. They are certainly not getting solved under the present arrangements. The idea that things can only get better if we carry on voting Labour in a UK context is absurd.
    Not just absurd but an insult to the intelligence of the Scottish electorate.

  26. GMcM
    Theres many years of oil production left.The oil revenues will be used to build a more balanced economy.I believe that we have the resources and people to do it.You obviously dont share my confidence.

  27. GMcM

    The “HE university funding debacle” is entirely an English debacle and it says nothing about your powers of perception to see it any other way.
    The fact that in England the Government has decided to charge students fees runs against not only traditional UK public policy but most of Europe’s public policy on the matter.
    There is of course no free university education anywhere. Either the student or the student’s family arrrages to pay for it or the state pays it.
    The Scottish Governmen has decided to pay the fees of Scottish students out of the Scottish budget.
    If English students are to have their fees paid it should come out of the budget for education in England.
    It’s really very simple.
    I assume you are aware that the English authorities will not be paying fees for Scottish students in England.

  28. Quote:
    Is this the reason the SNP aren’t building very many schools? It never stopped Labour when we were in power. Yet somehow Labour lack ambition?

    The largest school building program in Scotland, news hospitals built all over the country

    I commend labour on building schools, but we are paying for it now
    As a spark i was shocked to hear that the NHS paid £2000 for ONE DOUBLE SOCKET in one of Labours new hospitals!!!!
    Why? – the ppi model prohibited the Local NHS getting independent quotes from other contractors and left the NHS to pick up the extortionate bill.

    I applaude Labour for building all the schools and hospitals, but we now have lots of buildings that will cost SIX to SEVEN times more than it would have cost building it the old way

    As far as oil goes- you seem to be forgetting the oil and gas off the west of Scotland (Arran and the west coast). They have also recently brought west of Shetland online (did you include this in your projections)?

    1. So, you can accuse Labour of being foolish for setting up the contracts in that way, but you cant say we lacked ambition.

      Likewise, after reading the SNP’s wish-list of capital projects just announced, I wont accuse them of lacking ambition. Lacking any sense of where the money will coem from, yes.

      1. If your definition of ambition is “let’s mortgage our children’s prosperity against short-term populist measures so we can keep our big business pals happy” then you are quite correct. The difference is the SNP DOES know where the money will come from. The productivity of the Scottish people, working for the Scottish people not big business in London or New York or wherever.
        You know, for a crowd of so-called socialists, you are very happy to deal with big business but strangely reluctant to actually do anything that is to the long-term benefit of the working class. Your PFI disasters have shafted the working-class throughout the whole of the UK. No wonder the English reject you so regularly.

        1. ” The difference is the SNP DOES know where the money will come from.”

          Pity they didnt tell us that then.

          Since the Scottish people in an independent Scotland will be working for Scotland, not London (or anywhere else), I take it the SNP will announce the nationalisation of all firms not based in Scotland? Because that what you meant. I think the big-business loving SNP leadership wont want to do that.

  29. Michty what a bleak picture you paint Greg.

    The definition of ‘Peak oil’ was created in the early seventies using the then methodology of the day, and referred to accessible oil, mostly Primary recovery and some (where affordable) secondary.
    Fast forward four decades and we see companies returning to fields long believed inaccessible and too expensive for extraction. Now, as Greg Williams, should know via his procurement job, the technology has moved on in leaps and bounds and Tertiary or Enhanced Oil Recovery (EOR) is the way ahead, using techniques that offer prospects for ultimately producing 30 to 60 percent, or more, of the reservoir’s original oil in place. There’s now the possibility of using chemical and gas injection, microbial injection and even thermal/steam injection, to extract oil that was long believed unobtainable.

    Add the recent discoveries like the estimated 300 million barrel Catcher field or the one billion barrel Buzzard and it’s subsidiary finds and we can surely understand that we’re about to run out in the next 20 years…

    Incidentally, I’m delighted that at least someone in Labour has finally attempted a reasonably rational FFA debate.

  30. Add the recent discoveries like the estimated 300 million barrel Catcher field or the one billion barrel Buzzard and it’s subsidiary finds and we can surely understand that we’re NOT about to run out in the next 20 years…

    Chuffing lack of edit facilities…

  31. Crikey, didn’t realise this had generated so many comments already. Apologies for the lack of response. I will try and go through them all tonight.

  32. The thing we can’t wish away, however hard we try, is the question that no unionist of any colour woll answer. If the union is so good for Scotland, how come Danes are rich and Scots are poor. No-one laughed harder than me at the ‘arc of insolvency’ joke, but the fact remains that the poorest people in Norway, Denmark, Finland and Iceland…and probaly Ireland as well for all I know…are rather better off than the poorest people here.Another thing we should n’t shy away from is that the very poorest people in Britain became rather worse off under Blair and Brown. Is that a good advert for voting Labour? Obviously not, but until we face up to past failures on poverty and start telling people what we intent to do to make up for those failures, everything else is a bit of a waste of breath.

  33. John – I think it’s a bit of a push to claim the UK is ‘dangerously’ reliant on oil and gas revenue when it accounts for 1% of the tax base. If the UK is dangerously reliant, what would an independent Scotland be at 13%? Wind energy will only run without public subsidy with policies such as a carbon tax on fossil fuel generation. It’s just moving the subsidy around.

    Alan – agree a sovereign wealth fund like Norway’s sounds a good idea, but they also have income tax rates of 54% and VAT of 25%. Would you want these tax levels to enable a sovereign wealth fund?

    Michael – Renewables will play a massive part in Scotland’s future economy, independence or not. But as has been written before, renewables generating wealth rather than consuming subsidy requires an export market which will not be guaranteed under independence. In any cast, the corporation tax payable by renewable companies (20% under Salmond viz the 26% currently in the UK) is much less than the up to 72% on oil and gas fields. It’s not a like for like comparison.

    Ianbaeg – I missed that newsnight and am not completely sure where the current leaders stand. I was more thinking of Henry McLeish as a senior figure at least. What I’m saying is we shouldn’t rule FFA out yet when more research needs to be done on things like international comparisons and the expenditure that is not included in GERS. The best fiscal position for Scotland should be Scottish Labour policy. We have more work to do.

    Indy – reliance on oil and gas is a problem regardless of the constitutional settlement, because of the volatility and the inevitable decline in the industry. I’ve long been raising the need to diversify as a candidate in Aberdeen.

    Gavin – Calman should be passed, as it is better than today, but agree that Scotland’s economic devolution should not necessarily stop there, if there’s a sound justification for more powers. Again, I don’t speak for the current leadership candidates and am not party staff or anything. These are my own views.

    Duncan – RE Norway see the point above on higher taxation elsewhere that enables a sovereign wealth fund. Not been to Saudi, but in the UAE they are definitely diversifying out of a hydrocarbon economy.

    Jonathan Marshall – All the facts on the table – yes please. Problem is the Scotland Office produces one politically motivated set of facts, and the Scottish Government another.

    Clachangowk – Labour’s energy policy is eminently more sensible than the SNP’s. We share all Scotland’s vision for a green future. But not at the detriment of security of supply, and not at the expensive of tax payers. I would dearly love to see the cost to electricity bill payer’s of Salmond’s pledge for 100% electricity from renewables. You and I pick up the tab for that.

    Kev – I honestly don’t believe Scots would be better off under independence. Economic strength lies in a diverse economy and tax base, which Scotland enjoys as part of the UK. The Union is a strength in this respect. The social attitude survey is very true, but the SNP’s arguments are romantic and spurious. Please show me the figures in that booklet the SNP launched a week or so ago and are sending to all households.

    Cynical Highlander – perhaps ask some bankers what the interest rate an independent Scotland would pay on its government borrowing?

    Gavin – If I have to hear about this mandate thing one more time…! SNP got a clear mandate to govern Scotland in Holyrood. No doubt. Did they get a mandate for constitutional reform? Hmmm…how did Scots vote in the 2010 General Election for the parliament that deals with the constitution? When Salmond asked Scots to hang Westminster by a Scottish rope so he could get his referendum? Scotland returned 6 SNP MPs, and 41 Labour. We should not be flattering the SNP all the time, when in reality the 2011 result partly reflects that a lot of Scots voted for the SNP over an uninspiring Labour party and in spite of the referendum, which they always knew they could vote no on.

    Dave McEwan Hill – fancy adding some facts or figures into you’re rhetoric? Yours is the sort of emotive nonsense that finds its way into SNP economic policy. Anyway, doesn’t Scotland get higher government spending per head than the rest of the UK? Isn’t that a benefit of its tax revenues?

    Duncan Maciven – would you like to pay Norwegian levels of taxation? Or enjoy Qatar or Saudi levels of public services?

    Richard – I can’t really comment on what happened 10 years before I was born! I’m looking at where we are now. Understand how such a report, if it exists, would be frustrating for nationalists though.

    DM – there is a difference between being able to manage, and being better off. Why would you vote for the former, beyond emotional nationalism?

    Farrochie – have you factored the fixed costs of establishing a separate HMRC? Or the higher transaction costs that would result from the lower economies of scale?

    Angus – oil prices may go up, they may go down. Production is definitely going down. This debate is all about graphs and figures!

    King Kurt – the figures in GERS show that an independent Scotland needs all the oil revenues to balance the books. There’s no money left after that for transformation.

    Mark / evil Cybernat – As far as I know Prof. Kemp’s projections account for increases in recovery rates, Buzzard and the as yet undeveloped Catcher field. Production is still dropping though. Personally I think further technology will emerge to increase recovery rates. I can’t remember the field name off the top of my head, but I saw recently one operator wants to restart a shut in field (Alba was it?). However I don’t think these efforts will be sufficient to reverse the fiscal picture.
    —————————

    I’m glad this post has generated so many comments. To me, the fiscal picture should be at the core of the independence debate, rather than romance and Bannockburn rhetoric. We all need more facts and figures. I would also love to hear from anyone who has a view on the fiscal arrangements in the US, Germany and Spain for example. We could be learning much, as well as arguing!

    1. Yes I would not mind the Norwegian standard of living which is much higher than we in Scotland enjoy with much better social care.

      Norway and most Scandinavian countries come out top on most social indicators with Norway being voted the best place in the world to live year after year.

      Norway has topped the United Nations’ global list of the best country to live in for the eighth year running.

      According to the 2010 Global Human Development Report (GHDR), released yesterday in New York, Norway ranks first out of 169 countries with a score of 0.938. This is a slight decline in comparison to 2009, when Norway scored 0.971.

      Life expectancy in Norway is 81 years and the average Gross Domestic Product per capita is USD 58,810, the report shows. The average person also attends school for 12.6 years.

      The study methodology was also modified this year. Besides the classic indicators of life expectancy, GDP per capita, literacy rate and level of education, this year’s survey takes account of new evaluation criteria relating indirectly to development, and inequality (disproportionate distribution of income, medical services and access to education), the index of gender equality and poverty.

      Thus, Norway fits into the category of countries with “very high” human development, along with countries such as Australia, New Zealand, the United States and Ireland.

      So yes I think Norway is an excellent bench mark for Scotland to aspire to.

      Their higher taxes are very well spent.

      Surprise surprise. Ireland and Iceland also come out much higher that the UK on the HDI index. The much maligned Arc of Prosperity is alive and well.

      Another unionist myth bites the dust.

  34. This whole article and many like it is based on the peculiar premise that those who desire an independent Scotland would achieve it and then run it and its economy the same way it has been run (or, more acurately, run down)as a peripheral part of the UK.
    Why would anybody want to do that?

    Very few of the figures being bandied about have any real validity except in the context of a strictly dependent constitutional position.

    The realities are that indepedence is the natural condition of any self-respecting nation, that independent countries run things in their own interest, that they are likelier to run their own country more wisely than others would and that the Scots are just as capable of using what they have got constructively as anyone else and much likelier to do so if history is to be the judge..

    There is no way anything else can be proved so this is a bogus discussion and very typical of the war of attrition that unionist elements are engaged in on the Scottish constitutional question.
    The only thing that can be said with any certainty is that on a per capita basis Scotland has probably more in natural resources than any other nation in Europe and it would take incompetence on a monumental scale to fail to make constructive use of this

    1. i think the problem is that the sort of radical changes you talk about, will take a long time, and will be resisted – not least by the SNP leadership who currently dont show much signs of being the radical socialistists you imagine them to be.

      Plus, theres also the aspect that in order to convince people to vote for independence, the SNP are having to promise that not much WILL change. So on the one hand, we are bing told that nothing will change, and on the other we are told that once we are independent everything must change. Weird.

      1. Radical socialist eh? What do Labour stand for?

        The Labour party has been accused of letting the Tories off the hook over the issue of pension reforms.

        The attack followed the failure of the party to back a House of Commons motion yesterday which called for the UK Government to reverse unfair changes to public sector pensions.

        The debate, instigated by the SNP and Plaid Cymru, was the first since the UK Government announced its pension reforms. It followed a strike last week that saw two million UK public sector workers, including 300,000 from Scotland, take part in a day of action.

        The SNP and Plaid Cymru debate had been welcomed by several unions.

        Speaking after the vote, SNP Work and Pensions spokesperson Dr Eilidh Whiteford MP said:

        “Instead of uniting against these punitive reforms, it is incredible that Labour have chosen to let the Tories off the hook and let public sector workers down by sitting on their hands.

  35. Greg, Believe me The McCrone does exist and is as relevent to today as it was back in the 70s. Why? Because as I said, at the time it was written it was envisaged that North Sea oil would last 40 to 50 years and now we know that was a massive underestimatation and that we still have another 40 to 50 years of reserve.
    Regardless of your age you should know about these facts. At the time the report was written Labour (in power at Westminster) were using the same lie (and I don’t use that word lightly {labour new it was a lie}) as they are today, to play down the potential strength of an independent Scottish economy.
    For a prospective Labour candidate for an Aberdeenshire constituency to deny knowledge of McCrone and his conclusions is quite an admission.

  36. Greg,
    I have confidence that the people of Scotland are as capable as any in the world.I believe they can harness the countrys bounteous resources to provide a decent standard of living for all the people.You may think that is romantic nonsense.I think its social democracy.As practised by many similair sized,though less well endowed,countrys around the world.After providing for the poor,the sick and the old there may not be much money left for nuclear weapons.That wont worry me too much.

    1. Thats exactly right Kev, billions of north sea oil revenues were blown by the UK treasury (under Tory and sadly Labour) on a desire to be a super power, when in reality there is no way the UK can ever be a super power, in terms of USA, Russia and China, now even India.

  37. John Ruddy, Do not presume to tell me what I meant. Your debating style relies too much on semantics and not enough on dialectic. It may win you brownie points in here but the voters are not fooled as you should not need reminded. I note yet another by-election win in a former Labour stronghold yesterday.

    1. But surely debating in semantics is exactly what a cybernat does? Telling other people what they meant, only to rubbish it is the nationalist stock-in-trade!

      My point still stands though. Are you calling for the nationalisation of all non-Scottish companies? If thats not what you meant, perhaps you can explain how the Scottish people will keep all their own wealth, if they are working for companies which will take the profit out of Scotland (and presumably back to England and the USA)?

  38. The author of this blog is walking on dangerous ground.
    If you want Scotland to remain in the union, then dont mention oil.
    I ve worked in the oil industry for 22 years, and spent much of that time in Norway, I have to concede that Norway is a super rich state with probably the highest living standards in the world (it used to be the poorest in Europe, pre oil!), compare that to Scotland with one of the worst rates of poverty in Europe then all your graphs and your own (excuse me for being blunt) niave perception will leave us in the labour party open for ridicule.
    Your forgetting Salmond was an oil economist and will rip this to shreds.

  39. Very interesting and telling comments concerning Scotland’s ability to use the resources it is fortunate to have to rebuild and develop. As Richard Mackinnon points out the MaCrone report has as much relevance today as it did when it was first written… Why first it is in the open and sadly the duplicity of those involved in hiding it are clear for all to see… Second because oil and gas have not run out and will last another 30-50 years… Third the example set by the other nation that was fortunate to have the other half of the North sea is clear for all to see… Greg, I would much rather see the same taxes in Scotland as Norway has if the people of Scotland could enjoy the same standard of living that the average Norwegian enjoys. As a socialist I have always viewed redistribution of wealth through taxation as fair… Not that this is a view shared by many in the City or indeed the South East of England. I am perplexed that someone writing on Labour Hame would view taxation based on income, as a questionable thing… Norway has one of the fairest taxation systems in Europe, but sadly I guess this is how far removed from it’s roots many in the Labour Party have become… It is no surprise that at the end of the Blair Brown era the disparity between the Richest and poorest in our society ended up the way it did. If we only run the country for the city and a select few rather than for everyone else it is hardly surprising that the one the country and the Labour Party are in such a dire state. Thus far in the debate for independence no-one from the pro union camp has actually been able to provide me with any reason to continue to remain in this apparently unequal union. For what it’s worth I would like an independent Scotland to establish a State controlled company like Stat Oil… After all with 35-50 years worth of oil left there is plenty time… this would mean the Scottish people would gain the maximum benefit from the oil. One other point the semi autonomous region of Iraq, Kurdistan attracted over 6 billion pounds in foreign investment in 2011 in 2012 this is expected to double… If a small region of Iraq with it’s resources can do it I don’t doubt we can.

  40. Its interesting for me to read Jonathon Marshall’s comments.
    They are correct and he knows Norway, who own the other half of the North Sea and they enjoy a lifestyle beyond the wildest dreams of almost everyone in Scotland. Their companies like Statoil, Norsk Hydro and formerly Saga have made huge investments back to Norway, not just in oil, but renewables and exports to China!
    So where are we?
    The more I read Labour home the more dispondent I get, really, is there such a thing as Socialism or common sense in Labour anymore, and why all the anti Independence or seperatist talk? I have no fear of an Independent Scotland, obviously, and just to add to the debate, the Scottish whisky industry rakes in more money for the UK government than the oil does, so where is this all leading to?

  41. I think it is reasonable to accept there is a risk attached to a higher dependency on oil. Although there are big benefits too in years of high oil prices. And huge finds are still possible, as seen in Norway recently.

    Control of corporation tax under FFA can reduce the risk of overdependency on one segment however.
    It’s time to stop pretending Scotland isn’t in competition with England, especially the South East, which has huge natural advantages under a fixed corporation tax regime.

    I am disappointed with the candidates stance on Devo Max / FFA, which seems like the sensible and inevitable way forward for Scottish Labour, and the only realistic chance for a comeback in the years ahead.

  42. 1. You don’t spend all the oil money as it comes in willy nilly. You create an oil fund which provides regular income.

    2. While oil prices may go up and down they trend upwards.

    1. Mr Knight is correct.
      While the UK was blowing its new found fund, the Norwegians stashed it, now they have a country where everything is vastly superior to what we know, infrastructure, equality of life, living standard, working conditions, security, wealth, innovation and so on. Their engineering projects make ours look comical.

      1. True, but how can you spend the money on current expenditure AND create a soveriegn wealth fund with it?

        What would you cut?

        Pensions? Welfare? Education? Health?

  43. John Ruddy

    You obviously haven’t quite got it.
    Simply put the interest from a sovereign wealth fund supplements current government expenditure. You don’t spend the fund.
    You do as the Norwegians did.
    When oil prices spike you put a good proportion of this bonanza aside and build up a bigger and bigger fund which supplies continuous dividends without depleting the central fund.
    Norway is set up forever.

    1. I think it’s you who hasn’t quite got it. Currently oil revenues are funding current expenditure. If they are to be diverted into a sovereign wealth fund they would no longer being funding current expenditure. So what would you cut?

      1. So you’re just assuming that Scotland’s economy would be run the same way as it is now, Duncan, and that there would be no effort to grow it, so that current spending wouldn’t need to be cut?

        1. Ah, so you’re saying we should simply decide to grow the economy (I wish someone had thought of that before, seems obvious now) and then the oil money would be surplus and we could squirrel it away? Brilliant. Independence economics is always buoyed by unjustified expectation. Tell me, why don’t we just grow the British economy and then have a combined oil fund that will be even bigger?

          1. I think you’ve forgotten, Duncan, that as soon as Scotland becomes independent, the economy will magically grow, because we’ve been held back by the Union for the last 300 years. No need to actually do anything, it will just happen like that.

  44. No.It’s you that hasn’t got it.
    1. In UK oil funds are funding current expendiure. They always have done. That’s the point. The UK has contiually funded current expenditure out of oil revenues while Norway has continuously put some of them aside,particularly at periods
    when the oil prices were high, thus steadily building up a fund which now provides substantial continuous supplementation to Norway’s budget.
    Much of Scotland’s oil revenues were squandered by huge projects in the south of England and in paying for Mrs Thatcher’s “no lame ducks” destruction of UK indistry which put hundreds of thousands onto the unemploment scrap heap. Read the Mccrone report.
    2. Scotland dies not presently have access to its oil funds so”what would you cut” is a bogus question.

    If this is the level of understanding about Norway’s oil funds that is presently the case in Labour circles I’m not surprised that Labour is floundering.

    1. As ever, the oil fund proposal is about time travel. The SNP wants to travel back to the 70s and change how we spent the oil revenues.

      I understand the argument very well, but John’s point remains entirely salient. As you acknowledge, oil revenues fund current spending. We can’t travel back in time and change that. If you are proposing setting a fund up now then you have to say what you will cut to make up for the loss of income.

  45. 1. Oil revenues do not fund current Scottish spending.They fund current spending on a UK basis and in fact are disappearing on a daily basis into the black hole which is the UK’s debt. They provide the collateral for the UK’s huge and increasing loans and provide over 20% of Corporation Tax to the UK Government
    2. Oil is worth considerably more than it did in the 70s and will continue to rise.
    3. Had Scotland had access to Scottish oil revenues it would be the 6th richest country in the world. Read the McCrone Report (produced for the Labour Government then hidden for 30 years).
    4. On the basis of the GERS Report and the funding receoived through the Barnett formula Scotland receives about a 8.5% of the oil revenues. Obviously an independent Scotland would receive well over 90% of the oil revenues. It’s really very simple. Perhaps I should put it in simple sentences.
    5. To start a sovereign wealth fund an independent Scotland wouldn’t HAVE to cut anything but I am sure it would still cut out Trident and Nuclear weapons,
    expensive illegal invasions and sending thousands of troops all around the world to do America’s will .
    That is exactly what Labour would have done years ago when I was young before the UK/US establishment supported Tony Blair into power.
    You don’t appear to understand how completely weak your present line of argument is.

  46. I think Greg you are as confused as your employer is. BP used to stand for ‘Beyond Petroleum’, are you claiming now that it stands for ‘Back to Petroleum’? Let me spell it out for you, Scotland is the energy power house of Europe with or without oil and gas.

  47. Gregg Williams has his own views on O&G revenues and like the nationalists he can “prove” his case with facts, which Alex Salmond says are “chiels that winna ding”, so I winna bother to challenge his figures. However what he doesnt add to his calculation is the effect that a “hands-on” Government could have on the economic wellbeing of Scotland. After all it’s fair to assume that only Labour and the SNP will be challenging for that role in the foreseeable future and I can’t see either party misgoverning Scotland in the reactionary way we’re being ruled at present. If Gregg Williams factors this into his predictive model he might be surprised to see a different and more optimistic outcome, if indeed that’s what he wants to find.

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