A fresh war of words broke out last night over the prospects of an independent Scotland after official forecasts for North Sea oil and gas revenues were slashed.
Chancellor George Osborne claimed there was a “black hole” in the SNP’s plans as falls in offshore production and record investment levels led to predictions of lower tax receipts.
Scottish Finance Secretary John Swinney said the Office for Budget Responsibility (OBR) figures were “not consistent” with industry expectations, and appeared to be backed by trade body Oil and Gas UK, which described the report as “pessimistic”.
The OBR said total revenues were expected to fall by 20% in coming years, from £5billion in 2013/14 to £4billion in 2018/19, mainly due to the world oil price.
It revised down its forecast for this year’s revenues by £1.7billion compared to its prediction in March, because of lower production rates and major investments, saying 2013/14 was “likely” to be down by more than 20% on 2012/13.
Oil production was forecast to be 12% less in 2013 than 2012, and gas down 9%, with stoppages and ageing infrastructure partly to blame. New investments reduce Treasury receipts because firms are offered tax breaks to kick-start their developments.
Mr Osborne said there was a gulf between the OBR’s expectations and those of the SNP.
“It is another example of how they are not being straight with people about the facts around independence and it will of course mean that there is a black hole in an independent Scotland’s public finances, which would cost the Scottish people £1,000.
“So it is yet another example of how they are not being straight and the facts, the independent facts, refute their case.”
Alistair Darling, the Labour leader of the pro-UK Better Together group and Mr Osborne’s predecessor as chancellor, said: “Today’s figures reveal a difference of more than £3billion between the SNP’s wishful thinking and what the economists are predicting.
“To put that into context, £3billion is equivalent to the entire budget for Scottish schools.”
Mr Swinney said: “The OBR oil forecasts are simply not consistent with industry expectations for production or current price trends.
“For example, despite offsetting the costs of record industry investment the OBR fails to account for the resulting increase in production.”
Oil and Gas UK said: “While still compiling the data for our survey of members’ investment and production intentions due for publication early next year, Oil & Gas UK takes a less pessimistic view and foresees an upturn in production beginning in 2015 which should last for the remainder of the period.”