Referendum : The Oil Fund - Behind Closed Doors

Lesley Brennan

15 October 2013

So far in the Referendum campaign, we have become familiar with the SNP’s selective figures for the value of North Sea oil revenues which contrast with business and official forecasts.

Alongside that, their idea of an Oil Fund for an independent Scotland has been introduced, in which money from the oil revenues could be set aside for future use.

 

 

In “The Swinney Files” (Part Two) , download above, Better Together highlights from Freedom Of Information requests the difference between what is being said publicly by Scottish Government Ministers about the Oil Fund and what is being said behind the closed doors of government by professional civil servants offering them private advice

 

e.g  The statement by Finance Minister, John Swinney

 “It will be possible to contribute to an oil fund without there being any diminution of public expenditure.”

 

This runs contrary to the civil servants’ analysis :

 

“If the Scottish Government had adopted any of these rules in the past there would have had to be an accompanying reduction in public spending, increase in taxation or higher borrowing to ensure that the public finances continued to balance”

 

Mr. Swinney’s declaration : “A savings fund should be established immediately following independence”

is at odds with the civil service view :

“There is therefore likely to be significant demand, at least in the years immediately following independence, to use any additional resources to support public services and reduce public sector debt rather than investing in an oil fund.”

 

 

Mr Swinney’s assertion : “ Scotland’s fiscal position will strengthen ….. This would allow an independent Scotland to consider investing modest sums into a long term savings fund without an offsetting change to public spending or taxation”

 

is in sharp contrast to the civil service perspective  :

 

“ given Scotland’s fiscal position since 1997/98, if the Scottish Government had wished to invest in an oil fund, without having to increase its borrowing, there would have had to have been a corresponding increase in tax receipts or reduced public spending...this would, on present assumptions about on-shore tax revenues, require some downward revision in current spending”

.

 

The civil service also observed :

 

 “There has only been one year since 1990 when tax receipts have exceeded total public spending.

“This suggests that over this period North Sea receipts would have been required to fund public services in Scotland. Therefore if the Scottish Government had wished to establish an oil fund, it would have had to reduce public spending, increase taxation or increase public sector borrowing.”

 

It is one thing for a government to see its assertions undermined by evidence presented by its opponents.

 

It is another thing for a government to ignore as inconvenient advice that it receives from its own impartial civil servants.

 

The response that we are accustomed to when those who challenge the Scottish Government’s rosy scenario of the trouble-free, problem-free path to independence is that they are dismissed as “scaremongering”, “talking Scotland down”, or “being negative”.

 

In this case, however, the evidence being put to the Scottish Government comes come not from the usual political suspects, but from advice from their own civil service.

 

 

 

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