SNP's independence oil forecasts 'wrong by £155 million a day'
The Scottish Secretary publishes figures showing the disparity between the SNP's predictions during the independence referendum campaign and what has actually happened thanks to the collapse in the oil price.
North Sea oil prices have plummeted since September's independence referendum
North Sea oil prices have plummeted since September's independence referendum Photo: ALAMY
By Simon Johnson, Scottish Political Editor
The SNP’s forecasts for an independent Scotland’s oil wealth during the independence referendum campaign were £155 million per day too high, according to a Government analysis published as it was estimated a third of Britain’s North Sea companies are in danger of going bust.
Alistair Carmichael, the Scottish Secretary, said the collapse in the oil price would have meant £15.5 billion being wiped off Alex Salmond’s claim that the North Sea would generate £20.2 billion for a separate Scotland’s coffers in its first three years.
The “independence funding gap” is now the equivalent of £155 million for each of the hundred days that have passed since the September 18 referendum, he said.
Mr Carmichael demanded Nicola Sturgeon and John Swinney, her deputy and finance minister, explain how they “got it so badly wrong” during the referendum and take steps to ensure future projections are more trustworthy.
His intervention came as Company Watch, a financial risk management group, published research estimating that 70 per cent of the UK’s publicly listed oil exploration and production companies are now unprofitable and have racked up losses of £1.8 billion.
In a separate report, business consultants PricewaterhouseCoopers warned oil prices remaining at current levels would “light the touch paper for mergers and acquisitions in 2015 and perhaps even the first hostile takeover in living memory.
Earlier this month Labour called for an inquiry into whether civil servants had politicised the Scottish Government’s oil price forecasts to bolster the case for separation.
They had predicted an oil price of $110 per barrel, prompting Ms Sturgeon and Mr Swinney to claim that a separate Scotland would reap the rewards of a “second oil boom”.
However, the price has since tumbled to below $60 per barrel and many economists predict it will remain around that mark for at least another year. Despite this, SNP ministers have refused to admit they made a mistake or to issue revised projections.
Danny Alexander, the Chief Secretary to the Treasury, has said the UK Government must accept significantly lower taxes to sustain investment and jobs in the sector.
Mr Carmichael said the reality of what has happened since the referendum showed Ms Sturgeon and Mr Swinney had made a “£155 million mistake for every day that has passed.”
“We were making a decision that Scots were going to have to live with forever and the Scottish Government are sticking to wildly optimistic oil predictions that have not even made it to the new year,” he said.
“This is totally unacceptable and steps need to be taken to restore confidence in any future oil analysis provided by the Scottish Government.”
The analysis includes figures showing the North Sea revenue shortfalls in an independent Scotland for a range of oil prices, compared to the Scottish Government forecasts based on $110 per barrel.
If the price stayed at $60 in the financial years 2016/17 to 2018/19 inclusive, which the separatists claimed would be the first three years of independence, then the North Sea would have generated £4.7 billion in tax revenues.
This would have been 77 per cent less than the £20.2 billion predicted by the Scottish Government. If the oil price had bounced back to $75 per barrel, the shortfall compared to the SNP’s projections would have been almost £10.9 billion.
For $90 per barrel, the financial black hole in a separate Scotland’s finances would have been £6.2 billion, according to the figures, and for $97 it would have been more than £4 billion.
Mr Swinney accused the Scottish Secretary of “staggering hypocrisy”, citing one UK Government estimate that the price would reach $134 per barrel in 2018, and accused him of “gloating” over lower-than-expected tax revenues.
He insisted that oil was a “bonus” and not the “basis” of Scotland’s economy and cited forecasts claiming the oil price will return to $100 per barrel in the long run.