By Martin Kelly
Deputy First Minister Nicola Sturgeon has described the latest claim by the UK Treasury of an independence funding gap as “all over the place” after it showed a £30bn difference from earlier figures from the No campaign.
The SNP MSP was responding to a UK Treasury report that said the Scottish taxpayer faces a bill of £1.6 billion per year to meet the costs of what it says are unfunded policy commitments contained in the Scottish Government’s Independence White Paper.
According to the UK Treasury, the cost of key pledges – which included expanding childcare, reducing Air Passenger Duty and a reduction in corporation tax – would result in cuts of £1.6bn.
Chief Secretary to the Treasury, Danny Alexander said:
“This detailed Treasury analysis shows the Scottish Government would need to find £1.6 billion a year in higher taxes or spending cuts to fund just some of the additional commitments set out in the White Paper. This is equivalent to the combined annual budgets of Police Scotland and the Scottish Fire and Rescue Service.
“The reality is that the White Paper shows nothing about how they would pay for these commitments. The Scottish Government cannot claim it is going to spend what it will not have.”
However the claim by the Lib Dem MP was immediately ridiculed by the Deputy First Minister who highlighted the difference between the latest figures and earlier funding gap figures alleged by the No campaign.
Responding, Nicola Sturgeon said:
“Danny Alexander’s figures are all over the place. In September, the No campaign were claiming a funding gap of £32 billion, by last month that had shrunk to £10 billion, and now they are saying it is £1.6 billion – all these figures are wrong, but at this rate even the No campaign will be predicting a healthy surplus by the time the referendum arrives!”
In November following the publication of the Independence White Paper, the anti-independence campaign Better Together claimed a newly independent Scotland would face an immediate shortfall of between £9bn and £10bn. Two months earlier the head of Better Together, Alistair Darling, accused Alex Salmond of making £32bn worth of “false promises he cannot pay”.
Ms Sturgeon criticised the latest UK Government claims for ignoring what she said would be the “dynamic impact” the policies would have on economic activity which she insisted will “boost growth and tax revenues.”
According to the Scottish Government, a three per cent reduction in corporation tax is estimated to increase the level of economic output by 1.4 per cent and boost overall employment in Scotland by 1.1 per cent (equivalent to 27,000 jobs).
The revolutionary child care policy is estimated to boost female participation in the workforce by around 100,000 and in turn increase tax revenues. Based on a comparison with Sweden, this would generate an extra £700 million in tax revenue per year in the longer term.
The senior SNP politician then lambasted the Lib Dem MP accusing his coalition government of having the wrong priorities, which she said included spending £100bn on nuclear weapons.
She added: “But the most serious point behind all this is that the vastly different choices in spending priorities has now been laid bare. Westminster is pressing ahead with a new generation of weapons of mass destruction, at a cost of up to £100 billion, and at the same time is attacking the Scottish Government’s plans to transform childcare in an independent Scotland.
“Danny Alexander and his Tory colleagues at the Treasury are having to borrow vast sums to balance the books, while the Scottish Government is delivering on all our headline policies within a fixed budget year after year.
“People in Scotland are sick and tired of the lecturing and the hectoring from the No campaign, as Boris Johnson has now conceded – and contributions like this will only help push more people towards a Yes vote.”
The Treasury report also claimed tax payers in an independent Scotland would be forced to pay an extra £1000 per year.
Alexander also highlighted oil revenue forecasts recently published by the body created by Tory Chancellor George Osborne, the Office of Budgetary Responsibility.
He added: “The OBR has revised down North Sea oil and gas forecasts by £3½ billion over the next three years. Instead of needing to cut spending – as Scotland would have to as an independent country – the Scottish Government will actually see its budget rise by more than £300 million over the same period. This shows the very real benefit that the UK’s integrated economy and public finances brings to Scotland year-in and year-out.”
However industry experts and most academics have poured scorn on the pessimistic revenue forecasts produced by the Office of Budgetary Responsibility.
This year the oil and gas industry enjoyed record investment with £13.5bn set to be targeted at the sector.
Speaking in August, Oil & Gas UK’s chief executive, Malcolm Webb said the sector was worth £40bn to the UK Treasury and supported hundreds of thousands of jobs.
Mr Webb said: “The offshore oil and gas industry generates almost £40 billion a year for the economy by producing oil and gas worth £32 billion and by exporting oilfield technology and expertise worth £7 billion.”
He added: “The industry is the UK’s largest industrial investor and contributor to gross value added. With 15 to 24 billion barrels of oil equivalent (boe) still remaining to be developed, the UKCS possesses great potential for contributing to economic growth for decades to come.”