By Chris Rumbles

The SNP has challenged the findings of a think tank’s analysis of an independent Scotland’s future finances which the party say used oil and gas figures that contradict industry projections.

The CPPR, an academic research centre based at Glasgow University, released an analysis of Scotland’s future finances following the recent publication of the Scottish Government’s Expenditure and Revenue (GERs) figures and the Office for Budget Responsibility’s (OBR) Economic and Fiscal Outlook.

A dispute has now resulted following the paper’s release as the SNP claim the OBR figures used in the CPPR’s report do not take into account the impact of increased industry investment in the oil and gas sector.

The analysis paper asserted that the latest figures meant Scotland, when accounting for oil and gas projections, was likely to be at a fiscal disadvantage to the rest of the UK from 2013/14-2018/19.

Senior researcher at CPPR, Professor John McLaren, said there would undoubtedly be benefits from the investment but he was unable to fully confirm whether the OBR figures accounted for this.

He said: “We, the OBR, the Department of Energy and Climate Change and everyone else I know, accepts that improved efficiency/output will be the case and, as far as I am aware, OBR build it into their forecasts.  What is not clear is how big an impact it will have, especially on taxable profits and when this will arise.  Hence people make different assumptions.

“Oil & Gas UK [whose production forecast the Scottish Government used in their scenarios from a year ago] have twice revised down their production estimates over the last year, despite these high investment levels and Sir Ian Wood stated that he saw no inconsistency between his report and the OBR data.”

Edinburgh-based energy consultancy firm Wood MacKenzie issued a report earlier this year that said investment in UK oil and gas had reached its highest levels since the 1970s.  The group anticipated that £21.3 billion would be spent on capital investment over 2013/14.

Aberdeen South & North Kincardine SNP MSP Maureen Watt, who used to work in the oil industry, said:

“The OBR’s assumption that the record levels of investment in the oil & gas sector will see no increased production are firmly at odds with the industry’s own expectations.  That simply doesn’t make sense and indeed Oil & Gas UK’s central projection is that production will increase from 1.4 million barrels per day in 2013 to 1.7 million barrels per day by 2017.

“George Osborne’s latest tax raid on the oil & gas sector has clearly shown that it is only an independent Scotland managing our own resources that will enable the sector to reach its full potential. “

After both holding meetings in the North East last month, the Scottish and UK governments simultaneously proposed new oil and gas funding initiatives in Aberdeen and Peterhead.

The Scottish Government announced £10.6 million in funding for a new Oil and Gas Innovation Centre in Aberdeen while Shell’s gas-fired power station at Peterhead will receive UK Government funding of £50 million to install new carbon capture and storage equipment

In its analysis paper the CPPR said the Scottish Government’s oil and gas projections were ‘out of date’ and that new estimates were needed to coincide with the latest GERs and OBR forecasts.

The paper also makes clear that since OBR make no assumptions on potential changes to the Barnett formula or Scottish finances, ‘it is not possible to be certain over whether the fiscal position under independence would be better or worse than that within the existing United Kingdom’.

The OBR’s annual ‘Fiscal Sustainability Report’ for 2013 details that a number of global-scale factors including the economy, production and geopolitical events make oil prices ‘extremely difficult to forecast’.

North Sea oil receipts’ changeability is also noted in the OBR’s report as being a barrier to accurately predicting the decline of oil and gas revenue streams in the UK.

The Wood Report, a review commissioned by the UK Government to assess the state of offshore oil and gas, was published last month with author Sir Ian Wood calling for a new regulatory body and greater government and industry collaboration to maximise economic recovery.


2014-03-26 08:24


The paper also makes clear that since OBR make no assumptions on potential changes to the Barnett formula or Scottish finances, ‘it is not possible to be certain over whether the fiscal position under independence would be better or worse than that within the existing United Kingdom’.

So uncertainty in the union or out of it then. I’m only a Biologist, not an economist but I could have told you that for free.

2014-03-26 09:09

Oh yeah we really should listen closely to the predictions of hard boiled unionists. All of their worthless witterings are due to go up in smoke in September this year.

Only when we are no longer held hostage by Westminster will we be able to get to the truth about Scotland’s financial position.

When we have the powers of independence our economy will fly and even the rUK government will be free to stop suppressing the economy in the rest of the UK. They will have failed to kill Scotland so they might as well take the brakes off their economy.
2014-03-26 09:45

There are 15 fields to be brought online by 2015…which will increase the output from their present figures

More scare stories…just like the 70’s when we told, by the same type of people, that oil would last 10 years…i rest my case
2014-03-26 09:57

The oil and gas industry seem to understand their industry, its production levels and its potential with some consistency. This has never been questioned in the past, well not until we got an SNP government in Scotland. Add a unionist think tank or two and now all of a sudden the industry know nothing and have become incompetent fools unable to forecast oil production.

The industry must be asking themselves is the huge investment in such a volatile and rapidly declining resource worth the effort? Scotland…the only country in the world where oil is deemed to be a curse! Or we could, as Alex Salmond would say, follow the money.
Marga B
2014-03-26 09:57

OT again, sorry: Financial Times on Spanish constitutional court ruling Catalan referendum unconstitutiona  l:

Legal Blow to Catalan Vote

“The judges ruled unanimously that the sovereignty declaration of January 2013 violated Article 2 of the constitution, which upholds the “indissoluble unity of the Spanish nation” with particular objections to this claim: “the people of Catalonia have, for reasons of democratic legitimacy, the nature of a sovereign political and legal subject”.

“More alarming still to the Catalan leadership, Spain’s highest court also made clear their opposition to a referendum on independence … scheduled for November. “Within the framework of the constitution an autonomous community cannot unilaterally call a referendum on self-determination,” the ruling said.”

Catalan leaders go to Madrid in April to request Scottish-type arrangement. It’s a formality. Meantime, assimilation and centralisation continue.
2014-03-26 11:21

Once the Catalans have exhausted their legal and constitutional remedies they can go to the ECHR with a complaint that their rights to Self Determination are being denied them. The Spanish Constitution will have to bend in response or leave the European Council and the EU.

This is undoubtedly what his civil servants and wiser colleagues and advisers told David Cameron wrt Scotland after his initial response to the Referendum Bill was the same as Rajoy’s. If you recall he thought again and the result was the Edinburgh Agreement paving the way for the referendum and pledging to recognise the result and co-operate (the latter seen more in the breach thus far).

Nigel Mace
2014-03-26 10:29

All of these details are entirely beside the point.

In the Union we share the proceeds – up or down – with a population 11.9 times the size of Scotland. With Independence we share whatever proceeds, however organised, over whatever period of time, among our own country’s people – that is the share per head (allowing for the small % that is not Scotland’s oil and gas) will be 11 times greater or, if you prefer it, c. 1100%. That is the degree of advantage of being independent as far as our oil and gas reserves are concerned and no amount of quibbling about their levels, organisation or rates of exploitation removes that

In short, with a YES vote Scotland’s oil and gas is at least 1000% more useful to Scotland and its people, and with a ‘No’… if the doom mongers are right, it’s a bleak prospect indeed.

Look upon that picture and then upon this!
2014-03-26 17:36

I’ve always found it remarkable that neither McLaren nor his colleague in CPPR, Jo Armstrong, have a PhD. In most other fields of academia, acquiring a PhD is proof that you are capable of high-level research and that your judgement is reliable. It’s what you need, usually, to get a job in academia. Armstrong’s credentials are slightly better, but McLaren certainly appears to have come a long way on his BA in Economics and Social Studies from Manchester University. Oh, and membership of the Labour Party (but that’s in the past).
wee e
2014-03-27 10:35


the SNP claim the OBR figures used in the CPPR’s report do take into account the impact of increased industry investment



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