Oil, currency and the BBC: Salmond's economic case falls apart

North Sea oil: Declining sooner than expected?
North Sea oil: Declining sooner than expected?
Ian Dunt By

Alex Salmond has been hit by a triple-whammy of bad news in the Scottish referendum campaign, with serious questions being raised about North Sea oil, his plans for currency union and Scots' access to the BBC after independence.

In a devastating blow, Ian Wood, an oil tycoon and industry expert once celebrated by Salmond, warned there were only 15 years' worth of oil reserves left before decline hit Scotland's public services and economy.

Wood suggested Salmond was overestimating the extent of remaining reserves by anything up to 60%.

"The loss of significant offshore oil and gas tax revenues as the North Sea runs down will have a big impact on our economy, jobs and balance of payments, with significant increases in household energy bills – and a very adverse impact on the legacy for future generations in an independent Scotland," he told EnergyVoice.com.


"Young voters right now should just be aware by the time they are middle aged they’ll begin to see a real rundown not just in the level of oil and gas being produced but the ongoing implications of that, the jobs, economic prosperity, public services.

"And that rundown will begin in 2030, which is only 15 years away. So it's really not right to focus the debate on the short term."

The intervention is particularly embarrassing for Salmond because he has regularly lauded Wood. The SNP previously asked him to conduct a review of Scotland's education system.

The Scottish government white paper on independence stated that 24 billion barrels of oil were left in the North Sea but Wood suggested the actual figure was between 15 and 16.5 billion, even under a "more sympathetic" tax regime.

By 2050 production would be down to around a sixth of current levels.

It is a stark comparison with the Scottish government's estimated oil generation figures, which amount to £7 billion a year. That is already £2 billion too high, Wood said – equivalent to £370 per person in Scotland.

Figures released by the Scottish Government last week showed £4 billion was raised from the North Sea in 2013/14, substantially lower than Salmond's prediction of £8.3 billion. The total was down £1.5 billion on the previous year.

Wood's comments substantiate those made by the Institute for Fiscal Studies, which warned an independent Scotland would need to cut spending by £6 billion or significantly raise taxes due to declining oil revenues.

"Sir Ian Wood's comments blow apart Alex Salmond's plans for funding schools and hospitals," Alistair Darling, leader of the Better Together campaign, said.

"Alex Salmond has acknowledged that Sir Ian Wood must be listened to when he is talking about North Sea oil. Now Alex Salmond must listen to him and tell us his Plan B for Scotland."

Woods also said Scotland may be forced into the humiliating precedent of importing energy from the rest of the UK, as shale case becomes available through fracking.

That prospect challenges Salmond's assertion that the rest of the UK would agree to currency union because of the contribution of oil to its balance of payments.

The 'Yes' campaign hoped the question over currency union would be put to bed by a speech this week by Crawford Beveridge, chair of the Fiscal Commission Working Group.

Salmond has heavily relied on the group for his arguments on currency but Beveridge's speech saw him admit that while currency union might be the preferred option it was "entirely possible" politics would prevent it from happening.

He also warned that Salmond's plans to refuse to pay Scotland's share of the national debt if Westminster rejected a currency union would be viewed as a default by credit rating agencies.

"Alex Salmond’s credibility on currency is now in tatters," said Ruth Davidson, Scottish Tory leader.

"Last night his own economic adviser drove a coach and horses right through the idea that the nationalists can deliver a currency union. They can't. It isn't in Alex Salmond's gift, and Crawford Beveridge confirmed that."

Meanwhile, Labour's shadow Scottish secretary warned Scots would lose access to high quality television in the event of independence, as she tore through Scottish government proposals for a state broadcaster.

Salmond intends to replace BBC Scotland with a Scottish Broadcasting Service (SBS) in the event of independence. He insists Scots would not pay a higher licence fee or lose access to BBC programming, thanks to joint ventures.

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"Let's be absolutely clear about what is in the white paper – it is a plan which proposes taking Scotland out of the BBC and replacing it with a new state broadcaster," Curran said.

"We would go from being an integral part of the UK's national broadcaster, to having a commercial relationship with it. Buying back programmes and services that, at the moment, we get through our licence fee. And that would be a bad deal for Scots.

"In short, the SNP have set out a plan for broadcasting that is uncosted, untested and completely unrealistic.

"Their numbers don't add up and it means something simple for Scottish consumers: accept lower quality TV programmes, or a higher licence fee to buy back what you already have."

As Salmond's arguments for oil, currency and television were facing severe scrutiny he was making his final address to the Scottish parliament and promising Scotland would be the wealthiest country to become independent.

"With four weeks to go, people across Scotland are waking up to the wealth of opportunity offered by independence," he said.

"We're one of the world's wealthiest countries - our gross domestic product per head is higher than the UK, France and Japan.

"Indeed, if Scotland votes 'Yes', we'd be the wealthiest country in the world ever to declare its independence."

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