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10 July 2013

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Dick Winchester

The assertion that an independent Scotland's economy will remain so dependent on oil revenues is truly risible.

One of the big gains from independence is that it will allow Scotland to act more like the Scandinavian countries and broaden out its economy and grow its industry which will lead to improved growth, higher tax revenues and so on and so forth.

It's worth remembering Brian that you yourself pointed out that something in the order of 70% of post tax revenues in the oil/gas sector (around £18bn) were remitted overseas annually and that demonstrates clearly how little support the industry has had from both Westminster and the "City". Today we have had a report suggesting the potential energy that could be produced by tidal generation in the Pentland Firth is considerably higher than previously thought and yet there isn't a single Scottish company that's genuinely capable of exploiting that potential by supplying the technology.

Reversing this lack of support and investment in indigenous industries will arise with independence.

RevStu

"When you do the numbers, over the 32 year period the total value of tax receipts is £1,425 billion while the total value of public spending in and for Scotland is £1,440 billion"

So, an independent Scotland's debt would be £15bn, rather than the projected figure of around ten times that if we take a population share of the UK's debt in 2016? Have I understood you correctly?

Ben Cawthra

I keep hearing the mantra that independence would "allow Scotland to act more like the Scandinavian countries and broaden out its economy". As though it is that simple and would be a given. I'd love to see a simple explanation of how this would be achieved so easily...

Doug Daniel

"So, it could be argued that the large oil revenues in the 1980s generated a surplus. This was banked with the UK Treasury building up an oil fund that was then drawn on subsequently to meet Scotland's needs."

I'm not sure how you arrive at the conclusion that the surplus was "banked" by the UK treasury. It's quite disingenuous to try to suggest that there was anything even resembling an oil fund being built up, in fact. We all know it wasn't saved, because the Tories needed all the money they could get their hands on to fund the mass unemployment they created. And it certainly wasn't being saved in a wee box saying "Scotland's oil fund - hands off!"

Here's an alternative way of looking at it. If Scotland had been independent, that surplus generated in the 80s could have been built up into an *actual* oil fund, and we'd be enjoying the benefits of that oil fund today. But no, Westminster frittered it all away instead.

Rather than trying to argue that Scotland would still have been in debt even if it had been independent, why not look at the wasted opportunity? I dare say you could quite easily calculate just how big the oil fund would be today if all the surplus had been treated the way the Norwegians treat their oil revenues.

Mac

So the long term public sector debt for Scotland is only £15 billion over a 32 year period, just an average of £500 million debt accrued per tax year.

The UK government's public sector net debt now stands at £1,200 billion.

Surely these are telling figures? The UK is hugely indebted, whilst Scotland has never been.

Crucially, importantly, there would be no need for austerity measures in an independent government.

AMD

This analysis is interesting, but does it not ignore the revenues Scotland would have accrued via its Oil fund through investing these surpluses?

mahalakshmi

We all know it wasn't saved, because the Tories needed all the money they could get their hands on to fund the mass unemployment they created.

Alan Weir

If we are interested in these figures in order to assess, as best we can, a counterfactual scenario- would Scotland have done better if it had control over the oil revenues (either by being independent or through devo max)- isn't the assumption you seem to make: that the oil surplus of the boom years would have been banked (at a rate yielding £89 billion over 32 years)- a very strange one?

The surpluses in the first half of the 80s were enormous relative to Scottish GDP. I think in 84-5 we sent 24% of our entire GDP to London in oil revenue and the average in that half of the decade was around 20%. If I remember, GERS calculate fiscal surpluses of around the 16% mark at that time. Even Margaret Thatcher, had she had the equivalent revenues relative to UK GDP- tax windfalls of around £300-350 billion a year or so- would surely have invested in infrastructure rather than blow it all as she did.

So won't economists be able to give some estimate of the consequences of that, from empirical data? If, instead of 'banking' the oil boom surpluses, they had been invested, with average degree of wisdom, in infrastructure and other capital projects in Scotland, what would the boost to Scottish GDP have been- what would our GDP path have been like for the last 32 years, with this initial boost? What would the fiscal surpluses have then been, given actual expenditure minus a deduction for reduced welfare benefits given higher GDP? What would the cumulative boost in GDP have been by now? Would it have been more than £68 billion surplus you calculate (And this can be relevant to your comments about the future, if these figures of 'lost potential' are set against the rUK account in any settling of assets, liabilities and debts on independence.)

Sherry

@Ben Cawthra

"I keep hearing the mantra that independence would "allow Scotland to act more like the Scandinavian countries and broaden out its economy". As though it is that simple and would be a given. I'd love to see a simple explanation of how this would be achieved so easily..."

Without a natural focus towards the English economy, and a rebalance towards education, it is likely the economy would transition to one based on high-technology manufacturing, research with a large export sector. This is because these are the sectors where Scotland holds its competitive advantage. Right now the Scottish economy is not properly tailored towards this advantage, and does not have the infrastructure to support it. However evidence that we have, for example the high value that Scottish people place on Education and the Public Sector, are key indicators that our economy holds many similarities to Scandanvian nations.

Can we guarentee that a successful transition will occur? Of course not. To argue either way at this point would be ridiculous. It is equally ridiculous to ask someone to explain exactly how the economy would transition in such a way. However we can assume based on some indicators that such a transition would be in the best interests of the Scottish people.

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