SNP’s oil lies unravel as Nicola Sturgeon admits: We got it wrong

NICOLA Sturgeon yesterday admitted SNP predictions that an independent Scotland would enjoy a North Sea oil bonanza were “wrong”.

Nicola SturgeonPA

Nicola Sturgeon during First Minister's Question

Throughout last year’s campaign for separation her party repeatedly insisted that a black gold boom could deliver billions for the new Scottish state.

But the First Minister was forced into a dramatic U-turn after Budget figures revealed the Nationalists’ projections were out by £30billion. And the SNP leader conceded new forecasts would now have to be drawn up.

The Treasury’s advisers said on Wednesday that North Sea tax revenues would be £600million in 2016-2017 – 92 per cent below the SNP’s pre-referendum forecast of £7.8bn.

Over the next four years the Treasury is expected to make just £2.8bn from oil and gas revenues, according to the Office for Budget Responsibility (OBR).

The SNP was predicting as much as £33.1bn in forecasts made before the oil price crash.

During First Minister’s questions at Holyrood, deputy Scottish Labour leader Kezia Dugdale said the analysis exposed “dodgy sums” at the heart of the SNP’s UK election strategy and plans for “full fiscal autonomy”. Ms Sturgeon said that the Scottish Government would publish its own new oil revenues bulletin “as soon as possible”.

She said: “I think it’s fair to say everybody’s projections about oil were wrong.”

The SNP were banking on oil remaining at $110 a barrel. Brent crude has since crashed to almost as low as $40 a barrel.

The OBR has also warned of high operating and investment costs and declining production.

Annual North Sea revenues are not expected to rise above £800m  for the rest of the decade – but oil would need to generate around £8bn a year – 10 times as much – to maintain current spending levels in a separate Scotland.

The North Sea is predicted to generate £700m by 2019-20, the end of the forecast period.

Ms Sturgeon wants a redrawing of Smith Commission powers so Holyrood takes responsibility for all tax and spending.

But the move would mean the end of the Barnett formula and the block grant from Westminster, leaving the Scottish Government struggling to balance the books.

Ms Dugdale added: “Last week, I said scrapping Barnett would cost Scotland £6.5bn in spending cuts. I was wrong.

“Projections from OBR confirm the costs would now be £7.6bn. That’s a Barnett bombshell It would mean billions of pounds worth of cuts.

“The SNP’s plan for full fiscal autonomy within the UK would be devastating for Scotland.”

Nicola Sturgeon - The Last Stand for the Yes Campaign

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