Jason Allardyce
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SOARING oil prices would give an independent Scotland a £4.4 billion budget surplus, making it one of Europe's richest countries, according to a new study.
The surplus would allow Alex Salmond to maintain existing levels of public spending, while cutting corporation tax from 28% to 12.5%, reducing income tax by 5p in the pound and still having £2 billion every year to invest in a Norwegian-style oil fund to safeguard Scotland against a future decline in North Sea oil revenue.
The study, based on Treasury oil revenue forecasts and official spending figures, has calculated that, without money from the taxation of oil and gas, an independent Scotland would have an underlying deficit of £7.8billion. But when £12.2billion of oil and gas revenues are included, Scotland would have a surplus of more than £4billion.
The findings are likely to be seized on by Salmond to claim in a referendum campaign that an independent Scotland would be one of the wealthiest nations in Europe.
This would create problems for Wendy Alexander, the Scottish Labour leader, who has indicated that she supports a vote on separation.
Last week the Scottish government wrote to Alistair Darling, the chancellor, demanding talks on transferring North Sea revenues to Holyrood.
The calculations, by leading accountancy firm Grant Thornton, are in stark contrast to a UK government report in 2006 that indicated that an independent Scotland would have a deficit of £6billion, even if oil and gas revenues were taken into account. However, the price of oil has more than doubled since 2005 to $120 (£61) a barrel, leading economists to conclude that Scotland “is sitting on a gold mine”.
Maurice Fitzpatrick, an accountant with Grant Thornton, who has examined the economics of an independent Scotland for the past decade, said: “There is no doubt about it. The figures point to a very rosy picture.”
He added that the report, commissioned by The Sunday Times, may have underestimated the Scottish surplus because the calculations assume that Scotland would receive 82.5% of North Sea oil revenues. Salmond, however, is demanding a 95% share, which would raise Scotland's budget surplus to an estimated £6.2 billion.
While the amount of oil and gas being extracted from the North Sea fell by 5% last year to 2.8m barrels a day, the price rise has more than offset the decline.
Many oil analysts believe the cost of oil will rise soon to $150 a barrel and could reach $200 by 2010, because of demand from China and India and concerns about the security of supply.
Other economists are more sceptical. Thorsten Fischer, senior economist at the Royal Bank of Scotland, expects the price to fall by 30% over time, which would lead to a more modest surplus.
Oil & Gas UK, the offshore industry body, expects the volume of North Sea oil and gas extracted to fall to 2.4m barrels a day by 2010 but claims reserves could be drawn for a further 30 years.
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omg the english really do live in the clouds do they really think that they have a right to all that they see + that they can steal ,the uk is done and call it quits , we need to move on .
time for scotland to step way from the numpties,
engerland for the english
alex, falkirk, scotland
Don't panic English. Look at the BERR data, the UK consumes around 550 million barrels per year and will be importing almost 100% of the oil it consumes in ten years - if it is expected to take 30 years to recover the proved and probable 1000 million barrels it will be a very slow payout.
Graham Harmer, Braintree, UK
Not all Scots I beleive are so stupid when it comes to looking at the big picture. If Scotland wants independence give it to them. But if it came down to who owe's who what I'm sure the Scot's would be quite shocked to see the amount of money that England has put into Scotland to bring it up.
Alex, york, england
I dont think scotlands the most violent country in europe , i have always recieved a warm welcome north of the border.
The schitzophrenic english should smell the coffee!
Oh by the way would you like Gordon back to run your new country?
mark weeks, bristol,
What about the years when the oil price was say.... US$20/bbl? Scotland obviously was sponsored by the rest of the UK, will they be paying all this back if/when they get their independence?
Cloggy, Once in Scotland now in Englan, UK
It is funny that not many English commented here...Lol
Sunil, Edinburgh, Scotland
Thanks are due to Jason Allardyce and The Times for printing this story. No, repeat no newspaper or television programme in Scotland would ever dream of reporting it. As part of the conspiracy to lie to the Scots ( and by default the English) about the true fiscal situation they keep us in the dark.
Ian, Edinburgh, Scotland
Yes, Sam. Maybe they can do something positive with the money for its people and reverse the trends, rather than it being blown on nuclear weapons, millennium domes and whatever else. Bring the North Briton to court!
Bob, London,
Cally Ellis, Manama, Bahrain
In 2004/5 Scotland contributed over £48bn to the Treasury with oil at $45boe, you will be no doubt aware how much of that returned to Scotland.
The Great Deception - GERS 2005
By Niall Aslen
http://www.alba.org.uk/scotching/greatdeception.html
livilion, livingston , West Lothian
The figures presented are a little misleading and unfortunately add fuel to an emotionally charged issue. 2.8 mboe/day (million barrels of oil equivalent (includes gas)) are produced in the UK.Only if you take this into account and the tax take of 20% do we get to the figure of £12.2bln per year.
Andrew Douglas, Finavon, Scoland
Approx 1.9 mboe/day is attributable to Scottish production, and would give approx £8bln in revenue at 20% tax take (GBrown doubled the tax take in 2005) and £60/bbl ($120). It costs around £9bln a year to run Scotland. The question is how long our reserves will last? But the next 10yrs looks rosy.
Andrew Douglas, Finavon, Scoland
Lets not forget that Scotland will be reclaiming its fishing grounds which are 75% of all European Fish Stocks. No more illegal fishing and just think about fish prices to the rest of the UK and Europe. If you dont buy, then you dont eat. Asia will take it or perhaps Russia. 10 more billion a year.
Mike, Edinburgh, Republic of Scotland
Thank you Sam, London. It's appreciated.
We can't wait to not have nuclear weapons and to not be at war in Iraq and Afghanistan. Once we have our independence we will be able to spend money on things that matter. Health, eradication of poverty, etc. You guys carry on the way you always have.
tris, dundee, scotland
Following the recent cash calls by RBS and HBOS to cover debts, if Scotland does get independence lets hope their government runs things better than their banks!
John, Lincolnshire, UK
the life expectancy in Glasgow is the lowest for any city in the developed world, Scotland is the most violent country in the developed world, and they are the heaviest drinkers. you are welcome to your independence.
Sam, London, England
I am lost for words. Why, oh! why do my countrymen/women continue to vote for Labour. Hopefully, with Brown in power this trend is beginning to change. I thing the SNP will gain a huge number of seats in 2010. Roll on the referendum. Then we will see how my English cousins fair without our OIL!
Anne, Glasgow, SCOTLAND
Finally the experts are starting to see what has been known to SNP activists for years. 1. Continuing high oil prices. Thanks Tony Blair. 2. Cutting corporationtax will bring massive investment to Scotland. The Thatcher drain will run the opposite direction. Thanks Alec Salmond
Dave Llewellyn, Portree Skye, Scotland
Re Sounds fantastic.
England is a country within the United Kingdom. not the benefactor of Scotland. The oil was extracted by private companies and the BRITISH government taxed it. Care to comment on how much money the BRITISH economy has made from the oil ?
David Mitchell , Dalgety Bay, Scotland
To Cally Ellis of Bahrain. England didn't pay a penny to get the Oil out, the Oil companies did that.
The English papers are far more honest that their Scottish 'Unionist' counterparts when it comes to facts and figures re Scotland's wealth. Thanks, these figures are dynamite.
Brian Hill, Edinburgh, Scotland
Perhaps after this all the anti Scottish subsidy junkie myths will stop.
This revenue is as much Scotland's as the revenue generated in the city is London's /Englands.
So perhaps we can have some honest reporting of the truth .
We are all being milked by Westminster
R MacLeod, Glasgow, Scotland
Cally Ellis, Mananma Bahrain:
England hasn't paid any investment to get the oil out of the North Sea, this was largely done by private multinational corporations. Taxpayers from Scotland or England didn't fund any of this infrastructure or investment. The Government taxed the proceeds though.
Argus, Edinburgh, Scotland
andy, lyon
Scots aren't even the heaviest smokers in Europe either. The Greeks are. The Germans, French, Swiss, Dutch, Italians and Spanish all smoke more too. Even the healthy Scandinavians smoke more than the Scots.
Argus, Edinburgh, Scotland
This confirms that the Westminster System is poison to not only the Scottish Nation, but in fact to the other Nations of England and Wales. We are living in a society in which the Government is Corrupt and is a leading example to the many, that dishonesty and lies are quite normal. Shame on Brown.
Mike, Edinburgh, Republic of Scotland
Sounds Fantastic - let them be independent, give them a deadline for repaying all the investment that England has made to get the oil out of the ground and cut them loose. Anyone care to comment on how long and to what value Scotland has been a net beneficiary of UK taxes/Treasury?
Cally Ellis, Manama, Bahrain
Of course we won't be allowed our oil money. It's been propping up illegal wars and UK politicians' posturing on the world stage for decades (not to mention expenses). They're not about to give that up, to let us live like Norwegians.
tris, dundee, scotland
Andy,Lyon
Most recent surveys point to the fact that while alcohol consumption remains high it's not the highest in Europe, as Finns, Russians, English, Welsh and others all drink on average more than the Scots
btw-25% of Scots kids in poverty and you want to keep depriving them. How fair minded..
Oskar, Glasgow, Scotland
Despite their relative poverty the Scots are already the heaviest drinkers and smokers in Europe... Imagine if their pockets were stuffed full of surplus euros ... they would surely drink and smoke themselves to death . .. it doesn't bear thinking about.
andy , Lyon, France
Many of us have known this for a long time.
The London parties Labour, Tories and Lib Dems have also known this for years, but wish to deny us the right to run our own Country and benefit from our resources.
While we are surrounded by oil, we pay more than most for fuel and other resources.
Archie, Argyll, Scotland