A senior UK Government minister has dismissed proposals to set up an oil fund in an independent Scotland as a “pipe dream”.
Chief Secretary to the Treasury Danny Alexander has claimed the move would only be possible if taxes were increased by 18% – or if public spending was cut by 13%.
The Highland Liberal Democrat MP claimed it would be “very bad economic management” if SNP ministers borrowed money today to pay for an oil fund for the future.
Mr Alexander told Holyrood’s energy committee that his work to stabilise the UK economy since 2010 would be a “tea party” in comparison to the fiscal challenges the Scottish Government would face if people voted to break up the UK.
Establishing an oil fund is a top priority for SNP ministers if people choose a new constitutional future on September 18.
The Scottish Government says in its white paper on independence – Scotland’s Future – that Westminster administrations have failed to re-invest the proceeds of the offshore industry to provide a benefit to future generations.
The document says Norway’s oil fund, established in 1990, was worth about £470billion, which is equivalent to £90,000 per head of population.
The paper states: “In contrast, successive Westminster governments have accumulated debts which are now worth in excess of £1trillion.”
But Mr Alexander said the Norwegians did not bankroll their oil fund from borrowing.
“I think it is a pipe dream that an independent Scotland could afford to set something up,” he added.
“It would be very bad economic management to borrow today to fund an oil fund for the future. To set up an oil fund of the sort put forward by the SNP implies spending cuts of 13% from current levels or onshore tax rises of 18% in order to pay for it.
“The environment I have faced will be a tea party compared to the sorts of challenges that will be faced by an independent Scotland in dealing with those fiscal problems.”
A spokesman for Energy Minister Fergus Ewing said: “This is the height of hypocrisy from Danny Alexander, who is part of a Tory-led Treasury that is continuing to squander Scotland’s oil wealth instead of investing it for future generations.
“Norway’s oil fund is the largest sovereign wealth fund in the world, which shows just what can be done.
“If Scotland had such a fund from 1980, we would have eliminated our share of net public debt by 1982-83, and by 2011-12 we could have grown a fund worth between £82billion and £116billion.”
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