The Scottish Government will today launch a blistering attack on the UK Government’s alleged “mismanagement” of North Sea Oil.
A new report published this morning by Energy Minister Fergus Ewing compares Scotland and Norway’s experience since both began extracting oil and gas from the North Sea in the early 1970s.
The two countries are among the largest oil producers in Europe – but the report outlines “interesting differences” in economic performance. It claims:
In 1970, levels of GDP per capita in Norway were 7.5% lower than in the UK. By 2013, GDP per capita in Norway was over 80% higher than the UK.
Norway is ranked top of the UN Human Development Index in 2014, a measure of standards of living. The UK was 14th in the UN HDI rankings.
Norway has established an oil fund that is now worth over £500billion, equivalent to £100,000 for every Norwegian citizen. This is something that successive UK governments have failed to do.
Welcoming the report, titled North Sea – Two Futures, Mr Ewing said: “Norway is a great example of how, by fostering a stable and predictable fiscal and regulatory regime, a resource-rich nation can not only develop a very strong oil and gas sector, but through the development of an oil fund use its energy wealth to benefit the whole country.
“Unlike Norway, the UK Government has been missing the point – formulating policy based on short-term gain instead of focusing on the long-term impact upon value generation, and the need to sustain investment in all areas of the oil and gas industry.
“There is no doubt that as part of the UK we have so far lost out on the very real benefits that an independent country can secure. For example, Norway has established an oil fund that is worth over £500billion – equivalent to £100,000 for every Norwegian citizen. While over the same period the UK Government has accumulated £1.3trillion of public sector net debt.
“Poor stewardship of resources, frequent changes to the tax regime, a lack of focus on value creation and mismanagement of revenues are all mistakes that we cannot let happen again, and which an independent Scotland will address.
“In value terms, half the wealth from Scotland’s oil remains and it is imperative that Scotland does not allow the same mistakes to continue.”
The UK Government is expected to respond to the report today. However, the Treasury has repeatedly questioned whether an independent Scotland could afford an oil fund.
“The North Sea is a maturing basin and it needs valuable incentives from the Exchequer to sustain investment, which the UK, with its broad and diverse tax base, is able to provide,” a spokesman said.
“An independent Scotland would have to invest almost £3,800 per head – over 10 times more than when the costs are spread across the whole UK – to match the estimated £20billion the UK Government has guaranteed to provide on decommissioning relief in the North Sea.
“It is not credible for the Scottish Government to say they would sustain current tax incentives for the oil industry and set up an oil fund, while cutting corporation tax below the UK level and increasing welfare benefits. How would they fund all these tax cuts, ensure increase public spending and put money aside for an oil fund?”
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