Letter to the Herald

The SNP have had a bad week. This was the week when the choice before the people of Scotland next May came into focus.

It was the week when Labour shone a light on the so-called oil fund and found that the cupboard was bare. The SNP set the tone last Saturday when they accused the nation’s statisticians of being involved in “a discredited, inaccurate and political exercise”. Such a cheap shot was simply a foretaste. On Monday in response to the publication of GERS, a long established look at Scottish revenues and expenditures they published their alternative accounts. This purported to show that, assuming 95% of oil revenues, Scotland was in absolute surplus. By the end of the week their “absolute surplus” was exposed as a fiddle – achievable only by changing their own flawed methodology.  The SNP had to admit to removing some expenditure items from their July Budget figures in order to establish a spurious ‘surplus’. Such cynicism recalled the SNP’s historic willingness to manipulate their Budget figures for presentational purposes. In 1999 they removed Scotland’s share of UK debt to try and balance their books, only to later concede it should be added back in.   It’s clear the SNP will do anything to avoid using the ‘deficit’ word, and by doing so are quite prepared to shred their own reputation for financial probity. On Tuesday Alex Salmond forecast a “continuing rise in oil prices over the medium term”. Nowhere did he acknowledge oil production peaked in 1999 and according to industry body UKOOA, will be down to a quarter of peak levels by 2020. On Wednesday, at Westminster, he was at it again pledging “no tax rises” in an independent Scotland.  Meanwhile the Holyrood SNP was promising council tax abolition and a new local income tax.  All this from a party who has earmarked no additional resources for the costs of achieving independence.  On Thursday Alex Salmond was citing Norway.  Here was the Alex Salmond who troubles many in the SNP.  Nowhere does he admit that the Norwegians pay higher top rate tax, higher basic rate income tax, higher VAT, higher employers national insurance contributions and higher duties – despite raising more than double total UK oil revenues annually.  On Friday Alex Salmond hit back accusing opponents of seeing Scotland as an economic “basket case” because we pointed to a “Union Dividend. The existence of such a dividend within a country tells us lots about public spending patterns and revenue flows – but very little about underlying economic performance.  Throughout the 80s Scotland ran a significant surplus – while also suffering low growth, two recessions and mass unemployment.   However since 1990 the position has reversed.  Such flows of resources lie at the heart of the sharing of risk, revenues and resources that go with being part of a larger state. And Labour will continue to point to the good deal Scotland gets as part of the UK. Alex Salmond’s challenge is to convince voters that a declining oil resource can match the Union Dividend over the long term. There is no shame in being a nationalist. But Salmond does that cause no favour by contriving to “prove” Scotland will suddenly been a land of milk and honey after independence. Voters know that such claims are simply “incredible” and they instinctively distrust those who peddle them. Securing voters’ confidence requires accepting the facts and acknowledging that the Union Dividend has outperformed the Oil Windfall in each of the last ten years and that North Sea oil output is declining, and that it will continue to do so. So with current revenues not even replacing the Union Dividend there can be no £90 billion Oil Fund. Finally they must face-up to the fact that a “no tax rises” pledge will mean cuts to fund the costs of independence and get the books to balance. -                        Finally the SNP need to explain how with their promised cuts to business rates, corporation tax and council tax abolition they can hope to finance their spending commitments including universal citizen’s pensions and student debt write off. I lived through the transformation of Labour. Critical to our electability was our ability to answer tough questions convincingly.  The SNP faced a similar challenge this week and they flunked it.   The SNP should remember that it’s the people of Scotland’s incomes and earnings they are playing fast and loose with.  The First Minister had some sage advice for Alex Salmond this week – when you are in a black hole – stop digging!