Scottish Government step up call for oil fund

First Minister Alex Salmond has written to the Chancellor of the Exchequer stepping up the call for a share of the Treasury's North Sea tax windfall in order to establish a Scottish Oil Fund.

The Government Expenditure & Revenue Scotland (GERS) report published this week shows Scotland with a current budget surplus, and in a stronger financial position than the UK as a whole. 

The GERS figures show that, with a geographical share of North Sea revenues, Scotland had a current budget surplus in 2005/06 and 2006/07.  In 2006/07, Scotland's current surplus is estimated at £837 million, or 0.7% of GDP.  This compares with a UK deficit of £4.3 billion, or 0.3% of GDP.

With a current budget surplus in 2006/07 of over £800 million - in the context of a UK deficit of over £4 billion -  the flow of resources from Scotland to the rest of the UK is some £1.2 billion.

GERS also estimates Scotland's fiscal balance - which factors in capital and infrastructure investment for the nation's long term benefit.  This also shows Scotland in a substantially stronger position than the UK as a whole.  Compared to a UK deficit in 2006/07 of 2.3% of GDP, the Scottish figure is 2.1% - which equates to the OECD average.

A spokesperson for the First Minister said:

"The GERS report puts it beyond doubt that Scotland more than pays her way – and that the flow of resources is from Scotland to the London Treasury, not the other way round.  It is a transformational moment in the debate on Scotland's future – and gives the Scottish Government a powerful platform to press the case for action and justice now on the vital energy issues facing our nation.

"It is entirely unacceptable that Scotland's economy and individuals are suffering from sky high fuel prices when it is Scotland's black, black oil which is filling the Treasury's financial black hole.

"In his letter of 13 June, the Chancellor admits that the issue is 'the scale of additional receipts from the North Sea' – not the fact of the windfall, which could be as much as £6 billion on top of the £10 billion forecast at the time of the Budget, generating a multi-billion budget surplus for Scotland.

"The First Minister has written to the Chancellor on behalf of the fuel coalition of farmers, fishermen and hauliers he met last week, pressing the case for an action plan to bring relief from high fuel prices.

"Among the many measures the Chancellor must bring forward is cancelling the 2p duty rise planned for October, establishing a fuel price regulator to reduce duty as oil prices rise, and giving Scotland a £500 million share of the North Sea tax windfall to build a Scottish Oil Fund which will deliver direct and long-term benefits from our oil resources.

"When Scotland is demonstrably subsidising the London Treasury to the tune of billions of pounds, the people of Scotland will no longer accept any more inaction from the UK Government on these vital issues."