The Scottish Government will not be allowed to gain control over North Sea oil revenues, a UK minister has warned.
Before the election, the SNP said it wanted early talks with Westminster about the transfer of responsibility to the Scottish Parliament.
A few figures...
Here’s the official SNP Dec 2006 Budget Document, with 95% of oil and gas revenues being claimed by the party’s economists as Scotland's contribution to UK revenues.
So, a surplus of approximately 600 million sterling was allegedly sent to Westminster which works out at about 2.7p per day per head of population.
Will UK really be bankrupted at this alleged loss of 2.7p per day per head of population? I think not.
More to the point, what will the separatists do, if Westminster then decides to "retaliate" and give Scotland only its fair share of 8.4% of public expenditure instead of the present 10.42% ?
And finally....
It comes as analysts suggest production is down despite massive investment.
(Hat-tip: Barnett's Formula Admin)
8 comments:
Hmm... I'm getting a strange sense of deja vu with your post:
http://edinburghnews.scotsman.com/politics.cfm?id=1407872007#new
You really are scraping the barrel if you have to resort to recycling the gibberish of "Barnett Formula Admin" from the Scotsman boards. If you are "Barnett Formula Admin", though, you have my most sincere sympathies.
It's not the 2.7p per day you should be worried about so much as the overall UK deficit, to which NI, Wales and England added £35bn this year alone. Scotland leaving the union won't bankrupt anyone - the rest of the UK seems to be doing a good enough job of that on its own as things stand.
And for future reference, oil production usually goes down in the summer months. Something to do with it being warmer and demand for hydrocarbons being lower as a consequence, making it the best time to perform maintenance.
bhb
Hmm... I'm getting a strange sense of deja vu with your post:
I've used his figures, in reflection I should have given him credit for it, I'll rectify that later.
I note that you do not dispute the figures supplied.
It's not the 2.7p per day you should be worried about so much as the overall UK deficit, to which NI, Wales and England added £35bn this year alone. Scotland leaving the union won't bankrupt anyone - the rest of the UK seems to be doing a good enough job of that on its own as things stand.
As long as a deficit can be serviced, then its size is, to an extent, irrelevant. I'll take my chances that the UK will continue to be able to service its present deficit. Are you so confident in Scotland's chance of economic survival in the event of its separation from the rest of the UK?
If so, post up the relevant figures.
And for future reference, oil production usually goes down in the summer months. Something to do with it being warmer and demand for hydrocarbons being lower as a consequence, making it the best time to perform maintenance
If you are referring to my last quote, I believe that it was talking about not just seasonal but overall decline in oil production.Has production increased or decreased over the last 20 years? Is it likely to increase in the future?
"I note that you do not dispute the figures supplied".
Nope, quite happy with those. He/She is only using SNP figures, after all.
"As long as a deficit can be serviced, then its size is, to an extent, irrelevant. I'll take my chances that the UK will continue to be able to service its present deficit. Are you so confident in Scotland's chance of economic survival in the event of its separation from the rest of the UK?
If so, post up the relevant figures".
Yes. I'd agree that a deficit which can be serviced is less of a problem, but just because I can service thousands of pounds of debt on my credit card doesn't make it a good idea for me to try and do so. Or to hitch myself to such a financially imprudent partner when my own finances are in good order.
Independence shouldn't come down to the fiscal position, but if it does, Scotland has been running a pretty decent overall surplus for most of the last 30 years for which figures are available. Since I'm quite happy with the £600m surplus figure for the year in question which you quoted from your borderline racist friend earlier (they're a nasty piece of work - don't get too close), I'm not going to root around for further figures.
"If you are referring to my last quote, I believe that it was talking about not just seasonal but overall decline in oil production.Has production increased or decreased over the last 20 years? Is it likely to increase in the future?"
It's decreased, because the oil flows fastest in the beginning when the wells are first tapped and pressure is at its highest. However, drilling techniques have advanced to the extent that fields thought unviable even a decade ago are now considered worth exploring. Smaller firms are also better able to go after the reserves which the larger companies lack the expertise or inclination to go after. Carbon sequestration also offers the prospect of improved extraction rates.
So, extraction rates might be on a general downward trend, but the price of oil matters as well. With demand rising, it's going to be a valuable resource for many decades to come.
Yes. I'd agree that a deficit which can be serviced is less of a problem, but just because I can service thousands of pounds of debt on my credit card doesn't make it a good idea for me to try and do so.
Well….it still depends on the income your producing, the present budget deficit (if I understand the Economist well) is 2.7% of the UK’s GDP. I wish my debts were round about the same % of my income!
“Or to hitch myself to such a financially imprudent partner when my own finances are in good order.”
But a partner with infinitely more financial resources at its disposal-to help you out in times of need or to give you the odd leg up with investment when the opportunity arises.
“Since I'm quite happy with the £600m surplus figure for the year in question which you quoted from your borderline racist friend earlier (they're a nasty piece of work - don't get too close), I'm not going to root around for further figures.”
That figure (again as far as I can see) is based on the public sector remaining the same size as it is the minute. For long-term survival never mind prosperity, the economy (as is the case in NI) needs to reduce this %, in the event of independence the funding necessary to facilitate this switch simply wouldn’t be available.
He/she is a “borderline racist”-in what way? Anti-Scottish?
So, extraction rates might be on a general downward trend, but the price of oil matters as well. With demand rising, it's going to be a valuable resource for many decades to come.
I’m no geologist, so I’ll bow to your superior knowledge on this one. As a layman though it all seems less than clear-cut…supply can also increase in fields still unexploited in different parts of the world; the kerfuffle with Russia and others at the minute about the Arctic is basically over who gets the rights to the supposed fuels existing there. Demand is also unpredictable, especially with the push on for alternative energy in the west and the increase of green awareness. All in all, not sure you can rely on the oil.
Well….it still depends on the income your producing, the present budget deficit (if I understand the Economist well) is 2.7% of the UK’s GDP. I wish my debts were round about the same % of my income!
Trust me, so do I. However, that figure represents the deficit for the current year only. The overall (cumulative) deficit is sitting at closer to 40% of GDP.
But a partner with infinitely more financial resources at its disposal-to help you out in times of need or to give you the odd leg up with investment when the opportunity arises.
Maybe, maybe not, and certainly not infinitely. The Treasury has ruled out extra funding for the replacement Forth Road Bridge, and is (so far) refusing even to extend the Scottish Government's ability to borrow so as to finance it. In any case, even if the will were there, economies of scope are not the same as economies of scale – if financial resources were all that mattered, then China would be a better place to live than the UK.
That [£600m] figure (again as far as I can see) is based on the public sector remaining the same size as it is the minute. For long-term survival never mind prosperity, the economy (as is the case in NI) needs to reduce this %, in the event of independence the funding necessary to facilitate this switch simply wouldn’t be available.
It's a static analysis, so it reflects the public and private sectors as they are. At present, the size of the public sector (when oil revenues aren't hived off as 'extra regio') is of the order of 41% of GDP – lower than the UK (43%) and OECD average(c.44%).
There's room for debate as to what the state should be doing and how well our taxes are spent, but it's important to start from an accurate premise. Your argument of needing even greater public expenditure to effect this change is an interesting take on the usual pork barrel argument for union, though, I'll give you that.
He/she is a “borderline racist”-in what way? Anti-Scottish?
Yes, amongst other things, when the red mist rises. I refer the honourable gentleman to the following gems of enlightened discourse in just one board (all spelling and grammatical mistakes are entirely his/her own work):
“Scotland is a basket case, sooner you stop being a burden on England the better, go before your pushed!”, “Scotland if it was dog would be put down”, “Wrong, I dont want to convince scots to stay in the union, I want the world to know what a basket case Scotland is. After 300 years it's about time you stood on your own two feet, or should i say scot's females two feet.
The sooner scots stop being a burden on the Englaish the better.
Arn't scots males ashamed that more females then men are in jobs in scotland?”
http://news.scotsman.com/politics.cfm?id=1294462007
I’m no geologist, so I’ll bow to your superior knowledge on this one. As a layman though it all seems less than clear-cut…supply can also increase in fields still unexploited in different parts of the world; the kerfuffle with Russia and others at the minute about the Arctic is basically over who gets the rights to the supposed fuels existing there. Demand is also unpredictable, especially with the push on for alternative energy in the west and the increase of green awareness. All in all, not sure you can rely on the oil.
All of this is true, but strikes me as a similar argument to the one that you shouldn't enjoy your lottery jackpot because its a finite amount and might run out one day.
Of course, the point for any sensible administration would be to start helping the non-oil sectors of the economy to grow, such that oil becomes less important in the overall scheme of things. Norway has managed that with careful husbandry, but the policy of the UK Treasury has only been to treat it as a cash cow and get the money flowing out as quickly as possible. Result? We've nothing to show for the last 30 years.
I'm sure there's lots of arguments in favour of continued union. Economics, for better or worse, is no longer one of them, however...
Trust me, so do I. However, that figure represents the deficit for the current year only. The overall (cumulative) deficit is sitting at closer to 40% of GDP.
I think you’re not comparing like with like here. You shouldn’t be matching the cumulative deficit against the GDP, but against the collective assets of the nation. What you’re doing here (I think, I’m quite prepared to be corrected!) is mixing up the concepts of Profit and Loss Account and Balance Sheet.
Maybe, maybe not, and certainly not infinitely. The Treasury has ruled out extra funding for the replacement Forth Road Bridge, and is (so far) refusing even to extend the Scottish Government's ability to borrow so as to finance it. In any case, even if the will were there, economies of scope are not the same as economies of scale – if financial resources were all that mattered, then China would be a better place to live than the UK.
No, financial resources are crucial. The China example is dodgy, per capita the UK is miles financially better off. OK, I’ll concede that certain parts of the UK don’t get full advantage of its financial strength, but in event of independence even that potential avenue would be completely closed.
There's room for debate as to what the state should be doing and how well our taxes are spent, but it's important to start from an accurate premise. Your argument of needing even greater public expenditure to effect this change is an interesting take on the usual pork barrel argument for union, though, I'll give you that.
Ah, but planned correctly (I know, I know) it would be a one-off piece of public expenditure, to correct a structural weakness. And only the U,K as a whole, has the resources to effect such a correction
Yes, amongst other things, when the red mist rises. I refer the honourable gentleman to the following gems of enlightened discourse in just one board (all spelling and grammatical mistakes are entirely his/her own work):
Fair enough. Obviously not a Unionist then;)
All of this is true, but strikes me as a similar argument to the one that you shouldn't enjoy your lottery jackpot because its a finite amount and might run out one day.
Not really, more a recognition that of the fact that the dough will run out and asking oneself the best way to prepare for that day. If there is nothing to show for the last 30 years and Scotland breaks away, where’s it going to get the cash from to effect the necessary changes that we both agree are required?
Result? We've nothing to show for the last 30 years.
Not sure about that. I’ve lived in one or two spots outside the UK; in the terms of social provision I would prefer to be sick, unemployed or old back home. The oil’s not the only reason for our that, but if you think back to the dire state of the UK economy in the mid 70s-early 80s it was a pretty major factor in keeping the country and the welfare state afloat.
I'm sure there's lots of arguments in favour of continued union. Economics, for better or worse, is no longer one of them, however...
I’m going to get back to you shortly on that one, I can feel a post coming on…:)
I think you’re not comparing like with like here. You shouldn’t be matching the cumulative deficit against the GDP, but against the collective assets of the nation. What you’re doing here (I think, I’m quite prepared to be corrected!) is mixing up the concepts of Profit and Loss Account and Balance Sheet.
Cumulative debt as a share of GDP is a widely accepted measure (See http://www.nbs.sk/VS/ENG1997/A1_4.HTM). I'm not sure how you could measure debt against assets, since you would then get into all sorts of bother over how to value those assets (making company accountants look like choirboys in comparison!). Neither P&L or balance sheet analogies are really appropriate IMO – 'gearing' is probably the closest accounting analogy you could use for it.
No, financial resources are crucial. The China example is dodgy, per capita the UK is miles financially better off.
My point exactly! Per Capita is what counts, and that's where Scotland scores big time. However, if it's 'financial resources' you're looking for alone, then they're there in spades in a huge economy like China.
Ah, but planned correctly (I know, I know) it would be a one-off piece of public expenditure, to correct a structural weakness. And only the UK as a whole, has the resources to effect such a correction.
Assuming it's deemed desirable to reduce public spending, you can always do just that – reduce expenditure. The Scottish private sector, particularly in financial services, is screaming for literate and numerate staff just now, but can't match public sector pay at the bottom end. Say it quietly, but there's an obvious solution there, and it doesn't involve spending huge amounts of public money...
Not really, more a recognition that of the fact that the dough will run out and asking oneself the best way to prepare for that day. If there is nothing to show for the last 30 years and Scotland breaks away, where’s it going to get the cash from to effect the necessary changes that we both agree are required?
Well, as Meynard Keynes said, in the long run we're all dead. If you'd spoken to your average punter down Govan way in the 1960's, they'd have told you that Scotland would still be building ships in huge numbers today, from steel produced in Lanarkshire using Scottish coal. Predictions are always a mugs game, but services have filled the gap reasonably well. 3 of the big 5 UK clearing banks have their brass plates in Edinburgh. We're doing well in terms of biotech and medical spin outs, and West Lothian has managed to survive the calamity of the decline of electronics.
My point? People are resilient and adaptable, and there's enough of an entrepreneurial class left who, given the space by an enlightened political class, can still make things happen.
Not sure about that. I’ve lived in one or two spots outside the UK; in the terms of social provision I would prefer to be sick, unemployed or old back home. The oil’s not the only reason for our that, but if you think back to the dire state of the UK economy in the mid 70s-early 80s it was a pretty major factor in keeping the country and the welfare state afloat.
Well, yes, but compared to Norway, their social services and their oil fund? It made the men in red braces in the City wealthy enough, but Margaret Thatcher's policy of 'sado-monetarism' (as Prof Chris Harvie memorably described it – high interest & exchange rates to stem the outflow of capital following removal of exchange controls, coupled with getting the oil flowing as quickly as possible to stem the trade deficit – all of which pushed the pound sky high relative to where it probably should have been), wiped out many manufacturers who deserved to survive. We're still living with the consequences in parts of Scotland, but lack the social capital (unlike Norway) to show for it.
I’m going to get back to you shortly on that one, I can feel a post coming on…:)
Looking forward to it, but I still think it's the social and cultural arguments you need to start making with greater urgency :-)
Looking forward to it, but I still think it's the social and cultural arguments you need to start making with greater urgency :-)
You've given plenty food for thought there in that last post...but for two parts of the UK (NI and Wales) there's absolutely no economic argument re the Union.
England and Scotland are different cases, I'll admit.
Could both survive outside the UK? Yep, England probably better than Scotland...simply because that London remains one of the top 3 financial centres (and *invisible* earners in the world). Scotland's position is less certain. The point is that, economicall,y it's not black and white this debate...if I've got the time and put my mind to it, I'm sure I can make a pretty good economic argument for the retention of the Union.
Socially and culturally? It's a blindfold job;)
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