Page last updated at 22:59 GMT, Saturday, 25 July 2009 23:59 UK

SNP to repeat call for oil fund

Oil platform - generic
The SNP believes oil revenues should be used to create a lasting legacy

The Scottish Government is to repeat its call for an oil fund to create a "lasting legacy" of wealth.

John Swinney will publish a discussion paper on the issue at the opening of an Aberdeen University centre for research into energy economics.

The finance secretary will point to Norway and Alaska to argue that Britain has wasted its earnings so far.

But the SNP's critics say setting money aside for the future would cause large deficits in funding public services.

When the paper is published later this week, the Scottish Government will recommend tax revenue be set aside to help stabilise the economy and help the transition to lower use of carbon fuels.

Mr Swinney said: "Adjusted for inflation, some £230bn pounds of tax revenue has come directly from Scottish territorial waters over the past 30 years.

"Including a geographical share of North Sea revenues, Scotland has been in current budget surplus for three years.

"The Treasury's own projections show the North Sea will remain a major source of tax revenue for years to come."

John Swinney
John Swinney will repeat the SNP's call for an oil fund later this week

He added: "The UK government has wasted the resources from the North Sea but there are hundreds of billions worth of reserves still to be recovered and we may only be at the halfway point in terms of revenues."

But the rationale for an oil fund was questioned in a report by the Scotland Office last month.

Published to coincide with the annual estimates of government revenue and spending in Scotland, the report said oil funds worked on the basis of paying in all revenues but only taking out the interest.

The Scotland Office report said: "Oil revenues can be used only once - you can't spend them to offset an expenditure black hole and invest them in an oil fund at the same time."

A Labour spokesman said the SNP were "becoming a parody of themselves".

He said: "An oil fund works on the basis of investing money after all public spending is paid.

"But even on the most generous assessment, there have only been nine years in the last 27 when Scotland`s finances were in surplus - and none since 1988.

"North Sea oil production has been steadily decreasing for the last five years. The reality is that oil is a commodity finite in supply and volatile in price."



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SEE ALSO
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Warning over 'Scottish oil tax'
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