SERIOUS doubts were raised yesterday over SNP plans to create a Scottish Oil Fund and to fund public services – all from oil and gas revenues.
A new report from a think-tank warned Scotland's economy could be left vulnerable and unstable if it is based almost entirely on oil revenues.
The authors called on SNP ministers to explain how they intend to run both public services and set up
an oil fund using the finite resources from the North Sea.
The SNP wants to use oil revenues to create a Norwegian-type oil fund, investing the money to resource public services when the oil runs out.
Nationalists believe that this would provide an income stream for the Scottish Government for the future.
But the report from the Centre for Public Policy for Regions (CPPR) warned that ministers had not explained how they intended to finance both an oil fund and run day-to-day public services from oil revenues.
The UK Treasury is due to receive about £10 billion from oil and gas revenues this year, and the report warned that, while this would fund a sizeable part of the Scottish Government's budget, it would not both fill that role and provide the necessary resources for an oil fund as well.
The authors also highlighted the fluctuating income from oil and gas and said ministers had failed to explain how they would cope with this problem. The report was produced in an attempt to inform the debate over North Sea revenues ahead of a possible independence referendum in 2010.
The CPPR researchers stated: "Although the North Sea as a source of tax revenues is growing in importance, it is incumbent on those seeking to utilise them more directly to explain what their contribution in the future is likely to be, how the associated uncertainty can be accommodated in any budget proposals and how any related oil fund is expected to be funded, given Scotland's current fiscal position."
The report also called for "greater clarity" from the Scottish Government and asked ministers to provide much greater detail, ahead of any independence referendum, on their plans for an oil fund and just how they intend to cope with the problems of oil and gas revenues, in addition to the benefits.
A spokesman for the Scottish Government said North Sea revenues would give an independent Scottish Government enough to fund its public service commitments and give it £4 billion extra.
"This means that we would be able both to finance a spending programme to counter deflation and to invest in an oil fund for future generations," he said.
"With three-figure oil prices likely for the foreseeable future, generating huge revenues, the flexibility to invest in an oil fund is very great – and virtually every other oil-rich nation is doing so at present."
SNP accused of reneging on farms cash election pledgeSNP ministers were accused of breaking another manifesto promise yesterday when it emerged that an annual £10 million pledge to help new entrants into farming had been reduced to less than £2 million a year.
The Nationalists went into the last election promising an "annual" grant of £10 million to attract new farmers. The Scottish Government admitted yesterday that although a total of £10 million will be spent on the scheme, that money will now be spread over six years.
The SNP administration has come in for intense opposition criticism since its election last spring for breaking commitments made in its manifesto.
The Scottish Government has dropped pledges to provide a £2,000 grant for first-time buyers, to write off student debt and to provide nursery teachers for every child.
Other promises, including 1,000 extra police officers, were implemented only after pressure from opposition parties.
Nanette Milne, for the Conservatives, said: "No matter how much spin the SNP tries to put on this, the plain truth is that it has broken yet another election promise."
And she added: "Scottish Conservatives support a new entrants scheme. However, we cannot stand by and watch the SNP try to pull the wool over Scotland's farmers' eyes.
"Now is the time for the SNP to explain why it has gone back on its word and lied to Scotland's farming families and farming communities."
A spokesman for the Scottish Government defended the scheme, insisting ministers had provided a "significant package of support" for new farmers. But he added that the budget would be monitored and might be "rebalanced" in the years ahead.
The full article contains 755 words and appears in The Scotsman newspaper.
