The Scottish National Party has been dealt several hard blows to their campaign for independence recently. The plan for an independent Scotland’s financial security on which so much of their campaign rests has been attacked from all sides. They have been forced to revise their estimates for oil revenues, the cost of pensions and are now in a battle with Westminster regarding immigration and assets they will be entitled to. These problems could cause serious setbacks for the SNP during the independence referendum on September 18th if they go unresolved.
North Sea Oil Overestimation
A huge amount of an Independent Scotland’s financial stability rests on its North Sea Oil reserves. The SNP, however, has admitted that it overestimated its previous forecasts for oil revenues by billions of pounds. The SNP has estimated these reserves to be worth £34.3 billion between 2014 and 2018/2019. This is in stark comparison to the independent Office for Budget Responsibility’s (OBR) estimate of £15.8 billion for the same period. This is quite worrying for the SNP as they were already forced to reduce their projections for 2016/2017 by £1.6 billion. The OBR and SNP still disagree over oil revenues for that period, with the SNP predicting revenues of £6.9 billion and the OBR making predictions of just £2.9 billion. It is worth noting that the OBR has consistently overestimated North Sea Oil revenues. This just adds further fuel to the fire about how much the SNP may have overestimated its North Sea oil projections.
Scottish Tory Leader Ruth Davidson said, "While economic experts have been saying for some time that the figures for an independent Scotland don't add up, this is the first time that even Alex Salmond has admitted there's a multi-billion pound black hole.”
Another recent problem for the SNP has been the issue of pensions. One of the SNP’s many promises has been how it will remain a complete benefit state. This requires the maintaining of a satisfactory pension for all citizens. The problem that has risen though is that the population of Scotland, much like the rest of the UK, is living much longer. This means the number of pensioners far outweighs the number of tax payers, resulting in a pension that is simply unaffordable for the proposed government to sustain.
To offset potential fears about pension practicalities, the SNP has sought to solve the problem by encouraging immigration. The plan would require 24,000 tax paying people per year to immigrate to Scotland. If this target is not met then actuaries warn that large tax increases would be required. The reason for this is there would be 400 pensioners per 1000 workers if immigration rates were at a low rate of roughly 7,000 per year. The SNP has hit back with John Swinney - SNP Secretary of Finance - saying that “Net migration to Scotland is already more than 10,000 a year, and independence will allow us to have a flexible policy to suit our economic needs.”
With questions being asked about the SNP’s financial plans for an independent Scotland, the SNP has decided to target another source of income - shared assets. The SNP argues that an independent Scotland would be entitled to its fair share of the UK’s £1.3 trillion of assets. By offsetting £10 billion of assets which cannot be shared, such as foreign embassies and military hardware; Scotland could save itself £400 billion per year in debt repayments. However, a spokesman for the Scotland Office has rejected this idea and was reported as saying, “John Swinney now seems to have reduced his independence dream to an episode of Cash in the Attic. His financial plan for independence now hinges on how much he might be able to get for ‘Scotland’s share’ of the UK Embassy in Tokyo or the new HMS Queen Elizabeth aircraft carrier.”
Do you think that the SNP is being realistic in their campaign for independence? Or do think that Westminster is being negative in order to influence voters? Your thoughts and comments below please…