OBR downgrades projected oil revenues as SNP’s Full Fiscal Autonomy bid takes a battering

The Office for Budget Responsibility (OBR) has downgraded North Sea oil revenues to just £2billion between 2020 and 2040 - £34.5 billion less than previously estimated.

It added that over the next five years just £3.4billion in tax receipts will be generated offshore.

However, the Scottish Government, whose SNP Westminster MPs this yesterday submitted a motion to the Scotland Bill to allow the Scottish Parliament to bring in full fiscal autonomy if it chooses, downplayed the report, stating the Scottish economy was about far more than just oil.

The news from the OBR also came as Labour released the findings of its own report into the effects on the recent crash in global oil prices on the Scottish Government’s fiscal position.

According to Labour’s analysis, plummeting oil prices could lead to a £9.7billion cut in Scottish Government spending.

Scottish Labour cited the results to argue that the price of oil must climb back to $200 a barrel before any plans for full fiscal autonomy add up.

But while the Scottish Government has delayed the publishing of an updated oil and gas bulletin to reflect the recent price crash, Deputy First Minister John Swinney defended his party’s pursuit of Full Fiscal Autonomy (FFA) and the proposed amendment to the Scotland Bill.

During FMQs at Holyrood yesterday, Scottish Labour’s Deputy Leader Kezia Dugdale asked Mr Swinney what oil price was needed to balance the books under FFA.

The SNP minister responded by saying FFA would allow economic growth.

Mr Swinney, who was standing in for First Minister Nicola Sturgeon until she returns from a four-day visit to the US, said: “Our GDP per head used to be sixth in the UK, now it is now third only behind London and the South East.

“Our productivity has increased from 96 per cent of UK levels in 1999 to being in line with UK levels in 2012.

“The moral of the story is where we can exercise distinctive economic policies in Scotland, we can transform the economic performance of this country, and for me that is what fiscal autonomy is all about.”

To jeers from the SNP benches, Ms Dugdale described Labour’s findings as “the oil paper that the SNP government won’t print”.

The publication also came on the day when a report from Aberdeen and Grampian Chamber of Commerce said two-thirds of North Sea operators have cancelled projects due to the collapse of the oil price, which yesterday stood at just over $60 a barrel.