Humbled Swinney is forced to admit: I got it wrong about oil
JOHN Swinney’s economic credibility has suffered a series of blows following a stuttering performance on oil, jobs and health spending.
Only 24 hours before a key speech at the SNP conference, he struggled to explain how he got North Sea tax revenue forecasts so wrong before last year’s referendum.
The Finance Secretary was forced to admit the collapse in oil prices was responsible for an increase in people out of work, at a time when UK employment is at a record low.
Critics pointed to a growing percentage of new jobs in low pay sectors, and accused Mr Swinney of failing to pass on UK increases in health spending. It has left SNP supporters at the party’s conference hoping the Deputy First Minister will deliver one of the speeches of his career to ease fears about the economy ahead of next year’s Holyrood election.
The SNP has cut its North Sea tax revenues to just over £10billion – almost a quarter of pre-referendum levels.
Asked if this was proof he got his sums wrong, Mr Swinney bizarrely told the Today programme: ‘What it demonstrates is the figure we used had not transpired.’
The No campaign repeatedly warned the SNP against basing its spending plans on volatile oil revenues.
But Mr Swinney insisted: ‘No one at that time foresaw the decline in the oil price that has transpired.’
During the referendum campaign, Nationalists predicted an oil price of around $113 (£73). It has since plummeted to $49 (£32), due to the slowdown in China and the rise of fracking in the United States.
The oil industry has suffered more than 5,000 job losses, with other industries, such as manufacturing, enduring the knock-on effect.
Scotland’s jobless total has soared by 18,000 in months as the nation’s fragile economy battles to keep pace with the rest of the UK.
There were 170,000 people out of work in the period from June to August – the equivalent of 6.1 per cent of the workforce north of the Border, official figures show.
That is in sharp contrast to the UK as a whole, where unemployment has
‘No one foresaw
the decline’
fallen to a seven-year low, with a record number of people now in work. Yesterday, Mr Swinney admitted the collapsing oil price was behind Scotland’s jobs woes.
He said: ‘We are beginning to see the effects on the labour market we thought would come from the downturn in the oil and gas sector.
‘Part of that is the exposure Scotland has to export markets, and that has been particularly challenging for some companies. And we have got that particular effect on the oil and gas sector in the North-East.’
If the Scottish economy continues to struggle it will undermine any future independence bid.
The Institute for Fiscal Studies (IFS) has said even full fiscal autonomy – where Scotland controls all its tax and spending – would blow a £10billion black hole in the country’s budget by the end of the year.
Meanwhile, Scottish Labour claimed six out of ten new jobs in the past four years in Scotland have been in lowpaid, insecure work.
It produced analysis showing 42,000 new positions were in industries less likely to pay the living wage and more likely to use zero hours contracts. Scottish Labour public services spokesman Jackie Baillie said: ‘The SNP had the chance to extend the living wage, but they voted with the Tories against Labour’s plans to give a pay rise to more low-paid people like cleaners, carers and hospitality staff.
‘We are seeing fewer jobs under this SNP government than in 2008, and six in ten of new jobs are low-paid.
‘John Swinney should use his speech today to announce that the SNP will extend the living wage to all staff on public contracts.’
Scottish parliament researchers produced figures showing the SNP government has failed to match UK
increases in health spending. The Tory government has increased NHS spending from £106.8billion in 2009-10 to £112.4billion in 2015-16 – a 5.2 per cent rise. Over the same period, the Scottish Government has increased it by only 0.2 per cent to around £12billion.
Mrs Baillie said: ‘Staff are working under increased pressure and patients are being let down, all against a backdrop of the SNP squeezing health spending in Scotland harder than even the Tories in England.’
The Scottish Government has always insisted it passes on all UK increases in health spending and that the figures are not comparable.
But as Mr Swinney prepares to speak to conference today, his critics said the growing list of question over the oil industry, jobs and NHS spending has left his economic credibility in tatters.
Scottish Lib Dem leader Willie Rennie said: ‘Commentators and independent bodies suggested to the SNP they were looking at their oil forecasts through rose-tinted spectacles before the referendum.
‘It is no wonder John Swinney gets tongue-tied over the SNP’s record on oil forecasting.
‘If he had got his way we would have been facing a funding black hole that would have dwarfed George Osborne’s savage cuts.’