SNP DREAM OF LEAVING UK DEAD IN WATER

Fatal blow for Sturgeon’s bid to end the Union as Scotland falls £15bn in red and oil revenue plunges by 97pc

A collapse in oil revenues has plunged scotland massively into the red, leaving Nicola sturgeon’s independence blueprint in tatters. The Government Expenditure and Revenue Scotland (GERS) report, published yesterday, revealed our economy is worse than that of Greece or Spain.

The annual report highlighted the economic benefits of remaining in the UK – with a ‘Union dividend’ of £1,600 for every man, woman and child.

Scots not only receive more in public spending than the UK average, but less money is now raised through taxes north of the Border.

Oil and gas revenues slumped from £1.8billion in 2014-15 to only £60million in 2015-16 – a fall of 97 per cent.

Last night, opposition politicians said the figures showed independence was unworkable.

Scottish Labour leader Kezia

Dugdale said the figures should ‘act as a reality check for those calling for another independence referendum’.

Scottish Tory finance spokesman Murdo Fraser said the figures proved ‘Scotland benefits massively from being a member of the United Kingdom’.

First Minister Miss Sturgeon said Scotland had suffered a ‘shock’ following the global collapse of oil prices, but insisted ‘the foundations of our economy remain strong’.

But Scotland has been in the red for several years, which critics said makes a mockery of her claim that Britain no longer offers a ‘safe harbour’ in the wake of the Brexit vote.

Mr Fraser said: ‘When times are tough in Scotland, as they are now, the Union means we can top up public spending so we don’t have to make huge cuts to the NHS or increase taxes.

‘This Union dividend amounted to £1,600 for every man, woman and child last year, according to these figures. That’s how unions work – when one member needs support, the Union provides it. The SNP now needs to take heed of the facts for once.’

The amount of tax raised north of the Border was £400 less per person than in the UK as a whole – a change from previous years, when Scots contributed more than the average.

However, due to its rural geography, levels of deprivation and health inequalities, Scotland has always received more cash in return.

In 2015-16, the figure was £1,600 per person – up from £1,200 in the previous year. Scotland’s deficit – the difference between expenditure and revenue – rose to £14.8billion in 2014-15, greater than the annual NHS budget.

That is equivalent to 9.5 per cent of Gross Domestic Product (GDP), up from 9.1 per cent; while the UK as a whole is heading back towards the black, with the deficit falling from 5 per cent to 4 per cent.

The 9.5 per cent figure is the highest in the EU, behind Greece on 7.2 per cent and Spain on 5.1 per cent.

Despite having a population nearly twice Scotland’s, Greece’s deficit in cash terms is smaller – £12.8billion euros (£10.9billion).

The EU considers anything above 3 per cent of GDP to be ‘excessive’ and can impose financial penalties on and/ or withhold payments to member states which exceed that figure.

This has raised fears that an independent Scotland would face Greekstyle austerity measures if it applied to become a new EU member.

But Miss Sturgeon yesterday hit back at suggestions Scotland’s economy is in crisis. She said: ‘The lower oil price has, of course, reduced offshore revenues, with a corresponding impact on our fiscal position – this underlines the fact Scotland’s challenge is to continue to grow our onshore economy.

‘Scotland’s long-term economic success is now being directly threatened by the likely impact of Brexit.

‘Today’s figures come a day after analysis from the Scottish Government showed that taking Scotland out of the European Union and our place in the world’s biggest single market would make the task of growing and

‘A strong case for being part of the UK’

diversifying the Scottish economy even harder.’

Addressing the deficit, she added: ‘I think economic growth is the absolute priority for closing a deficit gap for any country. Clearly, as in the UK just now, when you’re on a path to closing a deficit, borrowing has a significant role to play. Clearly, that would be the case if Scotland was dealing with these accounts on its own.’

Finance Secretary Derek Mackay said: ‘The position if Scotland was to become independent would depend on a range of factors which are not reflected in this publication.’

The GERS report showed that, in 2015-16, £53.7billion was generated in tax – including a geographical share of North Sea oil revenues. That is equivalent to £10,000 per head, compared to a UK average of £10,400.

Cash from onshore taxes increased, but the collapse in oil prices last year – which led to massive job losses in the North-East – has seen the overall total fall significantly in recent years. Oil and gas revenues slumped from £9.6billion in 2011-12 to £5.3billion a year later, £4billion the year after, £1.8billion in 2014-15 and £60million in 2015-16.

Public spending by both the UK and Scottish Governments north of the Border has increased, rising from £65.8billion in 2011-12 to £68.6billion last year. That is equivalent to £12,800 per person, compared to £11,500 for the UK as a whole.

Miss Dugdale said: ‘It’s clearer than ever that Scotland benefits from pooling and sharing resources across the UK. Being part of the UK means higher spending on public services like education and the health service. That’s a strong, positive case for Scotland remaining in the UK – our most important social and economic union.

‘During the independence referendum, Nicola Sturgeon personally promised a second oil boom. Her own Government’s figures show she misled people – and that is unforgivable.’

Scottish Secretary David Mundell said: ‘These figures show how being part of the UK protects living standards in Scotland. Scotland weathered a dramatic slump in oil revenues last year because we are part of a United Kingdom that has at its heart a system for pooling and sharing resources across the country as a whole.

‘It is important that continues and the financial deal between the UK and Scottish Governments, struck last year as part of the transfer of new tax and welfare powers to Holyrood, means real security for Scotland.’

THIS Tuesday, sternly tailored, a little on edge, Nicola Sturgeon gave an intense address in Edinburgh, launching a Scottish Government study warning departure from the European Union could cost the Scottish economy billions of pounds.

‘This paper shows, in the starkest possible terms, the potentially huge cost to Scotland of being taken out of the European Union and the single market,’ she declared.

After a fusillade of scary numbers and with deliberately grim mien, she concluded: ‘Whatever the model of relationship with the EU which is chosen by the UK Government in their negotiations before and after Article 50 is triggered, it will not be as economically beneficial as full EU membership.’

Nothing so intense, driven and calculating a politician as Miss Sturgeon ever does is by casual whim. She sought on Tuesday, yet again, to reinforce the desperate SNP narrative that Scots are being wrested out of the EU ‘against their will’ and to keep Theresa May’s Tory Government on notice that she is determined to be part of the Brexit process.

But the true purpose – and timing – of the First Minister’s outing was to blunt this morning’s headlines: to take the edge off the latest figures released by Government Expenditure and Revenue Scotland (GERS). The GERS numbers are frightful. We learn that Scotland’s public spending deficit – the gap between what annually we spend and what annually we raise – is nearly £15billion; that’s £14.8million more spent, to be exact, than raised in all Scottish taxes – and there was worse to come.

Scotland is overdrawn by 9.5 per cent of its gross domestic product, we discovered, and in the last fiscal year our share of North Sea oil revenues – a comfortable £1.8billion in 2014-2015 – plummeted to £60million: a jaw-dropping fall of 97 per cent.

The wider GERS statistics are eye-watering. The deficit of the United Kingdom as a whole is only 4 per cent of GDP. Indeed, Scotland’s chronic 9.5 per cent indebtedness is not just more than double, it is the worst of any nation in the EU – worse even than crisis-racked Greece (7.2 per cent) or anguished Spain (5.1 per cent.)

That alone has frightful implications for Miss Sturgeon and the SNP: the price of EU membership for an independent Scotland would almost certainly be that we embrace the euro and (the joys of selling that idea to the Scottish public aside) its quangocrats would certainly demand massive restructuring of the Scottish economy to restore fiscal health: gulping tax hikes, swingeing cuts.

The North Sea oil numbers are almost personal – and still more humiliating. Only two years ago, Miss Sturgeon was at the centre of a Yes Scotland campaign in which putative oil-bought goodies were central.

The Nationalists even confidently forecast that, this year alone – the first of independence, had we voted for it – Scotland’s oil revenues would be up to £7.9billion. The hard reality unveiled yesterday makes a mockery of that blueprint for separation – and her opponents will do their best with these numbers to make Miss Sturgeon herself look ridiculous.

Certainly, they have lost no time in trying. David Mundell and Kezia Dugdale were quick to argue that Scotland has only ‘weathered’ so dreadful a drop in oil revenue because we are yet part of a larger United Kingdom, better able to absorb blows and nobly pooling its greater resources.

Horror

It depends where you are: there are horror stories from Aberdeen – a collapsing restaurant trade; the keys of huge new cars being gloomily handed back; banks foreclosing on mortgages.

Even in the Western Isles, the loss of many offshore jobs has been sorely felt. Willie Rennie was smarter, pointing out aptly that the ‘oil shock’ and the Brexit shock should not be capped by a cavalier independence shock.

‘The Nationalists’ case for independence has been swallowed up by a £14billion black hole,’ the Scottish Liberal Democrat leader intoned. ‘It’s a dark day for Scottish Nationalism but it is even darker for the Scottish economy.’

Ruth Davidson, recovering form after a summer shaken by the Brexit vote, pressed Miss Sturgeon to focus on stabilising Scotland’s finances and to ‘get on with the day job’.

They scent vulnerability and to some degree it is of the SNP’s – and Miss Sturgeon’s – own making.

In the days – indeed, the hours – immediately following Britain’s generally unexpected vote to leave the EU, the First Minister’s energetic performance attracted admiring international headlines; made her briefly seem the only politician in Britain to have kept her head.

Miss Sturgeon’s decisions – and rhetoric – do not look so clever now. There has not been a rapid surge in support for independence; certainly nothing close to the sustained 60 per cent on which she would dare risk a referendum.

Nor does broader support for the EU in Scotland translate into a passion for such continued engagement that Scots – always a cautious people – would bet the bank on secession from the United Kingdom. We are well disposed to Europe and legitimately fear the consequences of our departure from it – but this is not a hill we want to die on.

There is an even bigger headache. Winning such a plebiscite does not merely necessitate persuading thousands who voted No in 2014 to vote Yes.

A tough sell, given these oil numbers. But it means, too, keeping aboard everyone who voted Yes two years ago – many of whom voted briskly for Brexit in June. Some 29 per cent of Scots who voted Leave are habitual SNP voters – and the proportion in the party’s heartlands of the North-East and Perthshire is still greater.

How highly should we regard Nicola Sturgeon’s judgement? Right now, having spoken so freely of a ‘very likely’ referendum, she is caught between the hammer and the anvil.

Her paradox is that the unstoppable force of the independence campaign has encountered the immovable object of cold, hard fiscal fact: Scotland cannot afford what the Yes camp demands.

Ruling out a referendum in this parliament – as Miss Sturgeon really should have done at the Holyrood election, rather than leaving the door ajar and putting such joyous Unionist wind in Miss Davidson’s sails – would infuriate many Nation- alists, especially the more demented among its tens of thousands of new members.

But a further referendum, dumped on ballot-weary Scots post-Brexit, is riskier still. Defeat would not only end Miss Sturgeon’s career: it could slay independence as a possibility for a century – and perhaps even destroy the SNP itself.

There is a faint whiff of fear about Nationalists these days. Senior Sturgeon colleagues know that no administration, however sure-footed at first or however glittering its attainments, can indefinitely defy political gravity.

We may or may not have reached ‘peak SNP’. But there is a sense in high places that the restive mass membership is a force Miss Sturgeon struggles to command; that the damnable Named Person legislation may yet prove the Nationalists’ poll tax; that Alex Salmond himself, still only 61, remains a king over the water, dreaming of a return.

Adversity

Some even whisper that Miss Sturgeon herself is fundamentally ‘untested’; that she has never encountered serious political adversity, or profound public unpopularity, and may buckle if she does.

It has been notable, this strange summer, that some senior SNP figures are moving to a strategy of bleak realism. George Kerevan and Kenny MacAskill have thought aloud about the need for serious, even painful, restructuring of the Scottish economy – and, one suspects, with the quiet sanction of their leader.

Miss Sturgeon likes to paint herself as the personification of the Left-wing, socially liberal environmentalist ideals of her student youth. She uses the word ‘progressive’ so much she is in danger of wearing it out. Indeed, a growing problem for the SNP is that the metropolitan, pro-European, secular Scotland to which they aspire is increasingly unattractive to the rest of us.

In fact, she is a pragmatist; in many respects, even a conservative. She has almost certainly grasped that the key strategic failure in 2014 was that Mr Salmond and his people did not think through the issues of the economy, a central bank and the currency as rigorously as they should have.

That the SNP lost because it was careless; not because it was cheated. That, if she is ever truly to sell independence to us, she must first sell reality to her party.