Yes vote means more cuts and higher taxes, SNP dossier warned

A DEVASTATING private dossier for SNP ministers has sparked warnings that independence could trigger higher taxes or deeper spending cuts.

Internal briefing documents seen by the Scottish Daily Mail expose substantial risks in Alex Salmond’s flagship policy of putting North Sea oil revenues in a savings account for the future.

The revelation threatens to destroy Mr Salmond’s claims that a separate Scotland could use its oil wealth to transform the economy. One of the papers, written by a top economic adviser to the Scottish Government, explains that Scotland has run a deficit for 20 of the past 21 years – even during the boom years.

The report states that, had Scotland been i ndependent throughout that period, the oil revenues would have been required to fund vital public services such as the NHS, schools and policing.

The analysis, written for ministers in March last year but only published now under Freedom of Information legislation, concludes: ‘Given Scotland’s fiscal position since 1990, if the Scottish Government had adopted any of these rules in the past, there would have had to be an accompanying reduction in public spending, increase in taxation or higher borrowing to ensure that the public finances continued to balance.’

Yet only days before the report became public, the Scottish Government’s fiscal commission working group released a public report that recommended the creation of an oil fund.

Last week, Finance Secretary John Swinney claimed the ‘economic rationale’ for a fund was ‘powerful’ and he went on to blast Westminster for failing to put aside oil revenues in past decades. But yesterday a Scottish Government spokesman conceded that oil revenue would not be put into a savings fund until a separate Scotland was running a budget surplus.

And former Chancellor Alistair Darling, chairman of the pro-Union Better Together campaign, accused the SNP of trying to ‘deceive’ voters.

‘Last week they said they could set up an oil fund at no cost,’ he said. ‘It is now clear that their own private advice says that there would need to be tax rises, spending cuts or more borrowing – or all three. The SNP have quite deliberately set out to deceive the Scottish public.

‘This internal SNP paper confirms that, in all but one of the last 20 years, all the oil money has been spent on public services in Scotland – yet SNP ministers tell us it’s just a bonus and not the basis of our economy. Scotland doesn’t have to be faced with this choice. Being part of the UK means we have the strength of a bigger economy without the risk of oil volatility.’

Last night, a Scottish Government spokesman claimed the report confirmed ‘exactly what we have said on this issue’, adding: ‘These papers have been overtaken by the expert report of the Fiscal Commission Working Group, who have recommended that an independent Scotland should set up a stabilisation fund and a longerterm oil savings fund.’