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Making the case

Brian Taylor | 12:03 UK time, Monday, 2 June 2008

Thus far, Alex Salmond has, mostly, sustained his declared strategy of avoiding unwarranted conflict with Westminster and Whitehall.

Some of you, I feel sure, will dispute that statement. You will point to instances where the First Minister has disagreed sharply with the line emerging from London. However, consider. Mostly, these have been in the nature of responses to events or to UK Government decisions.

The treatment of agriculture or fisheries, the Libyan prisoner transfer, the allocation of extra funds to the prison system in England.

Bogus dispute

In the past, such issues would also have provoked disputes with the administration in Scotland. However, these disputes were generally kept quiet - to the occasional regret of the devolved team. Now, these arguments are aired in public.

Alex Salmond calculates that Scottish voters are weary of artificial political argument.

They dislike point-scoring. They can spot a bogus, contrived dispute from the other end of Princes/Sauchiehall/Reform/Union your own neighbourhood main street.

Hence, he has, mostly, steered clear of directly engendering conflict. However, oil is different. Perhaps understandably, he has been unable to resist the temptation of picking a fight over oil.

Mr Salmond wants the UK Treasury to hand over a "share of the tax revenue generated in Scottish waters, beginning with a share of the £4-5bn windfally revenue generated this year by the surging oil price".

He wants an initial 10%.

Politically and philosophically, this differs from the strategy to date. For example, with regard to the Comprehensive Spending Review, Mr Salmond pointed to the relatively small increase in Scotland. He suggested how much better things would be under independence.

He argued, politically, that the Treasury were mistreating Scotland. He did not, formally, argue that the UK system of finance should be altered structurally at present, within the devolved rules. He accepted, grudgingly, the settlement.

This is different. He is arguing that Scotland should be afforded distinctive treatment, within the Union, in regard to one element of the UK budget and one element only. He is straddling devolution and independence.

View as a whole

Mr Salmond's case is that the oil revenue is sourced in Scottish waters. If Scotland were independent, Scotland could expect a substantial return.

The FM is asking, in effect, for a modest form of quasi-independent status to be deployed in calculating Scotland's finances - while Scotland remains a devolved part of the UK.

To be clear, this does not, of itself, make the claim valid or invalid. Merely different.

The Chancellor, Alistair Darling, responds by arguing that one must view the UK financial system as a whole, not select a single part. High oil prices mean higher North Sea revenue. However, by depressing the economy, they may well mean lower tax takes in other sectors.

If one accepts the continued existence of the UK as the overall macro-economic structure, then the Chancellor's argument is coherent and consistent.

If one does not, then one might argue, as Alex Salmond does, that Scotland is getting the downside of high oil prices without getting her full "share of the tax revenue", to quote again his letter to the PM.

Consequently, your verdict on this financial question will be influenced, perhaps, determined by your views on the constitutional future.


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