Salmond faces demand for plan for oil revenue drop

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Alex Salmond faced opposition demands to explain whether he would raise taxes or cut spending to deal with a drop in oil revenues, during first minister's questions on 13 March 2014.

The size of Scotland's public spending deficit has risen to more than £12 billion in 2012-13, according to the latest Scottish government estimates.

The figure includes a geographical share of North Sea oil income, which fell in that year.

The Scottish Labour leader Johann Lamont said the estimated £4bn drop in oil and gas money was equal to spending on schools, while the overall £12bn deficit was equal to all health spending.

"If Scotland were independent, how would the first minister cope with this revenue drop? By cutting services or raising taxes?" Ms Lamont asked at the start of the weekly questions session.

The first minister said: "Johann Lamont knows that over the last five years, or indeed over the last 30 years, then the answer is that Scotland has been in the stronger fiscal position relative to the United Kingdom."

He later accused Ms Lamont of using "miserable, doom-laden" arguments in the chamber.

Scottish Conservative leader Ruth Davidson said Scotland currently has the support of the whole of the UK to keep the oil industry going.

"Yesterday we found out that annual oil revenues dropped by 44%, leaving a £4.5bn black hole. This is the price of funding every school in Scotland.

"But that black hole did not affect Scotland's public spending, because as part of the UK, we can absorb these shocks."

The first minister replied: "The North Sea industry has been supporting the UK Government for the last 30 years.

"How come it is such a huge advantage for the UK but such a huge burden for an independent Scotland?"

Scottish Liberal Democrat leader Willie Rennie said the GERS figures showed the "stability of the broad-based UK economy" compared with the "volatility of Scottish finances".

"One year's problem on oil means £4 billion would need to be found from somewhere. Instead of searching for a crumb of comfort, why won't the First Minister answer the questions he has been dodging... which taxes would go up and which services would be cut?"

Mr Salmond said: "Even with the £4bn fall in oil revenues, the current budget balance for Scotland and the UK were virtually identical.

"What made the difference was an almost 1% greater increase in capital investment in Scotland."

We apologise for the intermittent pink flashes in the video.

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