Getting oil out of your emperor’s new clothes

The debate over North Sea oil leading up to the 2014 Scottish independence referendum (and indeed since) has been a wearily predictable wrangle between the two opposing camps.  The two terms most commonly used to describe the relevance of oil to the two competing campaigns were bonus and basis.  Nationalist activists were adamant that oil was a bonus to the Scottish public finances whereas the Better Together campaign cautioned that oil revenues would form a substantial chunk of an independent Scotland’s revenue – a basis.  Better Together also highlighted the notorious volatility of crude oil prices, which could place that substantial chunk at risk.

Senior SNP figures were prepared to stand by the “bonus” claim, and this key rhetorical theme of the Yes campaign was frequently espoused.

Both the current First Minister and her predecessor will doubtless be dismayed by the fact that the man chosen by Ms Sturgeon to head up the SNP’s Growth Commission has come clean and admitted that this claim was, in fact, nonsense.  Andrew Wilson is an ex SNP MSP, also formerly of RBS and a partner at consultancy and lobbying firm Charlotte Street Partners.  If his Twitter feed is anything to go by he’s an extremely affable fellow, and well worth a follow (@AndrewWilson).  

Affable, yes.  But he was a part of the campaign that promoted the “oil is a bonus” line, and this makes his admission all the more frustrating.  What did he say?  The full BBC article can be found here http://www.bbc.co.uk/news/uk-scotland-scotland-politics-39178324, but the key part is:


It was indeed a basis.  A cursory glance at the Scottish Government’s accounts showed that to be the case.  In 2011-12, oil revenue was 16.9% of all Scottish revenue.  By 2013-14 this had dropped to 7.4% as the oil price headed south, and in 2015-16 it was an insignificant 0.1%.  In the same years, the notional iScottish net fiscal deficit as a percentage of GDP was 5.7%, 8.2% and 9.5% respectively.  As oil revenues collapsed, the net fiscal deficit ballooned.  To suggest that oil revenue was anything other than a basis of Scotland’s public finances was an insult to voters’ intelligence.

But that was the SNP’s approach.  The emphasis placed on oil’s apparently limitless capacity to pay for everything promised in the nirvana of iScotland played perfectly to that old SNP refrain: “It’s Scotland’s oil.”  Yes newspapers were stuffed through letterboxes with huge ‘FREE MONEY!’ splashes.  

£600! And it’s free!
Duggy Dug was inspirational

Alex Salmond and Nicola Sturgeon led the line; social media was awash with willing mouthpieces working to sow and reinforce the message.  And now that particular house of cards has come crashing down as a result of oil price volatility, do the SNP acknowledge the con trick they played on the Scottish voters?  

Not a bit of it.  John Swinney stood in for Nicola Sturgeon at First Minister’s Questions today and his response to the inevitable question from Kezia Dugdale was extraordinary.  Aside from the fact he made no attempt to answer the question (this isn’t specific to the SNP, any regular watcher of FMQs or indeed PMQs knows this is standard practice) he launched into a theatrical performance lauding the former Better Together members on the benches to his left and right.  His attempt to cast Labour and Conservative as one and the same was met with raucous acclaim from the supportive clapping seals behind him.  Mr Swinney has learned from his leader when it comes to his comedy turns.  Her response to Iain Gray’s admittedly poorly worded question in 2013 about where the money for an oil fund would come from (er, let me think) provoked a similar storm of mirth and guffawing from the SNP backbenchers.  Ms Sturgeon knew exactly the point behind Mr Gray’s question but again no answer to that point was forthcoming back then.  I wonder how funny Ms Sturgeon and Mr Swinney would have found budgeting the first two years of iScotland with the oil revenue valve firmly padlocked.

Not that that would have bothered them.  They’d have won the referendum, and the Gordian Knot of Scottish public finances would have been solved just like that of Alexandrian fame – with an almighty great cut.  The prospect of this task has now fallen on Andrew Wilson’s Growth Commission, the outcome of which is awaited with keen interest.

As the SNP machine gears up for another independence referendum (possibly, maybe, if that’s the best option open to us) it’s safe to say the economic argument as far as oil is concerned has been comprehensively won by the No camp.  The old Yes campaign’s “oil is a bonus” sloganeering has been brutally shredded by one of their best.  The SNP’s response to this has been clinical – remove the oil chip from the gaming table, and treat all questions on it with their customary theatrics and suggestions that those asking the questions “need to get on Scotland’s side”.  Andrew Wilson’s admission has completed the former, and John Swinney today did the latter.  Of course, this won’t stop SNP assertions that oil is a bonus. We just won’t hear them as frequently as we once did.

Wait, what’s that?  What did Pete Wishart have to say on it back then?  Ach, go on then, if you must.

Perthshire’s finest
A short session with Mr Wilson should bring Pete up to speed.

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