The supplementary charge for oil companies will also fall from 30% to 20%, backdated to January, effectively reversing the hike in the 2011 Budget.
First Minister admits error
Sturgeon: ‘We got our sums wrong on oil industry forecasts’
First Minister Nicola Sturgeon today admitted that the SNP’s revenue projections from the oil and gas sector were wrong in the run-up to last year’s independence referendum.
Her comments in parliament came after the Office for Budget Responsibility (OBR) said about £600 million will be generated by the sector in 2016/17 or less then 10% of the windfall predicted by the SNP in its White Paper.
The OBR, set up by the coalition to provide independent analysis, has revised downwards its projections for oil receipts in the next financial year from £2.4 billion to £600m, with its forecasts for each of the five years to 2019-20 now less than £1bn.
However, Ms Sturgeon told First Minister’s Questions that the SNP was not alone in building higher oil prices into its calculations. She told MSPs: “When the Scottish Government was projecting an oil price of $110 a barrel, the OBR was projecting an oil price of $100 a barrel and the UK Government’s Department of Energy and Climate Change (DECC) was projecting an oil price of upwards of $120 a barrel. I think it’s fair to say that everybody’s projections about oil were wrong.”
She went on to say that non-oil revenue was rising and that the country’s public finances are improving.
But opponents queued up to exploit the FM’s vulnerability to the OBR research. Scottish Labour’s deputy leader Kezia Dugdale said it exposed the “dodgy sums” at the heart of the SNP’s general election economic strategy, and she questioned the party’s ability to cope with full fiscal autonomy.
In his Budget speech yesterday, Chancellor George Osborne unveiled a package of tax cuts to help maintain activity in the North oil and gas sector. Petroleum Revenue Tax (PRT) will be cut from 50% to 35% to support continued production in older fields.
He said an independent Scotland could not have afforded these measures.
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