Danny Alexander on Scottish Independence Referendum myths
Scottish Independence White Paper myths must be debunked, says Chief Secretary to the Treasury, Danny Alexander.
I鈥檓 glad to see so many of you here this morning鈥�
In a week when we can all celebrate good economic news.
Yesterday鈥檚 GDP figures were yet another example of the strength of the UK economy right now鈥�
With 鈥� in the first quarter of this year 鈥� all three main sectors of the economy growing at above 3 per cent on a year earlier.
This is the first time this has happened in ten years鈥�
It鈥檚 the result of the hard work of people鈥�
From the southernmost point of Cornwall an area we granted national minority status last week鈥�
All the way up to the Shetlands鈥�
And it is another excellent example that 鈥� as a United Kingdom 鈥� we are well and truly seeing the recovery we so badly needed, thanks to the Coalition鈥檚 economic plan.
I remember when I was first invited to join the Treasury鈥�
At a time of a grave economic outlook鈥�
One of the best pieces of advice I was given鈥�
Was that I would need to have a sense of humour about things.
And four years on, that has certainly been true!
I鈥檝e been called a Ginger Rodent by Harriet Harman鈥�
I鈥檝e been told I bear a passing resemblance to Beaker from the Muppets countless times鈥�
And a couple of weeks ago I found out about a new photo blog鈥�
Called The Adventures of a Lego Danny Alexander.
Now, it鈥檚 perhaps true that the referendum campaign here in Scotland鈥�
Hasn鈥檛 provided many laughs so far.
And given both the enormity 鈥� and the irreversibility 鈥� of the choice we face鈥�
That is perfectly understandable.
This is, after all, the most serious decision any Scot will ever take.
But increasingly, as the campaign continues鈥�
When it comes to some of the statements and assertions made by nationalists鈥�
You really do need a sense of humour.
Because apparently, the same risks that apply to other countries wouldn鈥檛 apply to an independent Scotland.
Another financial crisis, for example, would pose no problem鈥�
Because according to Business for Scotland鈥�
The banks that needed bailing out in 2008 received funds according to the location of their operations鈥�
Rather than the location of their headquarters.
A claim that ignores the reality鈥�
That when the financial crisis hit鈥�
It was the government of the United Kingdom that stepped in to recapitalise RBS and HBOS鈥�
And the taxpayers of the United Kingdom that extended 拢275 billion of total support to RBS alone.
The nationalists may stick their heads in the sand when it comes to the global financial system鈥�
And the profound consequences of independence for Scotland鈥檚 financial sector.
But I haven鈥檛 heard the reality put better than by the former Governor of the Bank of England who said that鈥�
Banks are international in life, but national in death.
Second, there are the extraordinary set of claims that seek to reassure those living in Scotland鈥�
That nothing much would change with independence鈥�
Like the continued, belligerent, assertion that Scotland could 鈥� and would 鈥� keep the pound.
But while I can respect that Alex Salmond is passionate in his desire to break up the UK鈥�
鈥� he has to face up to the fact that the rest of the UK does not have to 鈥� and would not want to 鈥� continue to share the credit card.
There is also the fantastical claim, made in the White Paper鈥�
That an independent Scotland would share a third of the UK鈥檚 institutions and services鈥�
鈥espite the fact that this is completely unprecedented anywhere in the world.
This is a claim we have to listen to鈥�
Whenever an institution crops up that the nationalists haven鈥檛 had time to think about鈥�
Be it the National Lottery or the Met Office or the Passport Office鈥�
So it won鈥檛 surprise me if next Saturday night鈥�
Alex Salmond declares that an independent Scotland will share the UK鈥檚 automatic place in the Eurovision Song Contest final!
Over the last few weeks, I鈥檝e been attending public meetings on the referendum in the Highlands.
And all of the myths I鈥檝e just put forward are ones that have been put around by the nationalist campaign.
So I wanted to give this speech today, precisely because we cannot allow false or misleading claims by separatists to go unchallenged.
We need to make sure that when people go to the polls in September鈥�
For the most important vote they will ever cast鈥�
They are making an informed choice鈥�
Based on evidenced facts.
Everyone in this room this morning knows the importance of balancing the books.
Indeed every family and individual in Scotland understands the tough choices involved in matching up outgoings with incomings.
It has been one of the defining features of the government to tackle the UK鈥檚 deficit and rebalance our economy.
And as our strong, growing economy and falling deficit shows鈥�
鈥urs is a strategy that is working for all parts of the UK.
But by contrast, it is one of the defining features of the Scottish Government to ignore the realities鈥�
鈥f Scotland鈥檚 larger deficit鈥�
鈥nd falling oil revenues鈥�
because 鈥� unfortunately for them 鈥� these facts demonstrate quite clearly that we are better off together.
The nationalists鈥� assertions on Scotland鈥檚 finances are at best ill-informed鈥�
And at worst, deeply misleading to Scottish voters.
In a few weeks time, I will set out government analysis of the many fiscal benefits of the United Kingdom鈥�
But this morning I want to focus on debunking some of the more dangerous economic myths being propagated鈥�
Namely those around oil and gas receipts.
And those around the national deficit.
On oil, there are some frankly incredible myths being put forward by the nationalists.
The first is the Scottish Government鈥檚 claim
鈥hat the wholesale value of remaining oil and gas reserves amount to 拢1.5 trillion.
As with most of the Scottish Government鈥檚 oil numbers though鈥�
鈥his is not only based on the most optimistic scenario for North Sea extraction鈥�
鈥t is based on a scenario where oil price is the same as the price of gas.
But in recent years, gas 鈥� which accounts for 40% of forecast oil and gas production鈥�
Has sold for little more than half as much as the equivalent volume of oil.
Yet over-optimism is not the Scottish Government鈥檚 worst offence in this particular example.
No, the fact is that the 拢1.5trillion figure doesn鈥檛 include any costs for getting the oil out of the ground鈥�
And into the petrol pump.
It is apparently news to the nationalists that鈥�
Oil rigs cost money to build and run鈥�
Pipelines under the sea are expensive鈥�
New technologies require investment鈥�
And oil workers expect to be paid.
All told, more than 拢1 trillion is likely to be needed to extract the remaining oil and gas resources assumed by the Scottish Government.
So once you鈥檝e taken these inconvenient overheads out of the equation, the value is much much lower鈥�
And revenues for Scotland much much smaller.
But the nationalists aren鈥檛 ones to let a good fact get in the way of a nice electoral soundbite鈥�
And so they claim 鈥� in their infamous Oil and Gas bulletin from last March 鈥� that more than half of oil and gas reserves have still to be extracted鈥�
And thus plenty of government revenues from oil and gas are still to come.
But we simply cannot trust their forecasts:
- not just because they are more optimistic than any other published forecasts鈥�
- not just because 鈥渢here is a high degree of uncertainty around future North Sea revenues鈥� 鈥� not my words鈥�
The words of John Swinney in his private paper to colleagues鈥�
But because the Scottish Government鈥檚 oil and gas tax forecasts have already been shown to be spectacularly wrong.
The Scottish Government forecast that in 2012-13, a Scottish share of North Sea oil and gas revenues would be almost 拢7 billion.
As it turned out, total UK oil and gas revenues were only slightly above 拢6 billion.
And for the financial year just passed 2013-14, the Scottish Government forecast that a Scottish share of North Sea revenues would be higher still鈥�
More than 拢7 billion.
Well, HM Revenue and Customs has today confirmed that total UK North Sea revenues last year were 拢4.7 billion.
So over the past two years alone鈥�
The revenues coming from oil for the whole UK鈥�
Have been more than 拢3 billion below the Scottish Government鈥檚 most cautious forecasts.
Over the whole six year period of the Scottish Government鈥檚 Oil and gas bulletin 2012 to 2017鈥�
Their most cautious forecast for Scottish oil and gas revenues is 拢41 billion.
Yet the independent Office for Budget Responsibility forecasts that whole UK revenues will be just 拢25 billion over the same period.
It doesn鈥檛 matter how deep you drill into the figures, they simply don鈥檛 add up.
It shows that the Scottish Government and realistic projections go together like water and oil鈥�
And it leaves tens of billions of pounds missing from the Scottish Government鈥檚 White Paper.
Tens of billions of pounds that 鈥� under independence 鈥� can鈥檛 be raised across the UK
鈥ut will have to be raised from Scottish businesses and individuals鈥�
Or cut from Scottish services.
I have absolute faith in this country鈥檚 human resources.
And our resilience and work ethic鈥�
Just as we Scots have always proven we have the imagination and the creativity to push boundaries in science and the arts and economics and exploration鈥�
I have absolute faith that this country will keep producing great women and great men鈥�
Who can push those boundaries further.
But while we should celebrate that our human resources have such potential鈥�
We need to be realistic when it comes to our natural resources.
Our oil reserves are finite.
And we mustn鈥檛 let over-optimistic, unproven-projections鈥�
Raise false hopes for economic plenty.
Better off as part of the UK
Let me deal with two final myths together鈥�
Both the nationalists鈥� claim that Scotland would be better off鈥�
And have lower taxes, higher spending and no austerity if we were independent鈥�
And their biggest myth of all 鈥�
Their claim that the pro-UK campaign is only negative, or scare-mongering.
Because what these oil numbers published today show鈥�
鈥nd what I will argue for the next few weeks ahead of our final analysis paper鈥�
鈥nd the next few months ahead of the referendum
鈥s the indisputable point that we are better off together.
According to a range of independent estimates鈥�
As part of the UK鈥�
Scotland will face a smaller deficit, lower taxes and higher levels of public spending, both in the short, and the long term.
Independent organisations like the IFS, the CPPR and others have all shown that an independent Scotland would face a deficit of more than 5 per cent of GDP in 2016-17.
And forecasts from the IMF suggest this would be the second highest deficit of any advanced economy in the world.
On the other hand鈥�
As part of the UK鈥�
Scotland would be part of a nation with a deficit forecast of just 2.4 per cent of GDP in 2016-17, and falling further in subsequent years.
This means that鈥�
In the year 2016-17 alone鈥�
Independent experts agree that 拢1,000 less would be borrowed for each and every Scot as part of the UK鈥�
Than would be the case in an independent Scotland.
An evidenced, positive reason that we are better and more secure together鈥�
Today, in 2016-17 and beyond.
The Scottish Government know the fiscal position of an independent Scotland provides a 鈥渃hallenging context鈥�.
Again, not my words but John Swinney鈥檚 private memo to his cabinet colleagues.
And today we now know that the figures in the white paper are already out of date.
But rather than confront these risks and uncertainties, the nationalists simply choose to peddle myth after myth.
They claimed the white paper would answer all the questions about independence.
That it would be the most detailed guide ever produced to a new country.
Instead, the white paper is full of false promises and misleading claims鈥�
Based on an optimistic forecast for oil revenues that are already out by 拢3bn a year鈥�
鈥ontaining policy proposals that are not funded and would not be affordable鈥�
鈥nd commitments that the Scottish Government pretends it can make on behalf of other nations and international organisations.
It is time for the Scottish Government to confirm what we all know鈥�
鈥hat the white paper was wrong.
A month ago the Centre for Public Policy for the Regions called on John Swinney to issue revised and realistic oil and gas forecasts鈥�
鈥o correct the discredited Oil and gas bulletin
鈥nd the errors at the heart of the White Paper.
I am repeating that call today.
The Scottish Government must confront the fact that it is promising tax revenues and public spending that it cannot deliver.
It should revise its oil and gas forecasts鈥�
鈥r 鈥� better yet 鈥� adhere to international best practice and follow an independent forecast like the OBR鈥檚.
It is the very least that the Scottish voters deserve.
But I would like to end by saying 鈥� that there is actually one Scottish myth that I absolutely cannot 鈥� and would not be able to 鈥� disprove.
She鈥檚 about forty foot long鈥�
Publicity shy鈥�
And she lives in my constituency.
And if anyone here today, or any of your families鈥�
Wants to come up to Loch Ness and spend a weekend looking out for her鈥�
They will be very welcome indeed.
In short, there is more evidence for the Loch Ness monster鈥�
Than there is for many of the calculations and the claims that have been put forward by the nationalists to support their case for separation.
I want everyone in Scotland to be part of an influential country鈥�
Where businesses can thrive鈥�
Where the economy can grow鈥�
And where people can lead long, healthy, happy lives.
We have all those things as part of a United Kingdom.
We benefit from the shared sovereignty 鈥� and shared economy 鈥� that we enjoy as part of the strongest union of nations in world history.
And as Billy Connolly said yesterday鈥�
And he put it better than any politician could鈥�
The more people stay together, the happier they鈥檒l be.
It would be a real folly 鈥� and a real danger 鈥� to put so much of what we have at risk.
Especially if we based our decision to do so on the over-optimistic, uncosted claims of the 鈥榊es Campaign鈥�.
We need to continue challenging these myths.
And we need to continue making clear to the people of Scotland that we really are better together.
Thank you.