R&D spending in North Sea set to increase and boost Scottish economy

Yes I saw the article saying we wouldnt be able to afford an oil fund. I left this response (Amended Slightly)...

OK, so there are a few assumptions in the report that should be looked at...

1) Spending will remain the same after independence as it is currently.

2) It is unlikely the domestic economy will grow.

3) Future returns on oil and gas are being based on todays price.

So lets take these one at a time.

1) Spending will see reductions due to a variety of reasons. The biggest being that Scotland currently pays £3.16 Billion towards the defence of the UK (According to GERS) and this is likely to reduce by £960 million a year according to the assessment by Professor Malcolm Chalmers, of the Royal United Services Institute, where he states that a Scottish Defence Force would cost about £2.2 billion.

In addition, there are many Civil Service Jobs that are currently undertaken in London that would need to be replicated north of the border. These jobs would have lower average wages than London and would not include the £3k per person living allowance paid there either. As such government expenditure will reduce even if levels of staffing do not.

Next we have the fact that we would not be paying 8.4% of the military adventures that are Iraq, Afghanistan, Libya, and very probably Iran in the not too distant future. Remember spending on military operations overseas, such as Iraq, Afghanistan and UK involvement in the Libyan campaign, does not come out of the defence budget, but rather from the Special Government Reserve fund. This money is additional to the budget of the Ministry of Defence and comes under the services provided on behalf of Scotland part of the Block Grant.

And then theres Tridents replacement and its maintenance costs (Scotlands share is £210 million in annual maintenance costs). And these are just some of the governmental savings that would happen after independence, regardless of the tactics used to stimulate the economy such as cutting corporation tax or providing incentives for Foreign Direct Investment.

2) As has already been pointed out, the domestic economy will grow immediately with the introductin of the civil service jobs that were undertaken outside of scotland.

Cuts to Corporation tax and incentives to invest could entice companies to set up in Scotland. The reports assertion that there would not likely be any growth seems to fail to acknowldge that government policy can have a bearing on this.

We can also expect the ship building industry to see a slight revival as the Scottish Defence Force will need maintenance contracts and possibly new ships.

And of course, there is the continued investment in the Scottish Waters Oil and Gas and renewables, that is going to be 46 Billion over the next few years and looks set to continue.

3) Basing any calculations on todays Oil and Gas price for projections going into decades ahead is utter tosh!!! We know that global peak oil, if not close, has already happened. Whenever a resource becomes scarce, the value increases.

There is as much oil in the ground now to still be extracted as we have already done. This will however be more valuable as the tensions in the Middle East will not just go away, Oil is becoming harder to find and where it is being found, it is either in unstable countries or of a type that is difficult and expensive to refine (Canadian Tar Sands for example). All of this combines to ensure that in the long term future there is only one way that oil prices will go, and thats UP.

So forgive me if I dont find this report all too realistic in its findings.

Especially given that the CPPR is full of Labour place men such as Wendy Alexanders Husband, or Jim Gallagher, the former civil servant who is believed to have written the Calman report and who has been appointed as expert adviser to the Holyrood Scotland Bill Committe and is listed as an associate with the CPPR...

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