Election '97: Forsyth pours scorn on 'fiscal fantasy' of SNP

An attempt by the Scottish National Party yesterday to promote a pensioners' package worth pounds 12 a week for the average couple brought another withering attack on the "fiscal fantasy" of the party's forecasts for an independent Scotland.

Michael Forsyth, the Secretary of State for Scotland, said the SNP had produced a blueprint for national impoverishment and impotence. The nationalists were trying to enlist the support of voters on a false prospectus, he told a news conference.

But the SNP claims it is winning the economic argument for independence and will focus on the issue again today. "People have to realise they don't have to stay locked into this union with England for economic reasons," said Michael Russell, the SNP's chief executive.

The party believes that by burying the perception of Scotland as a "subsidy junkie" it will build confidence in people to vote for independence. Polls have the SNP at around 25 per cent but, encouragingly for Alex Salmond and his team, another 28 per cent of Scots give the party as their second choice.

Mr Russell said Treasury figures had shown the party had been right in the past about the surplus in the Scottish economy thanks to North Sea oil, and it would be proved right in its forecasts for the future.

While there is acceptance amongst economists and political parties of a Treasury figure that Scotland has contributed pounds 27bn more to the Exchequer since 1979 than it has received, the SNP is being pressed on its assumptions for the future.

Mr Russell said a number of economists backed an SNP analysis indicating a surplus for Scotland of pounds 12.5 bn over the next five years. Jim Walker, one of the Far East's top economists and formerly with the Royal Bank of Scotland, was called in aid by party leader Alex Salmond earlier this week.

But the SNP's opponents are making damaging use of an appraisal of the party's budget by Jim Stevens, Chief Economic Forecaster at the respected Fraser of Allander Institute. The SNP had inflated Scotland's true fiscal position by pounds 18.1bn over the next four years, Mr Stevens concluded. Its assessment was "about as useful as a chocolate fireguard". But Mr Stevens, as a member of Labour's Scottish executive, is hardly an independent in the matter.

Mr Forsyth said the SNP's calculations were based on the huge oil revenues of the pre-1986 boom years. These peaked at pounds 12bn in 1984-1985 and, according to Mr Stevens, their like would not be seen again.

"The SNP's own accounting shows that their old fashioned public-spending plans would entail an extra pounds 5.5bn expenditure in the first four years of separatism. Since the actual fiscal situation of a separate Scotland would be a deficit of pounds 8.2bn, the consequences of such a programme would be national bankruptcy," Mr Forsyth said.

Andrew Welsh, the SNP vice president, dismissed the Secretary's remarks as those of a unionist with a narrow vested interest in his job at Westminster.