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DERMOT MURNAGHAN: Now because of the fall in oil prices Scotland will now be facing, the estimate is a £15.5 billion black hole, it depends over what period you take that, if it had voted for independence.  That’s the claim made by the Lib Dem Scottish Secretary, Alistair Carmichael and I’m joined now from Perth in Scotland by the Deputy First Minister and Cabinet Secretary for Finance and the Economy, he is of course Frank Swinney and a happy new year to you Mr Swinney and I think you know what’s coming next, would it be a happy new year for an independent Scotland?  There’d be people come across the border with wheelbarrows of cash.

JOHN SWINNEY: Well the first thing to say of course is that Scotland wouldn’t be independent today, we’d be independent in 2016 had we voted for it in September so the issues around the oil price are issues that wouldn’t be relevant today to the economics of an independent Scotland.  What I think is important is to take a couple of points out of what Malcolm Webb said.  This is a temporary issue that’s being experienced in relation to the oil price and there are many expectations of recovery in the oil price, the OPEC estimate for example is for a sustained $110 barrel price for oil for the remainder of this decade and that’s very close to the assumptions that we made in our estimates that we took forward and the second point is of course we have got to have the right fiscal climate to encourage investment and exploration within the North Sea sector to ensure that the enormous opportunity that remains in oil and gas in Scotland of estimated reserves of 24 billion barrels are able to be exploited in a sustainable way in the years to come.

DM: Okay, there’s a lot in that Mr Swinney, are you really saying that okay if Scotland had voted for independence, big investors in the Scottish economy right now, if you had voted for independence, would not be making strategic decisions about where they would be headquartered, they’d be saying we’ll wait and see about the oil price, it might have gone up by the time Scotland becomes fully independent?  You know that’s not the case, they’d be moving the cash right now.

JOHN SWINNEY: What we’d be able to have is a sensible debate about the investment climate for the North Sea oil and gas sector and what we have just now is an investment climate which is unsympathetic to development.  The UK government today has a supplementary charge on the oil industry of 32%, it was 20% when the current government came to office.  They have taken some modest steps to try to temper that scale of increase but we need to have a much more stable and sustainable investment climate that enables companies to plan for the long term.  The biggest criticism that you get from the oil and gas sector about the UK government, persistent criticism over many years of successive Labour and Conservative governments, is that they are always chopping and changing the oil and gas regime and increasing it at every available opportunity and we’ve got to have a sustainable climate that enables companies to make long term investments, to realise the enormous benefits because the oil and gas industry is a very significant one in Scotland, it represents about 225,000 high quality jobs within Scotland, the type of jobs that we want to encourage and develop so it would be in the interests of an independent Scotland, as it is in the interests of the current devolved Scottish government that is led by the Scottish National Party, to make sure that we do everything we possibly can do to support development of the skill base, to develop the infrastructure, to develop the technology to ensure we have got a world leading technology industry based here in Scotland.  

DM: Excuse me interrupting Mr Swinney but you need a decent oil price to do all that and you’ll be aware of the forecast, the analysis done by Professor Alexander Kemp of the University of Aberdeen, looking at an oil price of round about $70 a barrel, which it’s below that at the moment and looking forward to when you ultimately aim to have independent, 35 years, he’s talking about the number of new oil fields being halved to about 88.  I mean that’s going to be a big hit on the Scottish economy.

JOHN SWINNEY: I think what people would accept is that you need to have the right investment climate and my fundamental point and this is where I completely agree with Malcolm Webb and what he’s just said to you, is that the investment climate is wrong for the North Sea oil and gas sector.  The UK government has an opportunity in the budget in March to introduce an investment allowance which is the clear step that would assist the investment activities of North Sea oil and gas companies, to reduce further the supplementary charge in a bolder fashion than was done in the Autumn Statement and also take steps to support further exploration activity because what everybody is agreed on is that there is still an enormous resource out there in the North Sea, an enormous resource to be tapped into.  We’ve got to get the investment climate right and if we get the investment climate right then we can sustain the development of the employment opportunities within Scotland.  Of course the other great benefit that we’ve got of North Sea oil and gas and the sophisticated developments of the industry is that there is much exporting activity taking place from Scotland right across the world with skills and products and technologies developed in the harsh climate of the North Sea, able to be used in other jurisdictions to support international development.

DM: Deputy First Minister, thank you very much indeed, John Swinney there.