The recent slump in the global oil price has seriously impacted the UK oil sector. Thousands of workers have been temporarily laid off or have lost their jobs completely. Knock-on effects to businesses that service the oil industry have been devastating and Aberdeen, the financial centre of the oil sector is struggling.
In a global industry like oil, prices fluctuate constantly. The causes for this volatility are many and varied but usually centre on issues of supply and demand. If there is too much oil available to buy, the price drops. Conversely, if there is a shortage of available oil, the price will increase. To counteract the periods of low oil price, most prudent governments have an 'oil fund' they can utilise to protect their oil industry and their economy. This keeps things healthy by introducing a financial subsidy from the fund until such time as the market picks up again. The oil fund is grown by transferring a percentage of the oil revenue into the fund during periods when the market price is high.
Despite over 40 years of oil and gas extraction from the North Sea, consecutive UK governments have never created an oil fund. Consequently, we are now witnessing the economic impact caused by no financial protection against low oil prices.
Perhaps it would be useful to compare the UK track record in oil production with another country faced with similar challenges over the same period. Such a country is our near-neighbour Norway, and, as we will discover, the fortunes of both have turned out very different.
In 1988, a Scottish Consitutional Convention was proposed, leading some years later to a 'Claim of Right' for a Scottish Parliament. After a successful referendum in 1997, a chain of events took place that saw the creation of the Scottish Parliament in 1999.
The Scottish Parliament is a 'devolved' body within the UK, and the powers it weilds have been negotiated over many years from the UK government.
The 2014 Referendum on Scottish Independence catalysed a new release of devolved powers by virtue of 'The Vow' - an agreement signed by the leaders of all three Westminster Parties to grant Scotland 'Home Rule' or 'Near Federalism' if Scotland voted to remain as part of the United Kingdom. The Smith Commission was set up to examine how this would be delivered. Sadly, the powers that have been devolved from the Smith recommendations fall woefully short on what was guaranteed, so negotiations will, no doubt, continue for the foreseeable future.
The powers that have been proposed and agreed will take effect over the life of the next Parliament in Holyrood.
This article covers a brief history of how devolution started and where it is today. It also lists the various devolved powers - both in current use and those that will come into force in the near future. Facts and figures accompany the description of the major new Tax and Welfare powers to be introduced next year.
Despite the aftermath of the global recession, Westminster's austerity policy and the slump in global oil prices, Scotland's economy is buoyant - and, under the watch of the devolved Scottish Government shows signs of significant growth.
Every quarter, the Economic Research Team at Scottish Enterprise produce a mini-report (Scottish Key Facts) which provides a snapshot of Scotland's economy. Much of the information is based on historic values and previous reports, but, when they become available, the latest figures are included.
Most of the information included in this article is based on the February 2016 report. The various facts and figures are shown in a tabular form, but where appropriate (to make the information easier to understand at a glance) we have converted the data into pie charts and histograms and these appear alongside the original data for comparison.
The report highlights the 12 main sectors that contribute to Scotland's economy and gives a detailed breakdown of the current activity within each.
From 1 April 2016 the Scottish Parliament will have responsibility for a Scottish Rate of Income Tax.
This responsibility will be a partially devolved power.
Essentially, Westminster will still set the overall rate of tax for the UK - but for Scotland, this basic rate will be reduced by 10p for every pound across the various tax bands. This means the Scottish Government will have to set an additional tax rate to compensate for the 10p reduction. This 'Scottish Rate' will be generated from Scottish taxpayers and affords a degree of flexibility for the Government. If they set the Scottish rate at 10p, they will have restored the UK national rate and overall, Scottish taxpayers will pay the same rate of tax as everyone else in the UK. If they decide to increase this 10p base figure, the Scottish Government will generate more tax from Scottish taxpayers. Conversely, if they decide to reduce the base figure, Scottish taxpayers would pay less in taxes and the Scottish Government would reduce their tax revenue.
At a first glance, this looks like a useful power - but there is a sting in the tail.
Kirsty Blackman MP
There's a lot of misinformation flying around about the fiscal framework. In one daily newspaper I read a completely misleading description of how Per Capita Index Deduction differs from other methods of adjusting the block grant.
I'm guessing I've managed to lose some of you already, so I will go back to the start and explain.
Currently, the Scottish Parliament is funded by a Block Grant. The change in this Block Grant every year is determined by a method called the Barnett Formula. In simple terms, the Barnett Formula looks at the change in each department’s funding in England for that year, and applies either an increase or a decrease in the level of funding Scotland receives. The calculation takes into account the level of devolution of each department and allocates Scotland a population share on that basis.