Earlier this year, nearly £700 million was raised in the first Scottish offshore wind leasing round since the devolution of the management of offshore wind rights. A further £56m was secured last week for three projects near Shetland.
These payments flow to the Scottish Government. These are the first set of payments and provide developers with the option of developing these sites over the next 10 years. Developers will then make leasing payments, which again will flow to the Scottish Government. In total, these leases should yield a significant and long-term source of new revenue for the Scottish Government.
It is tempting for politicians to see revenues like this as a “windfall” to be spent on their immediate priorities, and claim that this will deliver longer-term benefits for the country. These revenues then become “baked in” to future financial planning and the opportunity to use them more creatively, or for the longer term, is lost.
We have been here before of course, with the tax revenues that were generated from oil and gas activity in the North Sea. These were used by successive UK Governments to finance day-to-day public spending, rather than being ring-fenced for a public investment fund as some other countries did. The benefits of this accrued to those making use of public services at the time, but left less for future generations.
The Scottish Government recently described the UK Government’s decision thus: “rather than choosing to steward these energy resources, particularly oil and gas reserves, to produce long-term, structural benefits for the economy, successive UK governments have used the tax revenue to fund current spending” before noting: “other policy choices were available” including setting up a sovereign wealth fund as Norway did.
Given this criticism by the Scottish Government, it is essential that it makes clear what the framework is under which the immediate and future revenues from these offshore resources are to be managed. This will help make clear to the public the additionality in public spending and investment that these resources provide now and in the future beyond what would have been spent anyway from general resources.
The Scottish Parliament has a crucial role here too in making sure there is accountability and transparency about how these resources are managed and used. In an interview in The Herald on Sunday last month, Professor James Mitchell of the University of Edinburgh gave a wide-ranging assessment of the experience of Scottish devolution since 1999. Among a number of other insightful points, he noted that “we need a much more assertive Parliament”, adding that a feature of Scottish policymaking is the weakness of the Scottish Parliament relative to the Executive.
As Professor Mitchell explained: “Committees are nowhere near as powerful or effective as committees [at Westminster] … Committees are too controlled by the leadership of the political parties. They aren’t properly resourced.” This is something we can, and we should, do something about. Because it is parliamentary committees that are key players in scrutinising how our resources are utilised.
It’s only part of the problem though. While improving how committees operate would be no small gain, the bigger challenge is the lack of big, new, and innovative ideas to use our resources to reshape our country and our economy. This is not just a criticism of those in government, but of all political parties.
The Scottish Parliament, taking a longer-term view, ought to be central in the discussion about how we marshal our renewable resources. It should explore all the different options available to us to maximise the benefits of these resources, and in so doing create a public record making clear to future generations how these resources are being used and why.
For as the Scottish Government recently reminded us: other policy choices are available.
Stuart McIntyre is a professor of economics at the University of Strathclyde
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