British cabinet to meet in Scotland amid independence fears

LONDON (AFP) - The British Cabinet will meet in Scotland for only the third time in history on Monday to announce plans for the country's oil industry, which it warns will decline if Scots vote for independence.

The fate of North Sea oil revenues will be a key issue ahead of the Sept 18 referendum to decide whether Scotland will end its 300-year-old union with England, and is expected to be the focus of Prime Minister David Cameron's Cabinet meeting.

In a statement released on Monday, the prime minister revealed new measures for the industry.

They include plans for the industry and government to work closer to share infrastructure and geophysical information and to ensure that licences are awarded with a view to extracting the maximum amount of oil.

"These steps - good for the economy and good for jobs - will increase our energy security and reduce our reliance on imported oil and gas, which is one of the main drivers pushing up people's bills," said Downing Street.

It is only the third time that the British Cabinet has sat in Scotland as Mr Cameron strives to convince voters of the economic case to stay in the union.

"For many years the UK has supported the North Sea oil and gas industry and we have worked together to make this an economic success the whole country can be proud of," argued Mr Cameron.

"I promise we will continue to use the UK's broad shoulders to invest in this vital industry so we can attract businesses, create jobs, develop new skills in our young people and ensure we can compete in the global race," he added.

London warned that the UK Continental Shelf, source of the country's oil, faces "unprecedented challenges" that can only be met by a United Kingdom.

"Tax revenues from oil and gas in 2012-13 were £4.7 billion (S$9.9 billion) lower than the year before - a drop of more than 40 per cent," said the Downing Street statement.

"While the UK's broad and diverse economy is able to absorb this volatility, this equates to more than one third of Scotland's health budget or two thirds of Scotland's spending on education."

The British Cabinet has only been held in Scotland twice before: under Mr Cameron's predecessor Gordon Brown in Glasgow in 2009 and under Mr David Lloyd George in 1921 in Inverness.

While Mr Cameron's Cabinet meets in Aberdeen - where the North Sea oil industry is based - Scotland's pro-independence First Minister Alex Salmond will meanwhile lead a rival Cabinet meeting of his devolved Scottish government just a few kilometres away.

Mr Salmond is taking his Cabinet to Portlethen, just south of Aberdeen, and has challenged Mr Cameron to accept a head-to-head debate.

Mr Cameron's Conservatives, their Liberal Democrat junior partners in the British government and the Labour opposition are all campaigning to keep the United Kingdom intact.

Opinion polls have consistently shown a majority of Scots preferring to stay in the UK, although the gap with those who want independence has narrowed.

An ICM poll of 1,004 Scottish adults for the Scotland on Sunday newspaper, conducted between Monday and Friday, found some 37 per cent would vote for independence while 49 per cent said "no".

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