Healey oil admission at centre of row as Tories deny Scots misled


  By Martin Kelly
An admission by former Labour Chancellor Denis Healey that the Labour party downplayed the true value of oil in the seventies in order to thwart support for the SNP has been challenged by their Better Together Tory allies.
According to reports today, the Scottish Conservatives have insisted that the value of oil was not downplayed by Westminster Governments in the 1970s.

The Conservative claims are based on a parliamentary question asked by former SNP MP Jim Sillars in 1973 in which he asked how much oil would be extracted in 1980.  The answer given, 80 million tons, proved accurate.

Speaking to the Herald newspaper today, Tory MSP Jackson Carlaw said this proved Scots had not been misled over the value of North Sea Oil.

“The figures show very clearly that the UK Government made a public estimate, which was gleefully quoted by both the SNP and Labour at the time,” said Mr Carlaw who added:

“Yet history demonstrates that this estimate was entirely accurate after all, proving suggestions that the worth of oil was somehow played down are well wide of the mark.”

However the SNP has ridiculed the claim that successive Westminster government gave a true picture of the worth of Scottish oil.

SNP MSP Maureen Watt said:

“This weekend it was the Labour party’s Margaret Curran saying she didn’t know anything about Lord Healey’s revelations that the Treasury purposely played down the value of Scotland’s oil reserves in the 1970s – now today we have the Tories trying to defend the indefensible.

“Denis Healey wasn’t Chancellor and the Labour party were not in office when this PQ was answered, and it predates the McCrone report which was kept ‘secret’ for over 30 years because of the ‘the extreme sensitivity of the subject’ as its very own author wrote.”

The growing row over what was known by successive Westminster governments over how much the oil was worth escalated last week when former Labour Chancellor Denis Healey admitted the party had underplayed the true value in order to prevent Scots from supporting nationalism.

Lord Healey was Labour Chancellor from 1974 to 1979, and held the post in the run-up to the 1979 Scottish Home Rule referendum.  Commenting on the issue of North Sea Oil, the Labour peer said:

“I think we did underplay the value of the oil to the country because of the threat of nationalism but that was mainly down to Thatcher.

“We didn’t actually see the rewards from oil in my period in office because we were investing in the infrastructure rather than getting the returns and really, Thatcher wouldn’t have been able to carry out any of her policies without that additional 5 per cent on GDP from oil.”

The Labour peer also insisted that an independent Scotland could survive “perfectly well”, but said the rest of the UK “would suffer enormously if the income from Scottish oil stopped”.

He said of Westminster politicians: “I think they are concerned about Scotland taking the oil, I think they are worried stiff about it.”

Labour MP Margaret Curran (pictured), when pressed on the admission by a senior colleague denied any knowledge of the cover-up, and said she would never herself have taken part in such “foolish” collusion against the Scottish people.

Ms Curran said: “I would have thought that was a very foolish way to do it.  I would never have colluded with an argument that didn’t make Scotland strong.”

SNP MSP Maureen Watt added:

“It shows an incredible level of panic that the Tories describe the man who was Chancellor of the Exchequer for over half the 1970s as an ‘unreliable’ source.  Nor does it recognise how the Tories tried to play down the value of Scotland’s oil revenues.  The SNP remember how the Tories attacked an SNP prediction that oil taxation and royalties might be in the range of £825m to £2400m by 1980. In the event the actual figure was £2700m!

“The Tories protest too much.  Their desperation to refute the claim says everything about how sensitive they are – with good reason – to the suggestion they, and other Westminster Governments, do not act in Scotland’s best interests.

“Oil is a major industry and employer in Aberdeen and it is too important to leave in the hands of a Westminster government that sees the industry as a tax cash cow with frequent volatile tax raids. That is why the SNP will be reminding the people of Aberdeen Donside how the Westminster parties have tried to downplay the importance and value of the industry.

“Scotland’s finances are consistently stronger than the UK’s, over half of the North Sea tax revenues are still to come, and our oil and gas assets are worth £1.5 trillion or even more.

“But of course, it’s a complete myth to say that we are reliant on oil. Even without this fantastic resource, Scotland’s economic output is almost identical that of the rest of the UK. Oil revenues make up around double the share of Norway’s total tax revenue compared to Scotland, but no one is telling the Norwegians that they are too wee and too poor to be a successful independent country.

“We have seen an historic 30-year high in investment in our oil and gas industry, with £11.4bn invested last year –expected to rise to at least £13bn this year.”

The admission by Lord Healey confirms the conclusions of a secret report compiled in the 1970s by economist Gavin McCrone.

The McCrone Report was written by Professor Gavin McCrone, the Chief Economic Adviser to the Scottish Office, in the weeks immediately before the February 1974 Election.  In April 1975 it was presented to the Cabinet Office.

In the accompanying letter (dated 23 April 1975) by Gavin McCrone to John Garlick, Permanent Secretary heading the constitution unit set up within the Cabinet Office to plan devolution, he wrote:

“When my paper was written it was classified “secret” and given only a most restricted circulation in the Scottish Office because of the extreme sensitivity of the subject.”

It remained secret until 2005 when it was released under a Freedom of Information request.

The report stated that Scotland would have had an “embarrassingly large tax surplus as a result of the North Sea oil boom”.

In 1982, a parliamentary question by Tory MP Timothy Eggar asked:

“Would not my hon. Friend agree that one of the deepest concerns and one of the results of the BGC monopoly is that some private oil companies now predict that we will run out of gas or cease to be self-sufficient by the end of the 1980s?”

His colleague, Peter Rost MP replied: “Undoubtedly this is accepted…”