By Martin Kelly
More evidence has emerged demonstrating the extent to which Scots were misled by successive UK Governments over North Sea oil.
One month after former Labour Chancellor Denis Healey admitted that his party had underplayed the value of Scottish oil in the 1970s, new research has revealed that during the same period the Conservatives failed to honour a pledge to set up an oil fund.
In the October 1974 General Election, the Conservative manifesto promised that the UK government would create an oil fund for Scotland should the party be returned to power.
In The End of British Politics?: Scots and English Political Behaviour in the Seventies by William Lockley Miller, the author details how during the October 1974 general election the Tory manifesto promised a Scottish Oil Development Fund which would use oil revenues, “to finance additional services in the areas affected by oil development as well as abolishing road bridge tolls, providing new sports facilities including a new Hampden Park and renovating out-of-date housing and obsolete industry”.
It said that all this was, “in addition to expenditure to which Scotland as an integral member of the UK is entitled”.
The Tories narrowly lost the election to Harold Wilson’s Labour party and Denis Healey was installed as Chancellor. Last month in an interview with Holyrood magazine, Lord Healey, who was Chancellor from 1974 to 1979, finally admitted that Labour deliberately downplayed the value of North Sea oil in order to stem growing support for the SNP.
“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.”
The Conservatives were returned to power in 1979, however earlier promises by the party to set up an oil fund failed to materialise. During this time former Tory leader Alec Douglas Home made a promise to Scotland that if Labour’s Home Rule proposals were defeated in that year’s referendum, the Conservatives would deliver “something better”.
Despite a majority of Scots voting for an Assembly the result was ignored due to a condition introduced into the ballot by Labour that set a minimum requirement that forty per cent of the electorate had to voteYes.
However, with Margaret Thatcher in power, any discussion of devolution was off the table, and with it any possibility of an oil fund for Scotland which could have gone a long way towards ameliorating the devastation created by Mrs Thatcher’s policies.
Commenting on the latest revelations, SNP MSP for Aberdeen South and North Kincardine Maureen Watt said:
“Yet again this shows the lengths the Westminster parties went to, to mislead the people of Scotland.
“We’ve had the McCrone report and we’ve had Denis Healey’s revelations which were proved correct as the estimates used by Jim Callaghan show.
“If the Tories could promise an oil development fund in 1974 why did they not deliver it when they had the chance? Why don’t they deliver one now?
“It’s just the same as their promise of better devolution if Scotland voted No in 1979. That never transpired either.”
Previous research has highlighted how the anti-independence parties’ claims on the value of oil were underestimated with former Labour Prime Minister James Callaghan predicting there would be “total revenue yield from the North Sea, including gas, will approach £4bn a year by the mid-1980s”.
In reality by 1985 the revenue was three times estimated at just over £12billion.
Ms Watt added: “It just shows we cannot trust a word the anti-indpendence campaign says and any promises they make now will only ring hollow with the people of Scotland.
“I challenge the Tories to explain how we weren’t misled on an oil fund.
“We have seen an historic 30-year high in investment in our oil and gas industry, with £11.4billion invested last year – expected to rise to at least £13bn this year.
“Only a Yes vote next September gives Scotland the opportunity to make the next four decades of oil and gas work for our country and for future generations.”
Evidence that the true value of oil had been kept hidden from Scots emerged after a secret report was made public after thirty years of being kept secret. Compiled by economist Gavin McCrone in 1974, it revealed that the UK Government new that oil would make an independent Scotland embarrassingly rich.
Some of the conclusions the report makes about an independent Scotland include:
- The country would tend to be in chronic surplus to a quite embarrassing degree and its currency would become the hardest in Europe…
- An exchange rate of £1 Scots to 120p sterling within two years of independence theref ore seems quite probable.
- Thus, for the first time since the Act of Union was passed, it can now be credibly argued that Scotland’s economic advantage lies in its repeal.
- Britain is now counting so heavily on North Sea oil to redress its balance of payments that it is easy to imagine England in dire straits without it.
In May this year during a conference at the University of Aberdeen on the politics of the oil and gas sector, CEO of Oil & Gas UK Malcolm Webb made clear his personal view that the estimated 24 billion Barrels of Oil Equivalent (BOE) remaining in the waters off Scotland’s coast was an “underestimate”.
Recent estimates based on Economic Co-operation and Development (OECD) forecasts shows that the total revenue still to come from Scotland’s oil and gas sector could be as high as £4 trillion.
OECD economists at the Paris based Organisation have forecast that the price of a barrel of oil will rise to between $150 and $270 throughout the coming decade. The OECD envisages a baseline value for a barrel of oil of $190 which, the new report will say, will lead to an independent Scotland benefiting to the tune of between £2.25 trillion and £4 trillion.
The Scottish government’s own estimates, based on a more conservative price for a barrel of oil of $100, suggests that there is at least £1.5 trillion worth of oil and gas still to be extracted.