By Martin Kelly
The row over whether Scots have been misled by successive UK Governments over the true worth of North Sea Oil has refused to go away with the nationalists today challenging Tory claims that Westminster forecasts were honest.
Over one week on since former Labour Cabinet Minister Denis Healey sensationally admitted his party had underplayed the value of Scottish oil in a bid to thwart the SNP, the nationalists have highlighted comments from other former Cabinet Ministers that back Lord Healey’s claim.
The comments from Denis Healey have re-ignited the debate over North Sea Oil with the former Labour Chancellor’s candid interview with Holyrood Magazine forcing the valuable resource centre stage in the independence debate.
According to the Labour peer, his party deliberately downplayed the potential of oil in the seventies in a bid at thwarting growing support for the Scottish national Party.
Lord Healey also claimed that the current Westminster government were terrified of losing the resource and suggested the same tactic was still being employed by London in the current debate over independence.
However, yesterday Unionists hit back with Scottish Conservative MSP Jackson Carlaw challenging Lord Healey’s comments. The Conservative MSP claimed past UK Governments had been honest with the Scottish people over the value of North Sea Oil.
Attacking the Labour peer, Mr Carlaw said: “Those claims come from a discredited former Labour chancellor, who was one of the architects of the 1970s economic disaster Margaret Thatcher had to clear up,” he said.
“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.”
Mr Carlaw cited as proof an answer given to a question in 1973 which had asked how much oil was forecast to be extracted. The answer of between 70m and 100m tons turned out to be close to the eventual amount of 80m tons for the year 1980.
However nationalists have dismissed the example of a single obscure parliamentary question and highlighted numerous examples where both revenue and longevity have been downplayed.
It has also emerged that a secret report, compiled by economist Gavin McCrone in 1974 revealed that UK Government estimates were believed to be too low.
Writing in his report, Mr McCrone said: “…but it does now seem extremely likely that production during the 1980s will use well above 100m. tons a year with consequent increases in revenue and gain to the balance of payments.”
The McCrone report is now back in the spotlight with nationalists citing it as the main exhibit in their charge that Westminster has repeatedly hid the true value of North sea oil. The document, which was drafted by economist Gavin McCrone in 1974, was stamped secret for thirty years after it concluded 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.”
- “Nationalist policy as outlined in this paper can, of course, be regarded as extremely selfish.”
- “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.”
The SNP has also highlighted quotes from previous Labour and Tory politicians they say demonstrate how the value of Scotland’s oil was underplayed throughout the 1970s.
In 1978, former Labour Prime Minister James Callaghan estimated “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.
Former Tory MP Patrick Jenkin estimated oil revenue in 1980 would be £1.9bn – in reality it was £2.3bn.
And Tony Benn – then Labour MP for Bristol South East also estimated it would generate £2billion to £3billion a year from 1980. In fact it generated £2.3bn, £3.7bn, £6.4bn, £7.8bn and £8.7bn a year from 1980-1984.
Commenting, SNP MSP Maureen Watt said:
“I challenge the Tories to show exactly how the value of oil was not downplayed during the 1970s.
“In reality they are just digging themselves further into a hole. The comments made by former Labour and Tory politicians during the 1970s clearly demonstrate how much the value of Scotland’s oil was underplayed.
“Former PM James Callaghan downplayed the value of oil so much that in fact the amount generated was three times as much as he forecast.
“The Tories have been backed into a corner by Denis Healey’s revelations last week that the Treasury hid the truth about the value and longevity of Scotland’s oil and gas resources in the 1970s.
“They have been forced to defend the indefensible by saying oil forecasts weren’t downplayed – it is becoming clearer every day why we cannot trust a word they say.
“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.
“In reality, the Scottish Government’s oil forecasts are in line with the industry’s – personally I would trust the forecasts of those working in the industry rather than those of a UK government that, as Lord Healey says, is “worried stiff” about Scots voting Yes because of the valuable income from the North Sea.
“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. Scotland’s economic output is almost identical that of the rest of the UK without oil.
“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.”