1972. The discovery of oil in the North Sea revealed Prime Minister, Edward Heath concerns about Nationalist opinion and the poor state of the Scottish economy. Alert to opportunities for change he initiated a policy review.
The Senior, Downing Street civil servant, Robert Armstrong wrote to members of the Cabinet;
“As you know, the point has recently been put to the Prime Minister that the benefits of oil production brought ashore in Scotland should accrue, and be seen to accrue, to the Scottish economy. The Prime Minister sees considerable force in the arguments believing it would be difficult to stress too highly the psychological gains which would come from the revival of the Scottish economy being seen to be something from which Scotland was achieving from its own resources, not just by the grace and favour of the Government at Westminster or of English industry.” He added: “The Prime Minister understands that novel arrangements may be required to achieve this result.”
Heath’s stance created alarm at Westminster and led to many “on and off the record” meetings between various factions within and outwith government and the civil service resulting in an outpouring of confidential minutes and memos. Primary contributors being: the Scottish Office, the Exchequer, and the then Department of Trade and Industry led by the Scottish Secretary of State, Gordon Campbell, (later Baron Campbell of Croy) and the, Chancellor of the Exchequer, Anthony Barber.
Baron Campbell of Croy
In stating their opposition to Heath’s proposals the Westminster establishment voiced concerns about taking oil revenues away from the Treasury. A senior official at the Scottish Office, in London said in a memo to Downing Street on 25 January:
“The oil discoveries have raised speculation in Scotland on the financial aspects and will continue to do so. But, the official added: “the Secretary of State for Scotland, Mr Campbell would not wish to see direct payments from the oil revenues, as these would be too late to be really useful and would raise a new principal causing difficulties if applied in other contexts. On the general question of the financial relationship of central Government with Scotland, the present has been evolved over many years and the types and amounts of grants, for example to local authorities for housing and education…follow formulae which recognise special circumstances and needs where they exist. “Mr Campbell considers that to dismantle this system, besides being a Herculean task, would resurrect innumerable issues now mercifully dormant.” (Independence)
In a memo on 7 February, 1972, Treasury officials said they too were looking at “aspects” of the Prime Minister’s request. The Treasury argued more strongly and said “…Scotland takes a markedly bigger share of public spending than she contributes to public revenue. We are looking at the latest expenditure figures to confirm that they will tell the same story.”
Those in opposition to Heath’s proposals presented a uniform front and unanimously suggested that aims could be better met by investment in infrastructure and the fostering of fabrication yards and supply companies. Treasury officials later said there was “no question of hypothecation” of oil revenue to finance Scottish expenditure.
Their strident opposition to the suggestion gathered support, and submission of an alternative proposal, transferring all revenue gathered from the oil bonanza to the treasury in Westminster. The consensus was that, “any change in the financial relationship between Westminster and Scotland would resurrect innumerable issues, (A veiled reference to Scottish Independence) now mercifully dormant”. Edward Heath, blindsided, and out-voted in cabinet accepted their proposal. Scotland was then systematically ripped off for the next 43 year’s.
The Scottish National Party (SNP) argues, (correctly) that Scotland has been and continues to be cheated out of its oil revenue by Westminster.
This supplement, which will take some £500m out of the North Sea industry in a full year, will be a serious threat to jobs
Alex Salmond, SNP
In his budget speech earlier on Wednesday, Mr Brown said he would abolish the “royalty” payment on North Sea Oil.He also announced plans to improve capital allowances for oil companies.
But he spoiled the party for oil producers by slapping an extra 10% tax on UK oil production, taking it to 40% to “raise revenue”.
The net result of these changes to the complex North Sea tax regime is likely be a greater share of oil income going to the government.
The UK Offshore Operators Association, which represents more than 30 offshore organisations and companies, said the Budget was one of “give and take”. A spokeswoman said: “While the UK offshore industry welcomes the chancellor’s provision to increase capital allowances in first-year investment in the North Sea, it is disappointed at the decision to introduce a 10% supplementary charge on profits. “We believe this could undermine investor confidence in the long-term viability of the UK Continental Shelf.”
The industry has a labyrinthine tax structure, with different developments supplying varying levels of revenue to the chancellor depending on their age. Some fields going back 20 years or more can pay as much as 70% in various levies, while modern developments are taxed at a lower rate. UKOOA said it was too early to ascertain the impact of proposals to possibly scrap royalties on North Sea oil which are levied on older fields. The spokesman said: “His proposal to consult the industry on the abolition of royalties applies to mature fields developed before the end of March 1982. “It will take some time to analyse the impact of the full tax package on the industry.”
Alex Salmond, the leader of the Scottish Nationalist Party at Westminster, said the tax supplement on profits was a threat to offshore jobs in Scotland, which was at the centre of the UK’s industry. “This supplement, which will take some £500m out of the North Sea industry in a full year, will be a serious threat to jobs. “Because Scotland is deprived of the North Sea tax, Gordon Brown will get the revenue while Scotland will lose the jobs.” Mr Salmond said he would be consulting urgently with the industry to assess the impact of the new tax.
27 September 2002: SNP Argue for full independence
Andrew Wilson told the party’s conference in Inverness that Labour had mismanaged the economy and the time has come for the Nationalists to assume responsibility. Mr Wilson said: “There is an economic imperative for independence like never before.” Accusing Labour of a lack of ambition, he said: “Labour have had their chance, now it’s Scotland’s turn. Let’s show some ambition for our country.” He also said that “Scotland would not need to rely on oil revenues to ensure economic success after independence.”
Those comments came after fellow MSP Alex Neil received a warm reception when asserting that it was time Scotland received all the cash raised from North Sea oil. Mr Neil said there was enough oil under the North Sea to last for 30 years and raise £150bn.
He told activists that when oil was first discovered he had argued for all revenues raised to be evenly split between Scotland and the rest of the UK. Amid loud applause, he said: “Thirty years later I’m still arguing for an oil sharing policy, but it’s an oil sharing policy with a difference. “They’ve had their share, now it’s time that we got our share.”
‘No pot of gold’
However, Mr Wilson said Scotland could prosper without relying on oil revenues. He said: “The reality is that we can do it without natural resources. We’re not going to win independence by promising it’s a free lunch. “There is no pot of gold – black or otherwise – at the foot of the independence rainbow.” Mr Wilson told the conference that Scotland needed the powers of an independent nation to realise its potential.
Party treasurer Jim Mather said: “We are stuck with perennially low growth that in turn creates a wealth gap and a health gap with the rest of the UK. “The solution is clear, we must tackle Scotland’s core problem, Scotland’s lack of full financial Independence.”
Mr Swinney said he accepts that the SNP has attracted protest votes in the past, but he told delegates that his party was now ready to govern.
Our new approach will be to present independence, not as a land of milk and honey but as a land of opportunity
John Swinney, SNP leader
The SNP leader promised a reformed Scotland and issued warnings about life under Labour.He said that the SNP would ensure shorter hospital waits, safer streets and better schools if the party gains power at May’s Scottish parliamentary elections.
Boosting business was another key theme.
Mr Swinney promised to end the use of private cash in the public sector but warned that there was no “pot of gold” with which to ensure a smooth transition to independence.
The SNP leader said that Scotland needs the powers of independence to make a radical difference and “release its potential” – the party’s new slogan.
He directed his fire at the Scottish Parliament, telling delegates that criticism over his move for a debate on Iraq showed the limitations of the legislature.
He said: “They try to shout me down when I stray from the devolved agenda.”Well I have a message for the unionists. Scotland is not a devolved administration, Scotland is a nation and a nation’s voice must be heard.”
At the centre of Mr Swinney’s 40-minute speech was a promise that independence would create a passport out of poverty for many Scots.
Mr Swinney warned that the SNP would not use Holyrood’s tax-varying powers to raise revenue if it won power but added that it would use a Labour “slush fund” of £370m held in reserve by his opponents.
Mr Swinney said: “Our new approach will be to present independence, not as a land of milk and honey but as a land of opportunity. An opportunity to compete. An opportunity to put our people back in control. An opportunity to release our potential, our potential as a talented and innovative people. An opportunity to wave goodbye forever to those who stamp down on Scotland’s ambitions. That’s the opportunity of independence”. http://news.bbc.co.uk/1/hi/scotland/2284141.stm