Mc Crone Report Scottish Office

8/13/2019 Mc Crone Report Scottish Office

1/18

I t i s o o mmo n p l a o e , t h a . t t h e d i so o v e r y o f : No r t h ' S e a o i l a n d . e n t r y t o ~b e EmC

a r e f a c t o r s o f ma j o ~ e o o n o mi o s i gn~f i oa nc e f o r 3 0o t l a n d ~ A l r e ~d y b o t h i s s " e a ,

especia.lly ~he former, feature widely in the SN'Pts eJ.eotion ma.terial. The

'purpo~e of thi$ paper is to reassess the economic argume~ts for an independent,\

Scot l and ~n t h e l i ght o f t he s e de ve l opman t s , ea peo i ~l l y t he d i s c ove r y o f o i l . \

I t wi l l b e $ he wn t h at t h e whol e f r amewor k wi t h i n whi oh t he eoo~om1o' i mpl i at i o J

' o f n at i o na l i s m we r e a r gu ed h as i n de e d b ee n a l t e r e d. T he i mp Qt t a nc e o f t h i s i spr oo~bl y ~eat er t han i s r eco~i sed at pr esent by t h e ma j o r i t y o f t h e p u b l i c

a nd it ma y we l l b e , t h e r e f o r e , t h a t t h e ~i s o o v e ~y ot N or t h S e a o i l wi l l oome tt. '

be seen a.s $omething of a ~~atershed. in Scotland fa econom~.oand. political life.

The o as e f o r Sc o t t i s n n~t i ona l i s m i s , o f c our s e , v e r y muo h mor e . t h a n ~n eoo nomi

i s s u e . T h i s p a . p e r Dlakes n o a t t e mp t t o e : a : a . mi n ~t . h~ wi d . e r q u r as t : i o l ' J s . S u f f . i c e ii;

to say that Soottiahnationalis!!) ha:so",en !!)1tobmora concerned with economio

. prosperity than nationalist movemEints in other countries. Utllike Wales there

iA no grea.t culture.1 mov~ment a.ttaching to the preaer-o!ation, of a. l~n~ae. Thc'

ma i n c au s e o f d i s o o nt e nt i s t h a c o' Unt r , y' s ' Uns ~t i s f ao t or y eoo nomi c pe r f or man c o

o v er t h e l a s t h a l f o e n t u r y , es peo i a l l y ~he p~r s i $t ent une mpl oyment a nd n et

e mi g r a t i o n a b o v e a l l i n t h ~ Weat o f S oo t l a nd . P oo r s o c i a l a nd en vi r on men t al

co n d i t i o n e , e s p e o i a l l y i n a n d a r o u n d t h e o i t y ot Gl as go w, ~company t h~9. out d~t .e co n o mi c f r a me ~o r ~ a n d a r e a s mu o h a s o u r ce o f d i s co nt ent . Des pi t e r e~i on al

policy e .nc l the efforts of planners, t~as~ pro"b'1eme h;;;.ve not belilD overcome, nor

d o t h~y l o o k a s i f t h~y wi l l be ~n t he f o r es ee~b l o f u t u r ~. TheSNP h a v e t b e r e f c

b a . s e d t h e i r c a mp a i gn o n t h e a s s e r t i o n t h a t S o ot l a n d wo u l d b e e o o no mi o ~l l y b ~1 t e z

of f i n d ep e nd e nt ; a n d i t i s f o r t h i s r e a s o n . t h a t b u dge t a r y e s t i ma t e s h a v e al w~r s

featu.red "SOlarl!f9 in 'the controversy. Yet in spite of Scotland's' undoubt$cUy

poor eoonomic p erformanoe the SNP case "\1nt:i.l recel1tly lack~d credibility . lIio$t

p e op l e r e ga r d e d b o t h t h e i r s t a t i s t i c s a n d a r gu me n t s a s S U$ p ec t , an d t heyc on : eT hu e d to' Oijlievtr'tlra:t~Scotla.nd derived mor~ economic advani.1.ge than

.. '.d i s a d v a nt ~e f r o m t h e Un i p n . T h e i ~por t ance o f Her i n S ea o i l i s t h at i t r ~i 5es

just ihiS issue in a mOJ: 'EI aou'te form tha~ at any othc.l' timo since the .Act of

U n i o n wa s p a $s e d .

1.


2/18

~e C~e .Afl~i~st Nat:l,onl.\li~~ , . ',.

The tradi tiopal e~ohomio QaseI against nationa.lism ha.,sa.l~8/,'beent~a. t a

polit~oal1y indepe!ld.ent Scotland wo~ld be. una.blet~ gain. "Hlfi?~~n.te~Onol'/)iQ

sovere1intr' to solve her problems suocessfully. Thii,J iISPa.rtl~';&qlfe.tion of

th~ scale of the Soottish eoonomy, cni; more of the exteni!to ..rhioh it haa ~eQo

i n t e g r a t e d wi t b t h a t o f t h e r e s ~ o f t h e U K oVe r t h e 1~$ t 270 y e a r s .

Sc ot ) . and nee d~, a f as t ~r : r a t e o f e co n o mi o g r owt h t ha . n ei t he r ' $he o r t h ~ m: , bas

had 'in r~oent years4!' if she i:s to ~bsorb.b.et" excess bbou%" t"eaouro'Ga.nd. :t here b,

c ut dOWI 1 oo t h unempl oyment and mi gr at i on. ' 1 ' h e r e a r e t hr ee pr i hoi pal w~s , i n

which a.nindependont Oov9rnmen.t might seek ~o bring this a~out; First 11 oo~l

s e e k t o f o s t e r a nd . p r o t ec t Soo t t i s h i ndus t r y by mean: ; o f t a r i f f s a.nd i mpQM

o o nt r o l s . Bu t s u o H mea s ur es wo~l d r i sk r et ~l i at i on f r om Engl and whi cn. gi ven

S c ot l a n d' s c l o s e t r a d e t i e s wi ~h E ngl a n d, c o ul d o a us e d ama ge f a r i n e x o es s o f any beMfit that m~ 'be b.oped for. Suoh polioies wou.;J.dalao be inoompatiblei~:

co nt i nue d me mb e ~s h i p o f ~C and wi t hd r awa l , es pec i a l l y wi t h Engl and, Wa A~a an d

Ireland remai,ning members, ,would olearly have very dama.gingconsequenoes.

S ec o nd l Y , f i s c a l p ol i c i e s mi g ht b e u s e d t o g i v e e s peo i a l l y l a r ge pen ef i t s t o nC~

industria.! investment or ta.1c reliof' and suosicU.es to existing industry. This

might involve the imposition of' a. tax frontier < : I t the bord.er, as still exists,

bet ween mos t E rnC co u n t r i $ s , b u t t h ~n e e d no t make i t ' i mpr act i ca l . S u o h p o l i c i e

ha.ve been u~ed with oor..aiderable suooe$$J l?Y iJ14i1 Iri:;h Repu.blio sino~ tho mid-

1950s . The ma i n d i s advant age i s t ha t Engl and wou l d P f obab l y f eel o b l i ~d t o ' ; ;;. t

m3. t ob t h e SQot t : i " s h mea . s ur es wi t h an equ i va l en t i r i gr an t s o r t a x a l l owanoes f o rindustry in En;;1ish and, trlelsh Development Area.s. Up-to now Engh.ndb;!.e always

b e e n i na p o s i t i o n f i n a n o ~a l l y wh e r e , i f s b ~ wi s he d, s h$ cou l d h~" e mor e thaJ'1

mat c he d a . ny meas ur es whi oh a Sc ot t i s h Go v e r n me n t wo u l d b e a b l e t o ' a. f f or d.

" I t i s her e t hat t h e bud g$t ar yp os i t l on o f a Soot t i $h Gov~~nment beoom$s

importan.t. Va.rio~$ studies. no1;ab~yt,he Treasury's ScotHshBu.dget of 1967/68

and the Jtork ot' the Kilbrandon Comnlission have 'shown that publi~ '.expenditUl"epeX" h . ead i n Sc: ot l aJ : 1d i s g e n e: r . a Uy a b o v e t h e UK a v e r a g e , wh e r e a s pu, bHc' r eve nue

i n S09t 1a. nd i s $l ~~ht l Y l owe~, l a r g e l y b e c a u se S c o t t i sh , i n c o me $ a ~e be l ow t he

UKavera.ge. The result is that budgeta.ry e$Hmates tor Sootlimd show a., "

proportionately lar!er'borrowihg, req-ulreme11tthah for the lIt( as a whole. This ,.I

})o~i 'I:ion ia c::oT1,fi:rmQci~n thGl moat rocCln+. og'hmr.d;o of' ScotlnndhJ bud~tQ,:t'y,

2.


3/18

pod tion o~X'X'ied 9U~by the JiJoonornioes

T h i $ s ho ws a 5c o t t i ~h Qu~r en t ' ~oc vt i nt

reqube1l!ent of t.447m. o'l1'erall.

and S t a t i s t i os U~i t o ~ S E PP f o rI

s u r p l u s o f L 2 4 m. bu t a ' ne t bo r r owi ng\

~he1'e are" of course, 'various ways in which this could. De tackled.. 'In thef i r $ t p l a ce i t i s n o t n eo e s s a r y t o ba l anc e t h e bu dge t . T o f i n a nc e l o a ns a n d

v a r i o u s i t e ms o f c~p i t a l i n v e s t me n t , p . a ~t i c~l a r l y t h o se wh i ch y i e l d a r e t u r n

'by 'borrowing "is qv.i'tE:!N!aso,na~le;, other items ~o-o .ma.y be cove-red by oorrowing

from 'time to time pa;t"tioularly if an expansionaJ'Y' budget is necessary to gener2

a, higher level of economic aoii:i,vity in the, eoonomy. ror these various rea.sons

the Uni tad Kingdom budftet norma.llY invol vas; a. net borrowing req1~irement and

whiht this will norml3,Uy be fairly small this is not a.lw~$ so; in the preseni

y e a r , f o r e x a mp l e , t h e ' b o r r o wi n g ! ' c . q u i r e me : n t r e a . c h e d ' t n e r e o o r d f i g u r e o f 4 " OC

If allowanoe is made for the OI/Lpi.tai items tha.t it would 110rmally 'be reasonable

to finanoe 'by loan, this would stil'1'J,efJ.ve a Soottish dai'ici to f ov~r .20Om.,

a very similar figure in 1971/72 to w h a t it l'Ia.s in 1961/68. Wh.ilstsu,-h a.figuc o u l d o e cover ed i f i t a r os e. on l y \ ! : x : o o p t i o n a l l y , i t c 0 1 . 1 . l d n o t b e t ol er at ed a s a ... ,re.g'111ar fea.ture ~f tha 'b-ud..lt$t. it:\


4/18

,~juert!f!4!!nt __ecreC';tiv$~ in h~lIJt:1of cQettDt this would. 'be by far t b . t 1;)~st ws.y o~"solving $otla.ncl's eoonomio problems of the last two deoades . ,.tt,~a.s:, 'be$tI. ,B:r$'U-ed

thwt t1'\e I 'regional problem r only a.rises because exchange :rate ~~j'U;~tment, tne

no t - ma l wa: : }" ofdaE \ l i ng wHh d i s . equi l i br i a bet ween c ou ni %" i es , i s no t po s s i bl e be t wee n

r egi o ns .

H o - we - v e : t ' , t h e eo on omi oc , ; , s ea gai ns t Soo t t i s h na t i ona l i s m h ; a . s a l ways . eL t bo t t om c o me

~own t o t he . pr o~s i t i on t h a t a n i ndependent S c o t l ~d wo u l ~ not f i nd. i t p o s $ i b l e t o

Qa: t ' r y ~u t a n ef t e9~i ye d eva l uat i on . T o b e e f f e c t i v e , d e v a l u a t i o n i n v ol v e ~ a

c o un t r y i n ma k i n g a o ut i n i t s r eal l i vi n~ s t ap da r ds a t l eas t u nt i l s u c h t i me a s, . ,p r o d uc t i o n i s ~b l e t o c a t c h u p . Bu t t h e S c o t t i s A l a b o ur ma r k e t i s s o c l o s e l y l i n ke

t>tith tha.t of t he r ~s t of the UX t h~t it is ~8.1'!d'to s e e h o w r e a l e a r n i n p could be

a d j U$ t e d d o ~wa r d s wi t h o u t g i v ; n g r i s e t o t h e mo s t s e r ~o u a di r f i oul t i es . Fo r , s uo h

a s mal l ooun t r y hea~i l y dependeh t , o n i n t e r na t i Oha l t r ade , deva l ua t i on woul d, o foo ur s e , bav e ~er i ous ~n f l a t i ona ~yco n se q u e n o e s t s i nce a l l i m~o ~t s wou l d r i s ~ 1n

pr i ce. Tr _ de Uni ons a. r e t o a l a r g a 0l Ct ent o n a Gr e at Bd t a i n b as i s a nd i t i s ha. ~d

to see thel!) acoepting a de1ib~rate attempt ,to out rea.l" wages in Scotla.nd oompa.red

with Engla.nd.whatever the reason f.or. it may be Furthermore, even with indl!!pe"ndenc

freedom of la.bo\.lr movernen't between Englan


5/18


6/18

I

"in ).980 whio'h could,gre,liI.ii;Y exo!!led the present GoveX'nment reven\1.9 in$cotlMd from

a l l s o u r c ~s a n d cou l d eV$n be oo mpa r p- bl ~ i n s i z e t o t he whol e of ' t he SCQt t i s h

h~t i ona~ i noome i n 1 9 7 0 .

As well a,l$ the tJr:tiu to the Government Revenue, North Sea. oil will of oourSQrna.ke a:

ma.ssive oontribution to the bflla.noe of p~ments; inde,ed these two a.speots a1 :'a

~lo$~ly link~d. " At t>';e~en~ wo;r).d prioes the expe~ted. output of' 100m. tons of oil

i n 1 9 8 0 ' i s wor t h a p p r OXi ma t el Y " " " " . ; a s s u mi n g p r i p e r i a e s f r o m t h e pr es en t 3 3

a . tori t o 51 a . tonaiS i n, t he a o v e r ~me n t r e v e n u e oa. l oul a. t i ons t he va . i t . \ eooul d . be as

higl\9 , 8 _ Fa.rt o f this wilJ. t of course, be rGpatrh.ted by the inteJrnation.al, .

companies in the form of pI:'ofitsdistribute-d to their shal~ehoH,ers or reinvested in

projects in other. areas .. The 'b~la.noe of p~Yf!l~nts ga.in to Scotl9.n:i would therefore

d.epenr1 cri tioally on tho;) amount, of Government revenue seoured from th.e profits.,I n de e d . , $ i p oe non ' " o f t h, e maj or o o mp a n i e s o p e r a t i n f ! ; i n t he Nor t h Sea. a r e

p: t " ed omi n a. n t l y Soot t i sh o~edt t he Qover xun ent r e v en u e wo u l d ' b e t h e maj or el emen tt

-apart frol1\ tbe expenditure of the compZ!.n~elSon,good$ anti servioes produoed, in

S o o t l a n d, wh i o h wo u l d a. ocr ue f r o m t h e v a l u e o f o i l p r o du c ed a s a ' b al a no e o f p ay me nt

gain. Thus assuming mes,aures whioh would yield Oovernme~lt :revenue of, ihescale

r ef er r ed ' t o irt ~r e v ~o u s p a ~a ~r a p h s , p l u s $ o me a d d i t i o n a l r e v e n ue t o s h a r e h o l d e r $ i ~

Sc:otlr.tnd. and. to suppliers 'of equiplnQt1t, then the Mt 'bala.nce of paymet1'l;s gain mi(~ht -

b e $ ~p e o t e d t o l i e ve r y ' app r ox1m~t e l y i n t he r an~a o f 2 tOOOm. t o ) , 50Qm. a . ye ar ,

d ~p e nd i n g o n p r i c e s a n d t h e s h a r a of t he Gove r nment 't~el.

I t i s n o t p os s i b l e t o o o mn a r ~ t h es e f i gu r e s wi t h a n a c c ur a t e e s t i ma t e o f S c ot l a n dt s

p r e s e n t b a l a nc e o f p a yme n t s po s i t i on. rr~~ t h e s t a t e o f ~oot l apd t s ~co nomy onewould expe~l't a bala.noe of pa;ymp.n'ts de:f'ici"t on ourre,nt aCOou.nt and a., rough oOlnpa.risc

of. income a.nd. expendHtU"e estimat~"13 for GD? sUg'gest that this oould be of th~ or~lel

o f 3oOm. a y e ar i n 1970/ 71 . Pl a i n l y t h i s i s a mo s t unr e l i abl e f i gur e and ' i t wi l lviu'Y from' yea-r to year, but it i$ pro'oably suffioient to JIIuf:I'g'ost the orders of

magnitud~. \~but i,S q~1te o~~~ ~s th;p.t the ba.lance of pa.ymet1ts gain from North Se!

oil wou.1d.,eas:Uy, swamp the e::x:i.~t~n~ defio). t 'rlha.tever its size. and tram;forn Sootlar

;.rd:o a. country with a substantia). a:Qdchronio sttl'plus.

A1.l i:ne a.bove firrure's are, .of oour$e, ba.l$ed On the E\stimated output of 100m. tons

of oil, in ~980. This was the DTIta,.revised estima.te in tile early Summer of 1973..

.,

6 .


7/18


8/18

l ~ mus t be conol ~ded t ~er Q! o~e t ha t l ~r gc r ev e~, ~esan d b ~l ~no e Q~ p~y ms nt ~gai nA

would. ~,nr;tea,1 6Loorue 1;(;1PJ.'So()ttish Gover.nmantin tM event of indf.\pendencs provid$r.I

that li!rtap~J were, 'ba.ken 91 the:' 'by oarriBC; int~rel9~ Qr 'by ts.x61.tion to $eour8 th$

Oovernmen1 ita.ke ' tTndQuMetlly this wou.ld ba.nish any a.nxietios thl ! ll OO'V'91: 'ntnciU' l . t migl1t

have .had. a.'ocmt its, 'bud.8etS.ry posit.ton or its 'ba.ll.1nce of [email protected] . The oountry would

tend 'to' be 'inohron.io .I!Iurplu$ t() a. quite emba.Z'ra.essing deg1.~ee a.nc3.its ourrenoy wOl,\ld .

beoom0 the ha.rdut 17:13W.t'C)p~, with 'the exception perha.ps of the ~ot'w~gia,n kroner.

Juat a.s d\!poaed nICtnaroha ..a.nd ',I\friot!l.n lea.ders hGLve in the po. ,a t used the SW:L.ss1'$110" to ; . ; ,

01 ,S a. h I;1 V IiH 1 . o1.'se(mr1 ty, so nowW)11.1A tho Soottil5h pound. be seen o.sagood Mdge e.ga.inr. , ,

inflation a.rld d.eval",a:ti()n and the Scoit;,i~~h baDks could expeot : \ '.0 find themselves.

irt~nda.ted wi -I;ha, speculative inflow .ot' forei~.n func~,s.


9/18

Th~ si t\latlon dAflcrj.bed in -the first pa.l't of this p~per is ;'nr,!!!.ed al1 a.E!to\U1dine;

reveraa1 of th~ pro'blems which are us'\.ta.l1y cbnaid$reci .in a Scottir;h ot' BX"iti$h

context. Eut it could nonetheless give r iG~ tv sOme 9.erlous d.it tio111 tiOG and. wou:...

require careful handling if Sootland was reallyt~ deX'ivein2'l.xinn.1JIIbonefit trom i~;

It i s, of . cou rse, "p2rfectly possible that. these ditfid\il tis:s' would nO 1; be OVerComE

anri iib.~.tan ind.epevdent ScoUan:i d.esj:,i te ;,t"s wea.lth WQuld oontinueto have an....

unsa.t:i.af'aotory eoonomic perfOrma1.1ce. It tak.e$ mors 'th;:i.~mon~y'.~oelit!Jina.ie the

trad.itional probll:1ms of the Soottj,~lh eco nom , :y a.nd nationta.list lrIoveme?')ts, dependent. '

a . ~t hey ar e o n s t r on ~ emot i ona l p r es s u~~s f h~ve no t a l w~~s Q~e n not abl e t o r t he i r

economic realism. In '~h~s respect t he , " ex:al11ple of I;rel,~nd'spoor eoonomic pe:rf01"m6

'between 1922 ~1"I'i1956 aome:;; im!'tled.ia.ta1.y to mind a.nd. the BNP is alrea.dyshowing' signs

of. Il\~king promises which cO'tld. be an emba.rrassment to its tJCQ1Jornio tTlanag~ment.

Nevertheless it is obvious th


10/18

compet e; manuf aci ~r ed expo~t s woul d be pr i oed c~t of f or ei gn m~r kot s and i m~o~t $

wo~ld b.e(:(',tl'I~ highlY' ~ompet~tivEt at home; tourists wou.~dfind ,that thetat,e ofe.xohang

ma.d~SOQt1and a very expena~ve oou.nt:t',y' for holidays; and . Soott;;,sh :t'a:i'merJ would find

t h a t t h e EEqt g Common Agr i c ~l t ur al Po l i c y ga~e ~hem ~ much l es s s at i s f ao t o ' I ' 3l eve l

,:of s uppor t t han exp s ~t ed . ~bu~ t h~r e woul d b e g r a v e r i s k t h a t t h e e o o n omy wo u l d b e

dr i ven mor e and mor e t o d e p e n d o n t h e o i l i n du $t r y ~nd~t her ao t ~v1 t i e$ ~l di end t ~

wi t h~r . Bu t wh i l e o i l wou l d g i ve SCQt l ~~~ ~ gOod i ncome, i t c o u l d n e v e r b e a n ad e qu ~

so,~rce of employmen:t: with the rest of the o(m0m"v in decline. Sootland, therefore.,

' f oould fa.eEl the da.nger o~prosperit;r ooupled with oonti:ou.ing or even worsening

unempl oyment an~ e mi gr ~t i on .

To oounteraot this sitt1a.tion it would 'be essential to tX'JI'to ~eep the F;urplusee on

t he ba l anc e o f p ~y r n e n t s d o wn ' a n d t h e r e b y ~e d u oe t h e ~p wa r d p r e s s u r e o n t h 0 e x o h a ng e

r a t ~~ Th i s oou l d i nvo l ve ex t e~$ i vel en d i n r , abr oad , whe t he ~t 9 En~l Qnd, t he mmc o ru n d e r - d e v e l o p e d c o u nt r i e a . S u c h l end i ng cou l d we l l be i n Sc ot l ~nd ' s i n t er es t r a t her

than face the prospeot of an intolera'blyhigh 9 'JCc!1a.nge r8.te; it migoht l.lso do IhUOh

t o h e l p c e me n t r e l a t i o n e wi t h o t h e r E ; E Cco unt r i es a . n t \ ooup l ed wi t h t he s upp l i es o f

oil tor export, would. make Scotla.n:l a.highly desirable memherof E~C with a. strong

pa r ga i n i ng pos i t i on .

The f i r s t pr i o r i t Y t howev e r , wo~l d be t o s pend i he s ur p l us es a s f a r a s pos n i b l e i n

deve l op i ng Sc o t i and ' s domest . i o ec onomy and p r ov i d i ng a ~od . er n i n f r a s t r u o t ~r e f T h e

following' paragra.ph$ su.s~st how this might be done.

"

a. ~~~uf act ur i n~~~~u~~r ~

Out pu t pev - head i n moot s eot o~s of S co t t i sh i n d u s t r y i $ w~l l bel ow Eur op9~

levels. This i3 la.rl",'aly baoa.uE\le the Br'ltiah economy has invested m\~ch leSI

t h a n o t h e r E u r o p e a n o o u n t r i e s o v a r t he l as t 25 ye~r s . A s u b s t ~~t i a l

i n o 1 . " e a s e i f i ma . nu f a o t u r t nl { , " i nv e s t ! ' l l Mt i l i t he r ef or e n e o e s s a r y i 1 t h i s i s t o

b~ p u t r i g h t . Onl y t hen wi l l $6 ot t . i s h i ndust r y b ~ ab l e t o c ompet e

effeotively with other members of EEC a;t:..~thingoth0r than low 61.xQ.b~gerates

. .~ . .- .. , """'-- . *"-,' , ' . ' 04 . .

P a r t o f t h e r e a s o n f o r t b e l ow i nv es t mon t i n Soo t l a nd i n t n e P ( ~t h a ~ b een

the persistenoe of 'stop-go' in the t n < : eoonomy. Every time inve$tment has

b~gun t ~ r i ~e ~a t i $ f ao t o r i l y , a s i t wa s d o i n g i n 1973 , t h e e me r c e n c . o f a

ba l ance o f p a y me n t s d e f i o i t h Qa f o r c a d t h Q Go v e r n me n t t o t . a k e s t r on g

10.


11/18

den.tionar;y mee:ur. ~tbth. r.sult '1\.t the i.nve.tmentboomhe. I"Iter

out again. Scotla.nd made good ptC>B'rass in 1913. but iclea.l1y fl'om her POiD1~

of vi ew t he 5 per oent ~owt h ~at e ne~d~~ t o go on f o r a n o t n e r coupl e o fY'~ars. As an independentsta.te, Sootla.nd '8 'balanoe of paymentS pOI:!lition

would e!la'bla he~tO'bre$1


12/18

. mea s u r e i t wou l d no t c ome wi t h i n t he c on t r o l o f t be E~C B

co i l i nBS on r eg , i on~l a i d$ . T ne co s t ~f ab ol i s ~1~g Cor por at i on, .,~

T a x wou l d be 120m.

11. Weet Central Scotland would be sohedul~d a.s Sotla.nd.ts DtW'elopmsJ

Area. and the d.ef'ini hon oould be extended to cer+.ain' smaller ..

ar eas i n t he Hi gh l ands an~ I s l ands i f neoes $ a~. Wi t h i h t h i .

~r e a t h e r e wo u l d b e a 2 0 ? e r o e nt Re gi o n al Ve v e l o p me n ~ Gr a n t..?aid as a.t present~, in addition to (j,) above . .

iii. There would be a SoottilllhDevelopment .4ut-hori'ty covering thMtb,o;J; ,

ot S ~ot l an d b~t w~t h i n$ t r uc t i ons t o gi ve p~r t i o~l ar p r i or i t y t o

Wes t Cent r a l Sqot l and. I tp b u d ~e t wo u l d a . t l e a . s t b e On a . s oa l e '

e~~~va l ent t o t haf unds wh i o h p ~e v i o u s l y we n t i n t o R EP a n d SI De.It t- lOUld..be GlI!powo!-)I'I,"edto ~iV'O discret.ion~ gr~ts and loans and',woula on r$venues, pu'blicexpendit'U.I'O On oonstruotion projects '

oould be greatly ate'ppe~ ~p and a ma.j~ro,pera:tion should be mounted to oart

on .the reouild.ing Q f Glasgo~1 and dq .much more than has been d.one in the pa.1

f o r e nv i r o nme nt a l r e o ov e r y . T hi s ~o u l d p r o bAb l y r e qu i r e a s p e c i a l

Environmental Recovery Agenoy to assist the local a;uthorities :rather in thE

~~ t ~a t SSH~ope r at es .

Hous i ng poHcy hQ! . sbee n ' bede v i l l ed i n ' t h e p a s t by t he s ub$i d j . s a . t i on Qf

o er t a i n t y pe s o f h ou s i n g. ' T hi S h as l e d t o t b @ oo l os s a. l pu bl i c hc~s i ng

"eotor in Soothnd. with the- empha.::;is on quantity ra.th~r than quality . n.s~ems des;irab).e to subsidise hou$~.ng'for many yc,ars to come both toiIQP~P''\IJE.. ' ' .', ,,"\

.~he living oonditions of the Soo-tti~h people and to keep up the dema.nd.,:~

the construotion industry. Instead of BubsidiSJing rents at one e~X"ell1.;~. , . ' , il , !' , ;' : .! . ;"

and at the other giving tax relief on mortgages which ;is gre~ter 1;b~~k:(:->

the mo;rt,gage. 11; would seem ..m\!.ohmore appropriate to givo ~h.eaS~ ~~r~~ i~ind.iv;,duoa.1:s l'elga.rdlea,s of the type of hQuse they ooou~y or, wh~th.~l;\l~~!~:')'~

'tena:tlts or owners. Thi$ Qould probably be done undett' thE!_neW,':;t~?~t~!t ,.

system and it wou,ld have the effect of prov:i.din9; a. hou~in~ su1i.i~b:i- :.. " '., ' . : ;.... ' .... - '.. " : , ; ' . ~

ne,gative tax t? th~se with l0?t incomes, a~d a h,?us~ng,.t~&:ll~~~n;'~''toot&~:

. In this ~,demand :'fdr 'hou$~~g atll awhoieoo~ld.~~. '~'?8'1,\r.~";~;c!'~~1._, .....'

avoiding the distortion 'betweendiff'e:t'ep'li1;y'p.e;~ . < i , f ' ..4ouG .itJ.gwntoJ,i hat;!been... ' . ,', . - -~'" . - , :"'~""'" ~:,: , -:.~,.~ - - ~,'. :;' . . :,..' ';

such a . feature of the pas"t. It wo\~1d b e likely tn..t'lo,Q8.1a.uthQX':Lt;y .1').ousi

would ~hen gradually deoline in, importanoo ~d.ho:o,lSing~s$o(:iations would

assume greatsI' prominenoe. ~s oo,-np~tition between different forms of

ho~sinP.'Iinoreased, $0.th.e quaiit;y of housiTig would improve.


14/18

c. !f!~ioe" ;ndll~t.tt /In the past s9tW1CQ indtfstry ha.s received muohlen a.s~,istance f~om regio]

,polioy thr.::t1m


15/18

:e.

a n d . t . 1J 50 0m~ Ho we v er o n e o a nn o t l o o k a t t h e S. co t t i $h pos i t i on i n

isola.tion . If., be,?a.u&e"of,8.ct:i..oni~ tbe Middb~st, ~here is a. ser-iou'~ , - ." : " J

energy shorttl.ie in Bi~rope, S~otland would und.O'l.1cte.dlY s\J.ffer fSevel'ely 1'1"1

'th.Q'result i~g 81Utnp. it would thel'~f()re 'be i!1 Scotland. ts intl.'rests to

i nci r ea. $eher 01~ p r oduot i on we l l b e y o nd wh a t woul d ot her wi s e s eem de s i r alIf however there is ~o seri9U$ $horta.,~ .in phys10ai terms, merely a. oris j

of prioe, then a.otion by Scotla1':l~t;is not goinEto l!I.ffeot the internil,tione

prioe of oil, nor win it ma.:tter to the other oountrie!3 wha.t the 90tlrCe c

their 0-11is.

Inflation, ' !noome G Po ~il2rY: an~!!ra.ini~

The atrene;th of' thaSQ~t.tish e:X:oha.u.~era.t~ B o n d the low interest ra.tes whi(

would. result from the bud~tary a.~d 1)3.1a.noeof paymenb position would do

muoh to reduoe inflationary p:!'essure. A major p~~t of -the British' infla.t. '."' f'

haereaul ted .from thedownwa.rd. dr:i.:ft of. the currency and the oonsequent 1':

iI')'imp'ort pri.oes,~ . ~~ .aesenoe of th1s, relaxa.tion5 ill taxation < U :ld sued/.

t o r h o u s i n g wo u J a r i o d ou bt h el p t o r e du oe t h e p r e s s u r e o f wa ge i n c r e a s es .

NevertheleslS as. Scotland. tnovednearer full employment serio~:s. shortages oj

oertain typesot" ski'lled 'l.a.br,J\~ would occur. a~dthis wouli! te


16/18

.Aco es s t o : H: EC$hou l d a . l s o he l p t o pr ov i dG! a. ma. j or Bt i mu. l u~ t oS c - ot t i s h i nd us t r i al

. i n~es t men t . T he E ~C' i e n o t o n l y , a b i g ge r ma r k e t t h a n t h e UK b u t i t s eoonomy h~$> . . . "

'been' much more buoy-a.ut 'th'a.n that of Britfl.in. Th,ere is no doubt: that th.e exolus.ion

o f t h e U~i t ~d K i n dom ha d a d a ma g ! n g ' e f e c t o n : i n v e s t me n t a n d t ha. t f or ei gn f i r ms i n

pa ~t i ou l ar pr ef er r ed dev ~l Qpm~nt wi t ni n EEO. ~o g a i n t h e r ul l adva nt age ot t hi s..s t i mu l us f r om member s h i p i t wi l l , o c o u r s e , b e n e oe s s a . r . y t o have as t abl e domes t i c

eoonomy. Hi~h ra.tos of. mfl~ti61? and a dec1ining.o:urrenoy such as the UK has had

r eoent l ywou l d do muoh t o d i s oour age f o r e i l ~ oompan i es f r om co ~l ng t o Soot l and . ,

Norih Sea. oU could. he.va fa.r-reaohiJ+g ,oonl1equEmces for Sootii:i!ih membership of mcbeca us e o f t he t r emendo us l y i no r ea s ed pol i t i oa l power i t wo u l d c o n f e ~. Wi t h o u t o i l

o~h":r-niembers ,might }Jay little enoUf;h raprd to Sootla.nd; b.~rvoting power would nQ

be l ar ~e and i t . mi ght i ndeed be ~r ~ed t h~t $h~ o o u l d e x e r t mO~$ l $ve~ageon t ~e

Communit;y a.s part of the United ~ingciom" As the, ma.jor produoer of oil in Western, .

~ur o ~Q, however , S oo t l a n d wo u l d b $ i n ~ key. p o s i t i o n ~n d o t h e r o o u n t r i e s wo u l d b e

~xtrE1me1y :foolish1f they did not seek to do all they could to acoommodate Sootti$h

interests. For Scotl~nd the net ooat of Common!gr1cultural Policy, which fea.tures

$0 l ar ge i n B~i t i s h di s c us s i on$ wo u l d b e a t moat nome4Qm. a yea r , a s ma l l s um

o o mpa r e d wi t h t h e b a l a n c e o f p a y men t s g a i n f r o m No r t h S ea oil. T he mor e oommon

p ol i o i e s c o me t o b e d e c i d e d i n ' B r u s s e l s i n t h e y e a r a a h e. a d , t h e mo r e S o o t l Md wo u l d

b e n e f i t f r o m h a v i n g he r own Commi $$ i oner i n t h~ m~o a s o f r i g ht a n d Ge r o wn v o i o e

i n t h e Oo u no i l o f Mi n i s t e r s i n s t e a d o f r e l y i n g o n t h e i n d i r e c t , a n d s o f a r ' h a r d l y

s a t i s f . a o t o r y . f o r m o f v i c a r i o u s r ep r e s en t a t i o n t h r o ugh UK depa r t men t s .

go~~l~~~~1J' ...

T n i s pa~er has s hown t ha1 t he adv en t o f Nor t h Sea o i l has oomp~et e l y ov er t ur ~ed t h Q..t r adi t i onal eco nomi o ~r gument $ ~s ed aga~$t S~ot t i s h na t i on al i s m. An i ndepen~ent

S c o t l a n d c 0 ul d n ow e x pe o t t o h a v e ma s ~i v ~ s u r p l u s e s b o t h o n i t s b ~d g$ t n n d o n 'its

b.alanee ot.p~entlS and with tAG ! proper husband.ine; of rO$ourccs this situ-ation coul .

l a a t f o r ave~ l on5 t i me i n t o t he . f u t u r e .

Weal t h d o e s n o t au t omat i oa . l i y' mea n : f ul l empl oyment a n d t h e ' e n d o f n e t e mi g r a t i o n .

Bu t p r o v i d e d $ e ns i b l e p o l i o i e s a r e p u r s u e d, i t 1 9 p o s 6i b l ~ t o s e e h o w t h i s s i t u a t i o l

oould be used to ro-equip Soottish ind.ustry Md renew outworn 80cial oapita.l thereb;

pr ov i d i ng t he expa ns i on n~oe s ea r y t o a. bs or b S 09 t l and t s e xce s s l abou r an~ t he i nQ~e~:

ill p:r.odutrl; klti t;y required t~ r~i~e :Lncomj:!s. 'rhus, for the first time s inoa the Aet

o f Un i o n was pa s s ed, it oan now b e : c r ad i b l y a r ~e d ~t ha t Soo t . l and ' s e Q~no mi o

ad vant age l i e s i n i t . e r e p e a l . Whe n t h i s s i t u~t i on comma t~ be fully ap p r e c i ~t e d i n..

16.


17/18

the yea:N~ ahead, it ;ia likely to have .; J . major .impact on ~eottif:lh politic!5, aih

~

e

:I:so n soo:;j.al emrJ.p01i~i~i!l.l groui1ds 8.101149 th~t the o~se 1';1' ret~nti.on of the !,Inion .will in fi),tur.e ha,ve to 'be 'ba~ed..

I

l'1a;t!PrtaliGi: po) ic,y an o~1.J.ined j,n this pare:!:'can, of Gourse,I, be :regarded as

extrem,eJ,y $slf:!,F;h. Undoubted.ly it is, buti t oarl be a:rP,'Ufi1din reply tha.t so long

as Soottish CH:Fp3r haa,d is only 70 per oent of the. Europe?n a.vera.ge, the

unemploymen: a~~. amig'I'a.tion rates amon(;~the hi.',:h~st ttbct. the co\mtry reg


18/18

d i s cus s i ons o r p l ans f or t ha d . evel opl ! 1~nt of e n o X ' g y ( ' I . n d t h e r at . be r na . t i ona . l ~s t i o

atti tude so fa.r follo!

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Mc Crone Report Scottish Office