Labour party lied over true worth of North Sea Oil admits former Chancellor

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Sunday, 19 May 2013 21:54

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By Martin Kelly

Former Labour Chancellor of the Exchequer Denis Healey has sensationally admitted that his party hid the true worth of Scotland’s oil in the seventies in order to persuade Scots against voting for home rule.

Speaking to Holyrood magazine, the former Cabinet Minister said that the current UK government is “worried stiff” that Scots might vote Yes in the 2014 referendum which will mean Westminster losing billions in tax receipts from North Sea oil.

The explosive admission by the former senior Cabinet Minister came in an interview with the editor of Holyrood magazine Mandy Rhodes.

Speaking candidly, the senior Labour party figure who was Chancellor from 1974 to 1979 said that the rest of the UK “would suffer enormously” if Scotland voted for independence but that Scotland “could survive perfectly well”.

However, when asked about Labour’s role in the lead-up to the 1979 referendum for a Scottish Assembly, he admitted that his party had deliberately hid Scotland’s oil wealth in order to thwart the SNP who were then gaining in power.

This, he said was also a prime motivation for the current UK coalition government:

“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.”

In his interview, Lord Healey also revealed that he relied on Scottish Labour MPs to inform his views on what he termed the ‘Scottish Question’ and expressed regret that successive UK government’s had not set up a Norwegian style oil fund.

In another extraordinary admission he said of Westminster politicians: “I think they are concerned about Scotland taking the oil, I think they are worried stiff about it.”

He added: “I think we would suffer enormously if the income from Scottish oil stopped but if the Scots want it [independence] they should have it and we would just need to adjust but I would think Scotland could survive perfectly well, economically, if it was independent.”

Asked by Ms Rhodes what he thought about claims that Scotland is subsidised, the former Labour Chancellor described them as “myths” perpetrated he said by opponents of independence. He also rubbished Unionist arguments that an independent Scotland and the remainder of the UK would not both benefit from a Sterling zone.

The Labour peer’s admission that his party hid the true worth of oil from Scots confirms the conclusions of a secret report which was marked secret for thirty years.

In 1974 Professor Gavin McCrone wrote a report which stated that Scotland would have had an “embarrassingly large tax surplus as a result of the North Sea oil boom”. UK governments kept this information under wraps until it was eventually released in 2005.

The revelation that the Labour party deliberately set out to deceive Scots and that Margaret Thatcher then used the oil revenue to fund her own policies has been seized on by the SNP who have described the admission as a “hammer blow to the No campaign”.

Commenting, Finance Secretary John Swinney said:

“This admission from Lord Healey that the UK Treasury played down the value and extent of Scotland’s resources – on the eve of yet more Treasury scaremongering against independence – is a hammer blow to the No campaign.

“As Lord Healey now says, ‘Scotland could survive perfectly well economically if it was independent’. And he admits that an oil fund should have been established by the UK – confirming that Westminster has wasted Scotland’s resources, and the Scottish Parliament now needs to be in charge.

“If a former Chancellor is admitting that the Treasury hid the reality before about the value and longevity of Scotland’s oil and gas resources, we cannot believe a word they say now. The Treasury’s bogus figures weren’t worth the paper they were written on when Westminster was last worried about an independent Scotland gaining access to our own oil revenues – and nothing has changed this time round.

“In terms of revenue, more than half of the North Sea oil’s value is still to be extracted – which is why a Yes vote next September is so important. What’s more, oil makes up around double the proportion of Norway’s total tax revenues than it does Scotland’s – yet no one would describe the Norwegians as being too reliant on oil, or question their ability to be a successful independent country.

“We are a resource-rich country, and with the powers of independence Scotland could do even more to boost our economy and get more people into jobs. Only a Yes vote in next September’s referendum will give us the economic and fiscal powers we need to build the fairer, more prosperous nation that we all want to live in.”