North Sea oil 'could have made an independent Scotland as rich as Switzerland'

It was a document that could have changed the course of Scottish history. Nineteen pages long, written by Scottish economist Gavin McCrone, presented to the Cabinet office in April 1975 and subsequently buried in a Westminster vault for 30 years.

McCrone's paper, written for Ted Heath's Tory Government and only just released under the Freedom of Information Act, revealed how North Sea oil could have made an independent Scotland as rich as Switzerland.

Earlier this week, Chancellor Gordon Brown underlined the vital revenue stream that North Sea oil still is in the context of British politics.

In his pre-Budget report, Brown extracted an extra £6.5 billion (NZ$16 billion) in tax from North Sea oil and gas producers, to be taken over the next three years. Imagine then, what the oil could have done for a Scotland which chose independence in the mid-1970s and claimed ownership.

Thirty years ago, McCrone's conclusions shocked his political masters. An independent Scotland's Budget surpluses, wrote McCrone, would be so large as to be "embarrassing". Scotland's currency "would become the hardest in Europe with the exception of the Norwegian kronor".

Scotland would be in a position to lend heavily to England, a situation that could last "for a very long time".

The study was judged incendiary by London and classified secret. The mandarins demanded that McCrone's analysis be given "only a most restricted circulation in the Scottish Office because of extreme sensitivity".

It was the comparison with Norway that particularly worried. In the mid 1970s, Norway was fully independent and about to take advantage of an oil boom that has generated huge prosperity to the present day.

In Scotland, however, heavy manufacturing was in deep trouble. Between 1970 and 1974 the number of coal mines in Scotland slumped by a third, while steel production fell by a fifth.

The Government refused to bail out four shipyards in Upper Clyde in 1971, leading to a work-in by unionists and a march by 70,000 people.

And so the call for independence became louder. The 1970 general election saw the Scottish Nationalist Party poll just 11.4 per cent of the vote and one seat. By the 1974 election their support had risen to the all-time high of 30.4 per cent of the vote, and 11 seats.

American firms became nervous that a Scottish breakaway, socialist in outlook, was threatening their interests. Would-be "direct action" cells began to emerge across Scotland.

McCrone's report, in such volatile circumstances, would almost certainly have provoked a turning point.

Billy Wolfe, who was leader of the SNP at the time, is in no doubt of what the findings could have meant - "winning" Scotland in the 1974 election.

Such was the fear of Scottish nationalism that the study remained secret under Callaghan, Thatcher, Major and even Blair.

Alex Salmond, the current SNP leader, said McClone's papers would form a central part of their campaigning for the future.

"It would have had great influence. I was appalled at the extent of what has been hidden from the people.

"The impact would have been dynamite. This is hugely important. But it was not just important then. It is important now. Gordon Brown's black hole is being filled by black oil."

- INDEPENDENT