Report - Section 9
This paper has shown that the advent of North Sea oil has completely overturned the traditional economic arguments used against Scottish nationalism. An independent Scotland could now expect to have massive surpluses both on its budget and on its balance of payments and with the proper husbanding of resources this situation could last for a very long time into the future.
Wealth does not automatically mean full employment and the end of net emigration. But provided sensible policies are pursued, it is possible to see how this situation could be used to re-equip Scottish industry and renew outworn social capital thereby providing the expansion necessary to absorb Scotland's excess labour and the increase in productivity required to raise incomes. 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. When this situation comes to be fully appreciated in the years ahead, it is likely to have a major impact on Scottish politics, since it is on social and political grounds alone that the case for retention of the union will in future have to be based.
Nationalist policy as outlined in this paper can, of course, be regarded as extremely selfish. Undoubtedly it is, but it can be argued in reply that so long as Scottish GDP per head is only 70 per cent of the European average, the unemployment and emigration rates among the highest and the country regarded by the EEC as one of its worst problem regions, then Scotland is justified in using her own resources to rectify these problems rather than relying on the generosity of others at least until she has managed to catch up.
Yet undoubtedly the greatest weakness in the nationalist economic case is that Scotland, even with its oil, cannot expect to prosper in isolation. Economic conditions in Europe and above all in England, with whom Scotland will remain closely tied in trade, are of particular importance. Even with greater diversification of Scottish trade to Europe and to North America, an impoverished England or one perpetually suffering the rigours of demand restraint would have most serious consequences for the Scottish economy. 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 oil prices since the Yom Kippur war make this a much more serious matter than could have been imagined before; and it is now likely that transfer of North Sea oil to Scottish ownership would occasion much bitterness in England if not an attempt to forcibly prevent it. England would, of course, be no worse off than most of the Continental EEC countries in this respect; indeed, probably there are better chances of finding oil in the Celtic Sea or the English Channel than are open to most of them. If therefore the other countries can adjust to the new energy situation, England should be able as well.
Nevertheless it is now clear, as perhaps never before, that Europe could bring about its economic ruin by disunity. If supplies of oil become seriously restricted or the burden on the balance of payments of importing countries proves more than the international monetary system can cope with, a serious breakdown in the economic system of Western Europe could well result. This danger imposes serious international responsibilities on those European countries which are likely to be exporters of energy, Norway, Scotland if independent, and Ireland where oil is likely to be discovered. A spirit of European co-operation is not very evident yet either in discussions or plans for the development of energy and the rather nationalistic attitude so far followed by Britain would hardly be a good example to an independent Scotland. Yet the situation offers the energy producers a real opportunity to contribute to the economic strength of Europe and in so doing to ensure their own prosperity; if instead they retreat into narrow nationalism, developing their energy resources with regard to their own interests alone, they could undermine the whole European economy and seal their own fate in the process.
Perhaps the most important conclusion is that time is now extremely limited. British regional policy has been in operation for forty years and the annual cost of the measures applied to Scotland is now about £100m a year. But, although there have undoubtedly been notable achievements and the Scottish economy would have been in a much worse state without such a policy, there is still little prospect that it will solve the problems of West Central Scotland in the foreseeable future. High hopes have been held out for European regional policy but any impact form this is likely to be very small for a long time to come. In much the same way agitation for a workable form of political devolution has persisted amongst a substantial part of the Scottish electorate for a considerable time but without any practical result so far and it is still far from clear whether anything sill stem from the consideration of the Kilbrandon Report.
If, in five years' time North Sea oil is contributing massively to the UK budget, while the economic and social condition of West Central Scotland continues in the poor state that it is today, it would be hard to imagine conditions more favourable to the growth of support for the nationalist movement. Very determined steps to urgently transform economic conditions in Scotland will therefore be necessary and the Scottish people will have to be persuaded that their problems really have received the attention and expenditure they deserve if this outcome is to be avoided.