Letter

SCOTTISH ECONOMIC PLANNING DEPARTMENT^[1]
New St Andrew's House
St.James Centre, Edinburgh, EH13TA
Telephone 031-556 840. ext, 4017

J Garlick Esq^[2]
Cabinet Office
Great George Street
London SW1

23 April 1975

At the meeting which you held last week on various aspects of North Sea oil and devolution I suggested that I might send in the attached paper in the hope that it would serve as a starting point for any assessment the Unit may wish to carry out on the economics of Scottish Independence.

The Paper was written over a year ago in the weeks immediately before the February 1974 Election. This will be particularly apparent on page 5 where, of course, the Ministerial pronouncements referred to relate to the Conservative Government. I have not attempted to update any of the figures, since although there would be differences these do not seem to me to be such as to alter the argument.

As you will realise, the debate on Scottish nationalism has been founded to a surprising extent on economic arguments ad the purpose of this paper was to examine how far this was affected by North Sea Oil. The first part goes through most of the usual arguments which have been used against the Nationalists in the past with fairly convincing effect; the second part sets out the sort of economic strategy which an SNP Government might try to follow indicating both the dangers and the possibilities. As I said at the meeting, one can reach almost any conclusion depending upon the assumptions that are made about tariffs, a common currency, a Scottish Government's spending priorities and its success in controlling inflation. My paper may give an SNP Government the benefit of too many doubts, but I was anxious to see whether a credible economic strategy could be put together which would appear to be more convincing in terms of solving Scotland's traditional economic problems than the regional policies of the Unionist Governments have been up until now. I think the conclusion is that the most convincing way of taking the wind out of the SNP's sails is by demonstrating that we now have policies which can make major in-roads into these problems.

When my paper was written it was classified "secret" and given only a most restricted circulation in the Scottish Office because of the extreme sensitivity of the subject. I am copying it now to Leo Pliatzky, Dick Ross, Jim Hamilton, John Liverman^[3] and Stuart Scott Whyte^[4] .

R G L McCrone^[5]

1. ^ set up by the Scottish Office in 1973 with a responsibility for oil-related development
2. ^ John Garlick, then Second Permanent Secretary at the Cabinet Office
3. ^ John Liverman, then chief economist at the Department of Energy
4. ^ Stuart Scott Whyte, then deputy to John Garlick
5. ^ Professor Gavin McCrone, then chief economist at the Scottish Office