McCrone report

This article is about the report on economic aspects of Scottish independence. For the agreement involving Scottish teachers' working conditions, see McCrone agreement.

The McCrone report is a UK Government document which was written and researched in 1974 on behalf of the British Government of the day (Conservative, led by Edward Heath). It was composed by Professor Gavin McCrone, an employee of the Scottish Office, at St. Andrew's House in Edinburgh.

The eighteen-page report focused on the likely effects of North Sea oil revenue on the economic viability of an independent Scotland. Professor McCrone predicted that North sea oil revenue would make an independent Scotland "as rich as Switzerland", giving the country a large tax surplus, on such a scale as to be "embarrassing". [1] He also surmised that this surplus revenue would make the Scottish pound the hardest currency in Europe "with the exception of the Norwegian kronor".

The document was completed in early 1974, just prior to the February 1974 general election, which produced a 'hung parliament' with Harold Wilson as Prime Minister. Another general election was called for October 1974, which gave the Labour party a slim majority in Westminster, whilst the SNP recorded 30% of the Scottish vote, their best ever result at that time.

After discussions between St. Andrews House and the Cabinet Office in London, Prof. McCrone passed the report on to the new Labour government on 23 April 1975, along with a covering letter. The covering letter is the source of the oft-quoted phrase about "taking the wind out of the SNP’s sails"; Prof. McCrone was here outlining what actions he believed would be necessary to prevent support for the SNP from growing further.

The report was classified as 'secret' by civil servants at the time, and successive UK Governments kept it so, over fears that McCrone's findings would give a further boost to the SNP's policy of Scottish independence.[2]

In 1975, a year after Professor McCrone had written his report, civil servants met in London to discuss its implications. They concluded that his findings had been accurate, and that the average income in Scotland would increase by up to 30% per head if the country became an independent state. They also concluded that Scotland's "economic problems would disappear", and it would become "the Kuwait of the Western world", though this was balanced somewhat by the opinion that Scotland could risk "disaster" if the oil price collapsed. The civil servants summed up by finding that there was "a good case for the continuation of the Union." [3]

The report came to light in 2005 when the SNP obtained several UK Government papers under the Freedom of Information Act 2000. The full provisions of the Act came into force on 1 January 2005.[4]

UK oil production peaked in 1999 and had declined 67% by 2012,[5] but petroleum still contributed £35bn to the UK balance of payments in 2011. [6] The UK government took an estimated £6,530m in direct petroleum taxes in 2012-13[7] plus £6bn in income tax, national insurance and corporation tax from supply companies in 2011-12.[6] As of 2012, around 45% of UK oil & gas employees were located in Scotland.[6] The North Sea oil and gas industry as a whole contributed £35 billion to the UK Treasury in 2014. [8]

In his evidence to the Lords Committee on the Economic Implications of Scottish Independence in 2012, Professor McCrone stated that Scotland's GDP would increase by around 20% if North Sea oil were counted as part of it.[9]

In an interview for Holyrood Magazine on the 19th of May 2013, ex-Labour chancellor Denis Healey (who served in the Cabinet at the time the McCrone Report was submitted) stated: "I think we did underplay the value of the oil to the country because of the threat of [Scottish] nationalism... I think they [Westminster politicians] are concerned about Scotland taking the oil, I think they are worried stiff about it." [10]

See also

References

  1. ↑ "North Sea oil 'could have made an independent Scotland as rich as Switzerland' - Switzerland - NZ Herald News". The New Zealand Herald. 15 December 2005.
  2. ↑ "Papers reveal oil fears over SNP". BBC. 2005-09-12. Retrieved 2010-01-27.
  3. ↑ Johnson, Simon (28 September 2009). "North Sea oil gave Scotland 'massive' budget surplus, say Government records". The Daily Telegraph. London.
  4. ↑ "The UK Statute Law Database-The Freedom of Information Act 2000 (Commenced No.5)order 2004". Retrieved 2010-01-27.
  5. ↑ Earp, Mike (28 February 2013). "UKCS Oil and Gas Production Projections" (pdf). DECC. p. 4.UK oil production was 150Mtoe in 1999, and had dropped to 49Mtoe by 2012. 90-95% of UK oil comes from Scottish waters.
  6. 1 2 3 "House of Commons Hansard Debates for 25 January 2012". UK Parliament. 25 January 2012.
  7. ↑ "Statistics of Government revenues from UK oil and gas production" (pdf). HMRC. April 2013. p. 6. Retrieved 23 May 2013.
  8. ↑ http://www.bbc.co.uk/news/uk-scotland-scotland-business-27129660. Missing or empty |title= (help)
  9. ↑ http://www.parliamentlive.tv/Main/Player.aspx?meetingId=10877
  10. ↑ http://www.holyrood.com/2013/05/still-raising-eyebrows/

External links

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