By PAUL RIDDELL
Whitehall civil servants believed Shetland and Orkney might split off from an independent Scotland in the mid-1970s and take 53 per cent of the North Sea’s oil reserves with them, it has emerged from secret internal memos published more than 30 years on.
The thinking was that Scotland, which was then preparing for devolution, would sooner or later become independent and deprive the Treasury in London of most of the tax revenue from oil.
The money was badly needed because the economic crisis, caused by a hike in the price of oil following the Arab-Israeli Yom Kippur War in 1973, had left Britain facing financial ruin. The exchequer eventually had to be bailed out by the International Monetary Fund.
The inter-departmental discussions in Whitehall over devolution betray a mild sense of panic, with much discussion between ministers and civil servants and among civil servants themselves about how to halt the Scottish National Party’s “It’s Scotland’s Oil” campaign which had helped it win 11 seats at Westminster in the October 1974 general election.
By that time Shetland had already secured the private Zetland County Council Act which gave the council extraordinary powers to force the companies operating in the North Sea to bring their oil ashore at a single site at Sullom Voe and create funds to hold “goodwill” payments made for the future benefit of the isles.
Remarkably, one civil servant believed that the granting of these powers had simply allowed Shetland to “blackmail” the industry and the energy secretary at the time, Tony Benn, cautioned against allowing other local authorities or Scotland as a whole to be allowed to follow suit.
The papers were unearthed from the National Archives by journalist George Rosie for a BBC television documentary and extracts have been published in the The Times.
In a report entitled “Scottish Devolution and North Sea Oil”, Graham Kear, under-secretary at the DoE’s petroleum production division, suggested that if Scotland became independent it would be useful if Shetland and Orkney in turn split away from Scotland.
“If Scotland and the Orkney and Shetland Islands [sic] are both regarded as states, separate from the rest of the United Kingdom, median lines can be drawn to divide the United Kingdom Continental Shelf between Orkney and Shetland/Scotland and between Scotland/England.
“On this basis 53 per cent of the oil reserves in existing discoveries ‘belong’ to Scotland and the remaining 1 per cent ‘belong’ to England … any consideration of the effects of Scottish separation must take into account the possibility of pressure for the separation of the islands from the Scottish mainland.”
In 1978 the Shetland Movement was formed, although it advocated autonomy from the UK/Scotland rather than outright independence. SIC convener Sandy Cluness, a key figure in the organisation at the time, said this week he was unaware of fellow members discussing the possibility of separation with civil servants in either Whitehall or Edinburgh.
Perhaps the most incendiary revelation was that contained in a memo to Gavin McCrone, then a Scottish Office economist, from Jack Fleming in the Cabinet Office which said the special powers granted by the ZCC Act of 1974 had enabled it to “blackmail” the oil industry into making payments.
Mr Benn warned that “if taken further by a Scottish Assembly such changes could actually distort the economics of offshore exploitation, to the extent of influencing development decisions on particular fields with consequences for oil production”.
In the end, of course, devolution fell in the referendum of March 1979 because fewer than 40 per cent of Scottish voters approved of the scheme presented, and Margaret Thatcher took power in May that year. Cynics would say she spent all the oil reserves on keeping millions unemployed.