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McCrone report

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The McCrone report is a document on the Scottish economy written and researched in 1974 on behalf of the British Government. It was composed by Professor Gavin McCrone employed at the Scottish Office. The document gave a highly favourable projection for the economy of an independent Scotland with a "chronic surplus to a quite embarrassing degree and its currency would become the hardest in Europe". This led successive iterations of the British government to classify the McCrone report as "secret". This was so to avoid fuelling independence sentiment in Scotland. The report became public in 2005 when new freedom of information legislation came into effect.

Contents

Report content

The eighteen-page report focused on the likely effects of North Sea oil revenue on the economic viability of an independent Scotland. The report stated:

  • "It must be concluded therefore that revenues and large balance of payments gains would indeed accrue to a Scottish Government in the event of independence provided that steps were taken either by carried interest or by taxation to secure the Government 'take'. Undoubtedly this would banish any anxieties the Government might have had about its budgetary position or its balance of payments. The country would tend to be in chronic surplus to a quite embarrassing degree and its currency would become the hardest in Europe with the exception perhaps of the Norwegian kroner. Just as deposed monarchs and African leaders have in the past used the Swiss franc as a haven of security, as now would the Scottish pound be seen as a good hedge against inflation and devaluation and the Scottish banks could expect to find themselves inundated with speculative inflow of foreign funds."
  • UK political environment

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

    UK Government response

    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.

    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."

    Publication in 2005

    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.

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

    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.

    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."

    References

    McCrone report Wikipedia


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