Scots could have been nearly one-third better-off than the English if they had split from the UK

Douglas Fraser:

Whitehall knew in the 1970s that Scots could have been nearly one-third better-off than the English within a few years of splitting from the UK, although the knowledge was kept from the public.

The fear that devolution could lead to independence even led to the Labour government of the day holding a devolution summit, at which the chancellor, Denis Healey, headed an attempted revolt in trying to put the brakes on Scottish home rule plans.

A bleak Treasury assessment warned that just the perception that Scotland could be about to move from devolution to independence and take control of oil revenues would plunge the UK into economic crisis.

The prospects for the economy of the rest of the UK were described as "grim" while those for Scotland were so strong that officials advised ministers they should start to "think the unthinkable".

At the meeting on June 3, 1975, the chancellor, now Lord Healey, was backed by Roy Jenkins, then home secretary, and Tony Crosland, the environment secretary, but all they won from cabinet was a block on any new public commitments on devolution.

The information comes from confidential Treasury papers written in the mid-1970s and recently released from the Kew records office. In one analysis, it was reckoned that income per head in an independent Scotland could soar by the following decade. A Treasury official, S Scott Whyte, wrote in an internal memo: "It is conceivable that income per head in Scotland could be 25% or 30% higher than that prevailing in England during the 1980s, given independence."

The fear of losing North Sea oil revenue and exports was because the Treasury needed oil to get Britain out of a chronic trade deficit.

Internal memos even doubted the trustworthiness of their Scottish Office colleagues in working on a response to the independence threat. That point was made only two weeks after the SNP won 30% of the Scottish vote, and secured 11 seats at the October 1974 Westminster election.

The officials' exchanges later refer to the 1974 memo written by Gavin McCrone, then a senior economist in St Andrew's House. As disclosed in The Herald last year, it showed the economic case for Scottish independence was much stronger than government publicly admitted then or since.

For Peter Mountfield, a Treasury official, the prospects for the UK without Scotland looked bleak: "The Scots have really got us over a barrel here … An independent Scotland can go it alone, provided there is not a disastrous collapse in the world oil price. The prospects for a separate English, Welsh and Ulster economy on the same assumption must look pretty grim. Perhaps we should all start to think the unthinkable".

Kenny MacAskill, the SNP MSP, said of the revelations: "We've been robbed of billions. Every Scottish man, woman and child should be considerably better-off and could have been since the 1970s. Gordon Brown [the chancellor] wants us to rally to the Union flag, but this 25-30% gap is the price for being British.

"The bad news is that each of us is 25-30% poorer. The good news is that we've still got 30 to 40 years of oil and we can't allow the sins of the past 30 years to carry on."

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