Keith Aitken examines the issues surrounding the latest oil debate.
It’s Scotland’s Oil! Three words which, for those of us grown a little grey around the temples and upholstered around the waistband, evoke their era as instantly and vividly as Three-day Week, Bless this House or Mott the Hoople.
The era in question is that of 35 years ago. In 1969, BP detected the first traces of oil in what became the Forties Field. But it was in 1973 that the Saudi-led OPEC took revenge for western patronage of Israel by setting in train a massive price increase, thereby triggering economic panic and making oil the most jealously-held commodity on the exchanges. Just two years later, the first crude was pumped ashore at Cruden Bay in Aberdeenshire and the first revenues pumped into HM Treasury in London.
It was the disjuncture between these two destinations that gave the three words legs, and what legs! The slogan had first appeared on SNP posters around 1972, at a time when the SNP had never got its parliamentary representation into the plural. In 1973 a key architect of the campaign, Gordon Wilson, came within a hair of seizing a rock-solid Labour seat at the Dundee East by-election. A year later, he had both the seat and plenty of company. The two elections in 1974 saw the SNP increase its Commons presence from one MP to 11 and its share of the vote from 11 to 30 per cent.
Oil, and the question of who was to benefit from it, became for a while the lifeblood of popular politics on both sides of the Tweed. In Scotland, the radical 7:84 theatre company romped from town to town with John McGrath’s satirical tour-de-force, The Cheviot, the Stag and the Black, Black Oil. An Edinburgh University postgraduate student called Gordon Brown edited the Red Paper on Scotland, a conscious attempt by the intellectual left to wrest the political agenda back from an oil-fired SNP. A forgotten sixties thriller about Scottish secession, written by a patrician civil servant called Douglas Hurd, was retrieved and dramatised by BBC Scotland. Both series of Scotch on the Rocks and its turgid theme tune rode high among the hits of 1975.
All over public discourse, angels danced on the heads of oily pins. Learned professors argued on peak-time TV about the precise angle at which the Scottish border left the Berwickshire coast and how many installations would thereby lie north or south of a notional marine frontier. Shetland added to the gaiety of nations by threatening to stay put within a Scotland-less UK and to keep hold of its important chunks of the industry, a piece of cheek that helped win it a unique and enduring cut of the profits. In the nursing home that my then girlfriend’s mother ran, a tiny bright-eyed lady of 98 summers questioned me intently as to the difference between a platform and a rig (I hadn’t the slightest idea).
Meanwhile, in London, the ever-astute Harold Wilson saw an urgent danger that his Scottish colleagues were too flat-footed to confront. For UK consumption, Wilson and his colleagues made optimistic speeches about how a Britain due to become a net oil exporter from the start of the eighties, would shrug off the OPEC shackles and see its leaden economy soar: “God has given Britain her best opportunity for one hundred years in the shape of North Sea oil,” evangelised James Callaghan. At the same time, a devolution scheme was being cobbled together, over the dead bodies of Labour’s Scottish high command, to head off the imminent prospect of an oil-emboldened Scotland making off with its treasure. Heady days indeed.
Can they be revived 35 years later? Can those three bumptious wee words be made to work their magic all over again on the imaginations of Scots and the central nervous systems of Whitehall? Alex Salmond and his team, now dignified in office, would appear to think that they can. John Swinney has formally presented the London government with a Scottish invoice for a share of the £4 billion windfall received by the Treasury thus far from an oil price crowding $140 a barrel. Given the backbench pressure on Gordon Brown to be as beastly as possible to the Scots so as to avert Labour meltdown south of the border, Salmond and Swinney must know they have as much chance of an affirmative reply as they have of a job offer from the Sugarbabes. It’s handy politics, all the same.
For one thing, it adds another useful “if only” to Salmond’s repertoire when it comes to explaining why his administration is failing to deliver its more munificent manifesto pledges: not only did the Treasury give Scotland a cruelly parsimonious spending settlement, but now it’s trousering an unearned bonus from our oil revenues – you know the sort of thing. For another, it once again puts the unhappy Wendy Alexander on the wrong side of a possibly specious, but emotionally appealing, argument. In Scotland’s corner, or out? And, at a time when oil prices are at the top of not just Britain’s but the developed world’s agenda, it plugs the SNP’s half-forgotten grievance about Scotland’s claims over the North Sea reserves back directly into the mains of current debate. With oil prices once more at the forefront of everybody’s mind, it should be much easier to restore those claims to the forefront of Scotland’s. And so Scotland’s oil, soi disant, is back on the agenda.
To gauge the potential impact, it helps to try to understand why it fell off the agenda in the first place. Looking back now, the temptation is to conclude that Scotland’s active claim to the oil perished in the same referendum bloodbath that put paid for a generation to the expectation of home rule. Certainly, the SNP’s capacity to scare the willies out of London with that, or any other, chippy slogan disappeared after 1979 for almost a decade, only starting to revive with the Govan by-election in 1988.
But there was more to it than that. With the arrival of Margaret Thatcher, a theoretical claim over mineral reserves swiftly became the least of anyone’s problems. The foundations of Scotland’s manufacturing economy, and the tall pillars of hope erected upon them by postwar interventions, were disintegrating unchecked and at a terrifying pace: vehicle plants, paper mills, smelters, steel mills, coal mines. Responding to that was the here and now. The mood is perfectly captured by the ironic title, and bleak substance, of Ian Jack’s 1986 collection of reportage from a ravaged Britain, Before the Oil Ran Out. In the maelstrom of Thatcherism, the argument over oil was no longer about who ought to own it, but how its wealth was being used: not to build a land of peace and prosperity, but to fund a brutal restructuring that could hardly have felt less orderly or more painful if it had been financed by selling lemonade bottles. A quarter century as a net oil exporter put £250 billion of revenues into the British Exchequer, but it has never been easy to see or celebrate what all that money bought. Other countries, including those who shared our continental shelf, had lavish oil funds to invest in lasting works of public benefit. We had three million tormented souls on the dole.
Scotland certainly fought back against the affronts of Thatcherism, nurturing a sense of national victimhood that would eventually turf the Tories out of Scottish parliamentary politics altogether. But the skirmishes of those times were not fought over a claim of sovereignty for North Sea oil. They were fought through the formation of broad issue-based civic alliances, fronted by non-partisan bodies like the STUC and SCDI, that presumed to take on the mantle of a Scotland united against Thatcherism. The SNP blew hot and cold on these tactics (which, in fairness to it, waged many glorious battles and won almost none of them). The coalitions, in turn, worked by seeking out the common ground between their diverse participants, which was never going to include the divisive Nationalist shibboleth of “It’s Scotland’s Oil.”
It was also notable that Jim Callaghan was barely back in Opposition before his prediction of economic redemption had begun to sound like a wistful fantasy. Almost from the instant the first oil flowed, Britons have got used to being warned not to expect too much from it.
Almost from the instant the first oil flowed, Britons have got used to being warned not to expect too much from it. 
The reserves were always starting to run out, the costs were always too high, the operators were always about to decamp to better opportunities elsewhere. Construction yards, the most visible aspect of the industry in Scotland, seemed forever to be teetering on the brink of closure, in a manner all too reminiscent of their industrial ancestors, the shipyards. As long ago as 1992, as the historian (now Nationalist MSP) Chris Harvie reported in his trenchant study, Fool’s Gold, the general consensus was that the North Sea reserves had about five years left to run.
The feverish excitement of the seventies faded astonishingly quickly, come the Thatcher/Major era. For some of that time, I was responsible for The Scotsman’s industrial coverage: everything except the North Sea, which was the domain of the late Frank Frazer, incomparably the finest energy correspondent in the business. I never resented his fiefdom. Despite Frank’s great finesse and the daily stream of exclusives he produced, I watched the story slide over a very few years from the front page to the home news pages and finally, to the suits’ ghetto of the business section, where I had no wish to be. The Scotsman, like Scotland, got bored with oil.
Sometimes being the oil capital of Europe felt like a curse. There were successive human tragedies, most notably, the collapse of the Alexander Keilland accommodation platform in March 1980, and the loss of 167 lives in the Piper Alpha explosion of July 1988. The scale of offshore activity also inflicted disproportionately dramatic consequences on a small economy. Property in Aberdeen could be unaffordable one year and unsellable the next, depending on the prognosis for the industry. When oil prices fell abruptly in 1986, Scotland lost 20,000 of its remaining industrial jobs and underwent a technical recession that was not shared by the wider UK economy. The old lament of “we’ll pay for this the morn” is never far from Scottish lips, and the erratic dance of energy economics did much to encourage it.
None of which would seem to bode well for Salmond’s prospects of setting the nation’s pulses racing all over again about the hydrocarbons below the waves. Yet those self-same economics, together with what Hamlet calls the insolence of office, do now give renewed substance to the SNP chant of Scotland’s oil. The North Sea is going like the very clappers, and looks as certain as these things can ever be to stay that way into the foreseeable future. Oil prices will always be volatile, but the momentum of economic growth, and therefore of energy demand, in immense countries like China and India means that they will also remain historically high. Sustainably high prices, coupled with quantum advances in technology and expertise, dramatically improve the appeal of once ‘marginal’ provinces like the North Sea. Experts like Prof Alex Kemp of Aberdeen University now estimate that, on current terms, there may be almost as much viable oil left in British waters as the 37 billion barrels extracted since 1975: and that there is lucrative activity to be had there for at least another 30 years.
Many big operators did pull out, but the smaller players who took their place are lean, patient and ambitious. A classic case in point is the paterfamilias of the sector, the Forties Field. The mighty BP gave up on it five years ago, since when the new owners, Apache, have invested $2billion and are now pumping more oil than ever. The boom-and-bust times of the early days have given way to a more stable economic hinterland in north-east Scotland, based increasingly on selling Scottish expertise in servicing difficult reserves to a highly receptive world marketplace. North Sea oil production peaked back in 1999, yet in the past decade, export sales of oil-related services have doubled. North Sea oil, more than ever in its history, looks a safe bet.
All very well. But, in truth, it is the downside to high oil prices that lends the fresh force to the SNP’s demands - though as a spur to public indignation, rather than a key to the Treasury safe. More expensive oil means more expensive travel and transportation. It pushes up the price of all manner of goods and services, and undercuts the viability of numerous Scottish industries, from fishing and farming to the distributive trades, retail, tourism. It hikes the cost of living for every Scot, impacting especially harshly on fragile rural economies where fuel costs command a much heftier share of the household budget than in urban areas.
Here, then, is the equation at the heart of the SNP offensive. Scotland is hurting from high oil prices, arguably more than its neighbours are hurting. Expensive oil is delivering a bonus in higher fiscal revenues to the UK government. Much of the oil that Scotland is struggling to afford comes from beneath the waters that lie off its own shores.
Much of the oil that Scotland is struggling to afford comes from beneath the waters that lie off its own shores.
Therefore, it is only just and proper that Whitehall returns to Scotland, via an oil fund, a due share of the windfall it has gained from these misfortunes.
It is not hard, of course, to reconstruct this equation from a quite different, London-centric perspective. All of Britain is feeling the pain of high oil prices, including the southern part of the country where living costs are already higher than in Scotland. Scotland, by contrast, is reaping far from insubstantial benefits, in the form of heightened activity and prosperity in the North Sea industries. All the legal reasons why it was Britain’s oil not Scotland’s oil in the 1970s continue to apply, now substantially reinforced by Schedule Five, Part II, Section 3, Clauses A1 and D2 of The Scotland Act 1988, which respectively and explicitly reserve corporate taxation and oil & gas policy to Westminster. Plus, Labour needs to appease the Kelvin Mackenzie Tendency in Middle England to have any hope of clinging to power. Therefore, Salmond and his cohorts can go hang.
On June 10, a convoy of lorries headed for Edinburgh and the latest lumbering demonstration about fuel duty. BBC Scotland, somewhat missing the point, reported that the truckers’ objective was to put the fuel price issue on the agenda. For weeks, there has been very little room on the agenda for anything else. Though it is not exactly hot news that the road haulage industry dislikes paying its taxes, the headlines have been prominent, strident and consistent across all parts of the media. Politicians do not lightly fluff an opportunity like that. In London, it was being fervently leaked that the 2p per litre increase in fuel duties scheduled in the last Budget, and already deferred once by the Chancellor, was now a fiscal dodo. In Edinburgh, Salmond announced a study into the potential benefits of an oil fund for Scotland. Quite what deep and penetrating truth this solemn inquiry can possibly unearth, beyond that an oil fund is a cute accessory and everybody should have one, remains unclear. But that too is beside the point.
The point is that these are the politics of grievance, not reason. That’s not to suggest that they are necessarily crude or deceitful. It merely means that their potency lies, not in offering measured policy solutions to difficult problems, but in exploiting a popular perception that it’s no’ fair. The SNP knows perfectly well that Gordon Brown, however malleable he may be, is highly unlikely to give Scotland an oil fund denied to the rest of the UK. That isn’t why it’s asking. It’s asking with the opportunistic aim of hitching the Scottish public’s current sense of grievance to its own core ambition of promoting independence.
In retrospect, that was how “It’s Scotland’s Oil” worked in the seventies too. It was only because, for those few fevered years, anything seemed possible that anyone could ever have believed otherwise. The Wilson/Callaghan governments were famously jittery, but they were never - still less Mrs T – going to give an inch on ownership of the revenues. Yet, work it did: as a grievance, a catalyst for turning public animation into votes.
Much has changed, though. Scottish voters have spent three decades forgetting that it might ever have been Scotland’s oil, or that something more interesting might have been done with the dosh. Independence is no longer a novel idea that can be slickly wrapped up with the thrilling novelty of oil: rather, it is an exhaustively debated and thoroughly understood concept which only a settled minority prefer to the still-recent reality of devolution. The public’s anger this time, too, is much harder to package as vox Caledonia, given that Disgusted of Tunbridge Wells is just as furious in the forecourt as Pissed Off of Pittenweem.
Above all, the SNP is now in government. That has advantages and disadvantages. The main advantage is that it’s easier for a First Minister than for the leader of a small but raucous minority to affect to speak for Scotland. The main disadvantage is that grievance is the more natural vocabulary of opposition than of government. Voters expect oppositions to rail and wail and shout the odds for what is right. They expect governments to deliver.
Alex Salmond is a highly effective campaigner in a Scotland currently short of them. The issue of a Scottish share of oil revenues would be uncomfortable at the best of times for a Scottish Labour opposition, and these are not the best of times. In the short term, there may be capital for the SNP in behaving more like a UK opposition than a Scottish government. Yet, looking fit to govern is, these days, a big part of Salmond’s strategy. There will come a time when voters expect results for all his noise and fury over oil revenues, and if none comes it could do his authority significant harm.
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