It's Scotland's oil
"It's Scotland's oil" was a widely publicised political slogan used by the Scottish National Party (SNP) during the 1970s in making their economic case for Scottish independence. It was argued that the discovery of North Sea oil off the coast of Scotland, and the revenue that it created would not benefit Scotland to any significant degree while Scotland remained part of the United Kingdom.
The SNP campaigned widely in both the February 1974 UK General Election and subsequent October 1974 UK General Election using this slogan. At the February election the SNP gained seven seats in the House of Commons and 22% of the Scottish vote, rising to eleven seats and 30% of the vote in the October election. The idea behind the slogan has proven to be controversial in discussions surrounding the financial viability of an independent Scottish state and still resonates to this day.
The outcome of the February 1974 General Election saw the Labour Party, led by Harold Wilson, win the most seats. Prime Minister Edward Heath, leader of the Conservative Party, lost support from the Ulster Unionist Party and, although he entered coalition negotiations with Liberal leader Jeremy Thorpe, these broke down. The Labour Party then formed the new government, with a plurality of seats but without a majority. In October 1974, Wilson went back to the country to ask for a renewed mandate.
During this time, in Scotland support for the Scottish National Party had been increasing after the victory of the SNP candidate Winnie Ewing at the 1967 Hamilton by-election. The political instability surrounding the general elections of 1974 represented a time of intense political campaigning in the UK, which further brought the SNP to prominence. It was during this time that the slogan "It's Scotland's Oil" came to the fore with the February election seeing 7 SNP candidates returned, rising to 11 in October. Some well known MPs such as Tam Dalyell believe this was in no small part due to the "It's Scotland's oil" slogan employed by the Scottish National Party.
The economic background to the claim was the discovery of oil in the North Sea in the 1960s, and its coming on line in the 1970s. The majority of the largest oil fields in the UK sector of the North Sea were found in the waters to the north and east of the Scottish mainland, with the more northerly fields found to the east of the Orkney and Shetland islands. Aberdeen became the centre of Britain's North Sea oil industry, with many oil terminals such as that of Sullom Voe on Shetland and Flotta on Orkney and at Cruden Bay and St Fergus on the north east coast of Scotland, being built to support the North Sea oil industry. In the early 1970s, there was a great deal of economic turbulence with the 1973 oil price shock caused by the Yom Kippur War, resulting in rising inflation coupled with high unemployment, recession (also known as stagflation) in Scotland and the rest of the United Kingdom. Thus the economic argument that formed the basis of the slogan was that while Scotland was part of the United Kingdom, it lacked control over royalties and revenue from the majority of the oil which lay in the Scottish sector of the North Sea.
Reality of the claim
Given that Scotland is not a sovereign state, it has no effective maritime boundaries; and any claims Scotland may assert are subsumed as part of claims made by the United Kingdom. It could be argued that there is no definitive 'Scottish' sector of the North Sea in the same way there isn't a Norwegian sector or a Danish sector, or indeed a UK sector. However due to the existence of two separate legal systems in Great Britain — that of Scots law pertaining to Scotland and English law pertaining to England and Wales, constitutional law in the United Kingdom has provided for the division of the UK sector of the North Sea into specific Scottish and English components. The Continental Shelf Act 1964 and the Continental Shelf (Jurisdiction) Order 1968 defines the UK North Sea maritime area to the north of latitude 55 degrees north as being under the jurisdiction of Scots law meaning that 90% of the UK's oil resources were under Scottish jurisdiction. In addition, section 126 of the Scotland Act 1998 defines Scottish waters as the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland. This has been subsequently amended by the Scottish Adjacent Waters Boundary Order 1999 which redefined the extent of Scottish waters and Scottish fishery limits.
Recent evidence by Kemp and Stephen (1999) has tried to estimate hypothetical Scottish shares of North Sea Oil revenue by dividing the UK sector of the North Sea into separate Scottish and UK sectors using the international principle of equidistance as utilised under the United Nations Convention on the Law of the Sea (UNCLOS) - such a convention is used in defining the maritime assets of newly formed states and resolving international maritime disputes. The study by Kemp & Stephen showed that hypothesised Scottish shares of North Sea oil revenue over the period 1970 to 1999, varied to as high as 98% dependent upon the price of oil and offset against taxable profits and the costs of exploration and development. However the application of the Convention (UNCLOS III) on baselines and the North Sea continental shelf case of 1969 is by no means cut and dried and by international convention maritime boundaries extend along the line of the land border. Looking at the Scottish English land border this heads north east from Berwick pointing towards Bergen in Norway rather than east towards Denmark as envisaged by many. A large proportion of the North Sea oil fields would under this scenario therefore belong to England not Scotland.
Nevertheless a Scottish share of North Sea oil is never formally alluded to as part of Scotland's net fiscal position and is treated by HM Treasury as extra-regio resources. The BBC economist Evan Davis however reported prior to the 2007 Scottish Parliament election that the Barnett formula already allows Scotland to sustain higher levels of per capita public spending relative to the rest of the UK, which is approximately equivalent to its disproportionately high annual contribution of tax revenues to the central UK Treasury from Oil production. However Scotland's per capita spending growth, relative to the rest of the UK, has in recent years, been nominally reduced by the operation of the Barnett formula, in order to bring public spending levels into line with the UK average, in a phenomenon that had been dubbed the "Barnett Squeeze".
Notes and references
- Scotland's oil: Does oil in Scotland have a future? Professor Thomas W Walde - Thomas Walde Professor of International Economic Energy and Natural Resources Law at the University of Dundee
- Independent Online edition December 2005 Tam Dalyell, who served as Labour MP in West Lothian for 43 years, agrees.... "It could have tipped the balance it a number of seats including mine. Oil was very much a totemic issue
- School Science from The Energy Institute Map of North Sea oil fields
- Scotland on Sunday, January 1, 2006 How North Sea oil calmed the UK's crisis ridden waters
- Parliament of the United Kingdom - Standing Committee B, Energy Bill (2004) Lords Hansard discussion on the subject
- United Nations Convention on the Law of the Sea UK Legislation - The Continental Shelf (Jurisdiction) Order 1968
- Independent Online edition December 2005 By the mid 1970s, international convention had already agreed that the North Sea north of the 55th parallel was under Scottish jurisdiction. That meant around 90 per cent of the UK's oil and gas reserves fell within Scottish waters
- Murkens, Jones & Keating (2002) p183
- Scotland Act 1998 Section 126 - Interpretation
- Statutory Instrument 1126 of 1999 Scottish Adjacent Waters Boundary Order 1999
- Scottish Adjacent Waters Boundary Order 1999 Map of the extent of Scottish Waters
- Murkens, Jones & Keating (2002) p189
- Government Expenditure and Revenue (Scotland) 2002-03 In the Regional Accounts, the UK Continental Shelf is included in a separate region of the UK (the Extra-regio territory) and is not allocated to specific geographic regions
- "The Scottish gamble". BBC News. 2007-04-30. Retrieved 2007-06-20.
- Professor David Bell (January 2001). "The Barnett Formula" (PDF). University of Stirling. Archived from the original on 2007-07-26. Retrieved 2007-12-27.
- Murkens, J, Jones, P & Keating, M (2002) Scottish independence - A Practical Guide. Edinburgh University Press. Edinburgh.
- Kemp, A.G & Stephen, L (1999) Expenditures and Revenues from the UKCS - Estimating the hypothetical Scottish Shares 1970-2003 North Sea Study Occasional Paper No. 70. Department of Economics. University of Aberdeen.
- Wälde, T. Thomas W. Wälde Scotland’s Oil Does it have a future?, published oinline at http://www.dundee.ac.uk/cepmlp/journal/html/Vol14/Vol14_5.pdf, accessed September 20, 2007.