A History of Modern Britain

by Andrew Marr

  Why was this? It was partly that the boom came just when British industry was at its lowest ebb, strike-prone, short of money, short of good management. It was partly that the oil-boosted pound did indeed make the recession of the early eighties even worse, rising faster and further than ministers expected. The petro-currency helped squeeze the economy and improved efficiency, at the inevitable cost of widespread closures, sufficient to enrage many naturally pro-Conservative business people. Michael Edwardes, Chairman of the State-owned carmaker British Leyland, said at the time that if the government could not find a way to deal ‘with North Sea oil, then I say: leave the bloody stuff in the ground’.

  Before 1979 Labour was struggling to rein in the American companies that had arrived early and eager. But after 1979 the Conservatives were determined to use the oil revenues quickly, to pay debt and cut taxes, rather than to invest it in some long-term plan for industry. This was the key ‘rate of depletion’ argument played out across Whitehall, which was really about how best Britain should use its bonus. The Norwegians, with a much smaller population and their industry run by the State, invested the proceeds in a great Nordic piggy-bank. When the Scottish Nationalists seized the oil issue in the early seventies they came up with a similar plan for a Scottish oil fund, paying out a permanent dividend to benefit the Scots henceforth. The argument between ‘extract as much as possible now, and spend the proceeds’ and ‘extract slowly, and invest’ was, however, a complicated one, since nobody knew what would happen to the oil price. With North Sea oil so expensive to produce, leaving the stuff under the seabed might mean that if the world price fell it became uneconomic.

  Nor was it clear that money invested elsewhere by British ministers would turn out to be money well invested – particularly if it was also meant to kick-start industries. Under Labour, the so-called Varley assurances had been given to the oil industry, a promise that the government would not impose cutbacks beyond a certain level but allow the oil companies to take out most of what they could. According to Professor Alex Kemp of Aberdeen University, who has been writing the official history of North Sea oil, the argument in the early Tory years was between David Howell at the Department of Energy, who believed in slower extraction, and Howe at the Treasury, who needed the revenue as quickly as possible. Howe won the day, with Margaret Thatcher’s consent, imposing a punitive 90 per cent marginal tax rate and treating oil taxes just like income tax or VAT even though oil revenue was finite, a one-off. Professor Kemp concludes that ‘oil revenues were used as part of macro-economic management rather than energy policy, looking thirty years ahead.’

  Good thing, or bad thing? This can be seen as a one-off waste, funding the squeeze of the early Thatcher years but leaving little for future generations left in the pot of gold at the end of the North Sea rainbow. Yet for those who saw that drastic economic squeeze as essential, it was money well spent. Lawson said the oil taxes gave ‘a healthy kick-start’ to the process of cutting the government deficit, though he always argued that the overall impact of North Sea oil was exaggerated. As to the profits from oil, they would be better invested privately. Lawson made his point by comparison: ‘A peasant finds gold in his garden. Should he be allowed to mine it at his own speed and be left to allocate the proceeds between extra spending and saving for the day when the gold has been exhausted? Or should some authority force him to leave some of the gold in the ground to guard against profligacy?’ So in his view, the transfer of oil profits into investments overseas, as happened after the abolition of exchange controls, rather than in (say) British manufacturing, was a good bargain for the country as a whole.

  British manufacturing continued to slither downhill, falling from 34 to 30 per cent of national output in 1970-7, before oil properly came on stream, and then from 30 per cent to 23 per cent in the great oil decade. (By 2006 it accounted for less than 15 per cent.) According to the government’s own figures, 2 million manufacturing jobs were lost at this time. Productivity inevitably rose in consequence and the economy would recover very strongly, though this does finally answer the question about whether too much expertise and chains of supply were lost, putting Britain permanently out of markets she could otherwise have retained. Whichever view you take, this ‘British revolution’ could not have been sustained without the pipes and the rigs. Why did Margaret Thatcher say so little about North Sea oil? Or Geoffrey Howe? Could it be simply that in the heroic story of their remaking of the British economy, the Almighty’s underwater gift was an embarrassingly vital support mechanism, for which they could take absolutely no credit? And that therefore they were as unlikely to draw attention to it, as actors apparently leaping through the air would be to the wires supporting them? Still, it was unfortunate. The roughnecks and roustabouts, the shuttle helicopter pilots landing in gale-force winds on postage-stamp-like platforms, and the divers taking horrible risks on the ocean bed, deserve a larger role in modern history. Un-unionized, risk-taking, freebooting, they were after all, model Thatcherites, every one.

  Let us return to Lawson’s metaphor of the peasant with gold in his garden. The question is, whose garden? Had Scotland been an independent country and had the lines of national territorial waters been drawn at an appropriate angle (the legal arguments about this were dense), then Scotland would undoubtedly have been a rich country. Like Biafra in Nigeria, it could have funded a breakaway on the basis of oil – though hopefully with less tragic effects. As we have seen, the Scottish National Party had spotted the possible consequences of oil early on. They had begun to worry Labour in the sixties with a series of stunning by-election successes. Whitehall had hit back; the Treasury produced a notional Scottish budget for 1967-8 showing Scotland deeply in the red. Given that Scotland had a relatively poor and relatively scattered population, and a shrinking economic base, this was hardly surprising. But what difference would the oil revenues make? Suddenly, Whitehall came over all coy. Oil money was expertly mixed into national revenues. Jim Sillars, the MP who moved from Labour to the SNP via the briefly fashionable Scottish Labour Party, protested: ‘The potential embarrassment of each drop of the magic oil was dealt with by the simple, crooked device of removing oil revenues from any purely Scottish statistics…The fish caught and landed from Scottish waters are allowed to remain in Scotland’s accounts, but the oil over which those fish swim – well, that’s different!’

  The SNP was not waiting for official confirmation of what it suspected, however. It had strong covert support in the Edinburgh banking world and could draw on some of the brightest economists north of the border. Within months of the first big BP oil strike its chairman Billy Wolfe was declaring that oil should be a dominant part of its propaganda. In 1972 it launched its most famous slogan, ‘It’s Scotland’s Oil’ followed a year later by the still more aggressive, ‘Rich Scots or Poor Britons?’ Thanks to the recent release of government documents we now know just how jumpy this made Whitehall. Civil servants told Labour ministers after the second 1974 election they should delay Harold Wilson’s promised Scottish assembly (‘Powerhouse Scotland’) to stop the British economy being destabilized. By then the SNP was claiming the support of a third of voters and had won eleven seats in the Commons. ‘Progress toward devolution should be delayed for as long as possible…’ said one mandarin: ‘The longer this can be played, the better.’ The problem was that the civil service thought the SNP’s calculations on the huge wealth that could come Scotland’s way with oil were, if anything, an underestimate. One Treasury official wrote: ‘It is conceivable that income per head in Scotland could be 25 per cent or 30 per cent higher than that prevailing in England during the 1980s, given independence.’ Another wrote bluntly: ‘The Scots have really got us over a barrel here.’ But the Scots, whatever their suspicions and however vigorous the campaigning of the SNP, never knew quite how large that oily barrel was. Had they done so, it is likely that the politics of the later seventies and eighties would have been very different.

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  Th
e Scots and the Welsh Leave Us Close to Tears

  Scotland and Wales had very different political cultures but by the sixties they shared the sense of being parts of the UK in decline, whose old Labour elites no longer delivered the goods. Scotland’s industrial heartland was dominated by coal, steel, shipbuilding and engineering. South Wales, built on coal and steel, was also culturally besieged, as people migrated to the richer new towns of southern England, and the Welsh language declined. Both these smaller countries asked themselves whether, if they cut free from the United Kingdom, they might somehow achieve a new beginning. The European Common Market showed that it was possible for small countries to thrive perfectly well. Even outside it, the Norwegians, Icelanders and Swiss seemed to be managing. No Western country seriously felt threatened by her neighbours any more. Living through the political traumas of the seventies, almost everyone in England was to an extent trapped inside the nightmare. For Scots and the Welsh there was the possibility at least of simply closing the door and walking away.

  Yet in neither country did the secessionists ever have majority support. In both countries, their base tended to be among small business people, academics and public servants, the kind who in England were at the same time joining the Liberals. But the Scottish National Party and Plaid Cymru had clear objectives, effective political organizations, a certain fashionable rebel quality; and they scared the wits out of the established parties. These would be years when the breakup of Britain haunted many politicians and when nightmares of IRA-style violence being copied elsewhere fuelled best-selling books and television dramas. Once it had been easy to satirize Druidical Welshmen capering about and plunking their harps, or collections of wild-eyed, bushy-haired Scottish poets in kilts and jerseys. But by the seventies, it was not funny any longer.

  The Scottish story can be traced back to the beginning of this postwar story. On 29 October 1949, a raw day in Edinburgh, a solemn faced, dark suited crowd walked into the gloomy headquarters of the Church of Scotland, a parade of landowners and miners, aristocrats and shipyard workers, fat businessmen and lean clerics. They had come to sign a Scottish Covenant, a practice last heard of in the bloody seventeenth century, when fanatic Presbyterians were taking on London and the losers had their heads lopped off in public. But this lot were hardly a revolutionary sight, and their document was full of sonorous assertions about their loyalty to the Crown. There was an impromptu prayer. The Duke of Montrose signed his name. There would be another 2 million signatures in due course, nearly half of Scotland’s adult population, politely requesting a Scottish Parliament again.

  Fast forward a few months, and move to Westminster Abbey at dead of night. A handful of dark-coated Scottish students were busily jemmying loose a lump of stone allegedly carried by a Greek prince and Pharaoh’s daughter in the time of Moses to Scotland, via Ireland. This is the ‘Stone of Destiny’ on which Scotland’s ancient kings sat to be crowned. It had been swiped by the wicked English and was being smuggled back to Scotland where it would be hidden as an inanimate hostage. (The Stone was eventually returned to the police, draped in Scottish flags, and was finally returned to Scotland again in the nineties by the Conservatives.) Soon afterwards brand-new postboxes with the symbol QEII for the new Queen, were being defaced or blown up across Scotland, where there had been no QEI. These are parts of the history of post-war Britain which hardly anyone in England has heard about, or understands. Yet at a time when Scotland is becoming ever more politically disassociated from London, it is a story which deserves to be remembered.

  Having abolished their own parliament in the 1707 Act of Union, the Scots had become steadily keener on getting it back again, ever since Victorian times. The first National Party of Scotland was formed in 1928, merging with the Scottish Party to become the Scottish National Party or SNP in 1934. By the end of the Second World War Labour was committed to some kind of Scottish Parliament. Yet home rule disappeared as an issue again for most people during the forties and fifties, and indeed into the sixties. This was partly the binding-together effect of the war, which increased pride in being British. It was also because both Labour and the Conservatives (called Unionists in Scotland) had pursued policies of granting the Scots factories, agencies and jobs. In the age of centralism and planning, Scotland seemed to be getting quite a good deal.

  During the war, Churchill had appointed a visionary socialist called Tom Johnston, who had once been considered an excellent alternative to Attlee as the next Labour leader, as his Secretary of State for Scotland. Johnson was soon dubbed ‘the uncrowned King of Scotland’ and set about scattering hydroelectric schemes through the Highlands, bringing electricity and work; ordering great commercial forests to be planted; reforming education, and generally carrying on like a progressive dictator. After the war, he continued running the hydro schemes, forestry and Scottish tourism outside party politics, a one-man socialist planning bureaucracy. He even tried to get fish farming started, half a century before the technology was ready, though it would eventually employ tens of thousands. The Tories, then quite popular in Scotland, pursued similar policies, doling out industrial plants such as the Ravenscraig steelworks and obliging the British Motor Corporation to build cars in Bathgate, and the Hillman Imp to be constructed at Linwood. During the Wilson years, Scotland was run by Willie Ross, a Scottish Secretary as authoritarian, self-certain and skilled as Johnston himself, a veritable second uncrowned king. His gifts included a nuclear reactor at Dounreay, the Invergordon aluminium smelter and rescuing a Clyde shipyard. He set up the Highlands and Islands Development Board and the Scottish Development Agency. If planning could make a country rich, Scotland would be paradise. In the sixties, public spending per head there was a fifth above the English average.

  Through most of this time Scottish Nationalism was a mere midge of a movement, producing intense but very local irritation. That grand Scottish Covenant signed in 1949 had simply been ignored. Labour dropped its old commitment to a Scottish Parliament in 1956. Nationalism was associated with poets, dreaming students and the odd eccentric aristocrat, a tartan irrelevance to the modern world. The man who did most to change that is almost forgotten now, including in his own party. He was not Billy Wolfe, the SNP’s first charismatic post-war leader, but a farmer from Ayrshire called Ian Macdonald who left his farm to organize the ‘Nats’ full-time. Before 1962 when he took over, the SNP had fewer than twenty active branches and a membership of around two thousand. Three years later under Macdonald’s organizing, there were 140 branches and six years on, in 1968, the SNP had 484 branches across Scotland and 120,000 members. It is hard to think of a similar rate of growth in any British political party. With the distinctive CND logo everywhere at the time, the SNP came up with its own modernistic thistle loop, and that was soon glinting from lapels and jerseys across Scotland.

  It was at this stage a classic protest party, whose members tended to be prominent in anti-Vietnam and anti-nuclear protests. As disillusion grew, both with the post-Profumo Tories and with Harold Wilson, the SNP began to win first local council seats and then parliamentary by-elections. The first breakthrough came in Hamilton, a small industrial town outside Glasgow where one of the SNP’s new generation, Winnie Ewing, won a safe Labour seat in 1967 and was driven in triumph in a scarlet Scottish-made Hillman Imp to Westminster. Though she lost the seat in the general election she was followed by Margo MacDonald, the ‘blonde bombshell’ of Govan on the Clyde, and by rising success in local elections. In 1970 Donald Stewart became the first SNP victor in a general election contest, winning the Western Isles. In the first 1974 election, the party won a further six Commons seats, and four more in the October election, taking its total to an all-time record of eleven, and the support of just over 30 per cent of Scottish voters. This would give them a crucial power-broking role in the politics of the late seventies which, as we shall see, they badly mishandled. Scotland’s economy was doing badly in profound ways. Apart from the short-term boost of oil-related jobs, mainly in th
e north-east, industry was old-fashioned, riven by strife, badly managed and losing ground in every direction. There was a feeling that the country could not be run worse by its own parliament; that the days of London planning and the gifts of uncrowned kings had not, in fact, produced the modern country everyone hoped for.

  Labour became increasingly panicky. Harold Wilson deployed a favourite device, the setting up of a Royal Commission (‘takes minutes and wastes years’ in his own formulation) which duly suggested devolution for Scotland and Wales. After plots and counter-plots Wilson finally imposed this on a reluctant Scottish party. It was a form of devolution strong enough to outrage many Labour left-wingers at Westminster, including the young Neil Kinnock, yet too weak to please the out-and-out home rulers in Scotland. A handful of politicians, officials and journalists left the Labour Party in the winter of 1975 to form the breakaway Scottish Labour Party under the charismatic Jim Sillars. It briefly captured the headlines before being infiltrated by Trotskyists who, like crocheted bedspreads and lava lamps, seemed to turn up everywhere in the Seventies. The SLP duly split and then collapsed. Some of its members returned to Labour. Others, including Sillars, eventually ended up in the SNP.

  Back at Westminster the new Labour leader Jim Callaghan began a long and weary battle to deliver home rule. Leading the fight was Michael Foot, a romantic enthusiast for devolution, despite the fact that his great hero Nye Bevan had been wholly opposed to such ‘chauvinism’. Yet the most single-minded and influential MP in the devolution debates of the seventies was probably the anti-devolution backbencher Tam Dalyell who later led the Belgrano inquisition. An Old Etonian left-winger, he fuelled himself late into the night with pockets full of hard-boiled eggs prepared by his housekeeper and a head full of hard-boiled arguments about the breakup of Britain, prepared entirely by himself. His ‘West Lothian question’ asked how Parliament could tolerate having Scottish and Welsh members who could vote on matters affecting the English, while not having any authority over the same issues in their own constituencies (because they would be handled by a devolved parliament). It has never been satisfactorily answered. Many believe it will one day end the Union of Scotland and England. A bill for Home Rule was eventually enacted on 31 July 1978 after an exhausting parliamentary battle in which the government’s fate hung in the balance night after night. But a key concession would end up scuppering the bill and Callaghan and the SNP too.