Oil and our Economic Future

This article was originally published in The Herald

I was born 15 years after the SNP’s breakthrough election of 1974, where it achieved 30.4% of the Scottish vote.

But I still know all about the slogan: “It’s Scotland’s oil”. It captures the faith that a small country can be a credible economic power, and it still resonates with me.

I am neither a member of the SNP nor a Nationalist. But I do support independence, and I am frustrated that we lack this sort of clarity today.

The leaders of Yes Scotland and the SNP are defensive about our prospects, stuck in a cycle of fending off attacks from the No side. They should assert the case for a different sort of economy, one that uses our resources to meet the needs of the Scottish people.

Recent polls have shown the public lacks faith in the economics of independence. This has created a huge deficit, with Yes at 31% next to No at 59%. To turn this round, we need a game-changer.

This means shifting the debate from the empirical to the ideological. Rather than quibble over facts and figures, Yes leaders need to put Westminster under pressure by asking whether our resources are being used to address endemic problems such as poverty and unemployment in Scotland.

Is it possible to turn our economy towards social justice? Thirteen years of New Labour suggests this is unlikely.

North Sea oil is central to the debate about our economic future. Unionists are in denial about this, and their attacks have been widely accepted in the media. But rumours of the death of our oil industry are greatly exaggerated.

A report from the David Hume Institute suggests the industry is worth between £2.25 trillion and £4trn. There’s still plenty of potential. The question is: how we use it. The answer has enormous implications for the rest of our economy.

As many economists, including Nobel Prize-winner Joseph Stiglitz, have pointed out, Westminster squandered our North Sea bounty. It let corporations exploit revenues for short-term profit, and spent the tax windfall on a disastrous experiment in monetarism. Rather than invest in future industry, our oil was used as a battering ram to destroy Scotland’s industries.

Successive Tory and Labour governments were happy to cream off tax receipts without any thoughts about the long-term health of our economy. The result has been haphazard growth that has benefited only the elite. When he was energy minister from 1975-9, Tony Benn told oil chiefs: “We have a common interest in getting oil out of the North Sea, but if there is a conflict of interest between your shareholders and my electors, my electors are going to win.”

Sadly, subsequent ministers have given in to big oil, and our economy has paid the price.

We need to go further than the SNP and even Joseph Stiglitz are willing to allow. A future Scottish Government should take oil under 51% public ownership.

Ralph Blake, an analyst in the Scottish Financial Industry, has argued that nationalisation would see more than a tripling of oil revenues. This would allow us to present a different sort of economic future, with a Norwegian-style oil fund to tackle poverty and unemployment.

This should be central to the Yes case. We also need to tackle the question of climate and sustainability, by using the oil fund to build a green re-industrialisation that could be the envy of the world.

With 25% of the renewable energy potential in Europe, Scotland’s green energy potential is equivalent to half of all of Germany’s energy needs. We could power Scotland’s people and much more, and we could bring down the energy bills in people’s homes.

Radical ideas are needed to win this debate. Oil and energy are central to Scotland’s radical future, and we need a vision for their reconstruction.

Ben Wray is active in the Radical Independence Campaign and is a researcher for the Jimmy Reid Foundation.

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