Secret papers show Margaret Thatcher launched an “invisible” raid on Scotland’s budget – despite admitting it would provoke fury in the wake of factory closures in the Highlands.
The Iron Lady sanctioned a behind-the-scenes plot to start “chipping away” at the nation’s block grant, claiming Scots received “generous” treatment and “over-provision”.
The revelations are contained in confidential Cabinet records from 1984 being made public for the first time today.
Last night, a spokesman for First Minister Alex Salmond described the contents as “astonishing”.
In disclosures that are certain to be seized upon in the battle over the nation’s future, it has emerged that in 1983 the Treasury began drawing up plans to slash Scotland’s budget, behind the back of Scottish Secretary George Younger.
John Redwood, who was a senior policy adviser to Mrs Thatcher at the time, wrote to the prime minister in January 1984 saying there was a £900million overspend in Scotland’s £6billion budget – 15% – and that she should seek savings of £500million.
Exchanges between ministers describe the funding as the “territories programme” and refer to justifications such as Scotland having a pupil-teacher ration of 17.1 compared to England’s 18.5, and claims that roads north of the border were “under-used”.
When the plans were discussed in February 1984, the then chief secretary to the Treasury Peter Rees put forward another reason for cuts – that “with the growth of the North Sea oil sector, and electronics, there had been a substantial narrowing of the income differential” between Scotland and England.
Minutes show Mrs Thatcher agreed there was “over-provision”, but warned of the “important political dimension” following the recent closure of the Invergordon smelter and the Wiggins Teape pulp mill at Fort William.
The note said: “A frontal assault on public expenditure in Scotland would put him (Mr Younger) in extreme difficulties and could create a possible opening for the SNP.”
It added: “The prime minister said she recognises the case for reducing public expenditure provision in Scotland and Northern Ireland, but felt it should be tackled with great care. There should be no attempt to publicise the figures.”
When Mr Younger was eventually informed of the bid to reduce Scotland’s budget, he moved to block plans for a study to prove the “over-provision” and said any cuts must be “invisible”.
A memo to the prime minister in October 1984 said: “Mr Younger is still objecting to the principle of such a study. He feels even the knowledge of its existence would be very controversial.”
Mr Rees wrote to Mrs Thatcher the following month: “He (the Scottish Secretary) was prepared, where possible, to make economies in provision for Scottish programmes but this was best done by chipping away over a period of years.”
A row erupted between Mr Younger and Mr Rees over the level of cuts that could be made without being “detected”.
He repeatedly insisted that “it would be impossible to defend savings which were visible”, but said he was “willing to trim the Scottish block programmes as far as possible so long as that could be done invisibly”.
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