DEAL-MAKING with US oil executives was the priority of Labour energy ministers in the 1970s, as they tried to play down the prospects of an independent Scotland laying claim to North Sea revenues, it was admitted yesterday.

Senior figures from the 1970s responded to revelations that Whitehall officials prepared a secret dossier making a powerful case for Scottish independence.

They said that political instability and a weak negotiating position would leave Scotland much worse off in negotiating with the multi-national oil majors.

Tony Benn, the energy secretary from the 1970s Labour government, disputed a claim, contained in the 1975 dossier, that the extent of the oil bonanza was "disguised" by Whitehall.

He said the case against independence was proven by Scottish voters refusing to back it.

"We knew that the oil value was enormous, " he recalled.

"Everybody knew this was a very, very valuable resource.

There was never the enthusiasm generally for Scottish independence, even though the argument was a powerful one.

"The reason Scotland didn't become independent isn't because the English stopped it.

It's because the Scots didn't vote for it."

He added: "If Scotland were independent, it would have been far, farweaker in negotiating with the multi-national oil companies. I worked with them all the time, making sure trade unions were recognised."

Dickson Mabon, who was oil minister and Labour MP for Greenock and Port Glasgow, said yesterday the priority was to make sure American oil executives invested in North Sea drilling.

Also, with major gas finds off the English east coast, he said the government was keen not to spark a fight over ownership of the assets.

"There would have been a very real English backlash, " he said.

"The figures weren't clear, they were constantly changing and gas developed a higher profile. We were keen to get oil companies involved - mainly American - and we didn't want them to fear that their investments would be at risk if the assets shifted to Scotland."

Lord Ewing, a Scottish Office minister in the 1970s Labour administration, recalled the atmosphere when the prospect of independence was raised with Willie Ross, his boss as Scottish secretary: "If anything smacked of independence, you had to scrape Willie off the ceiling."

The dossier's revelations, published yesterday in The Herald, showed that Whitehall knew there was a strong case for independence but chose to keep it secret.

Gavin McCrone, a senior Scottish Office economist, circulated a document that argued Scotland would have "embarrassingly" large tax surpluses and could become one of the strongest economies in Europe over a long period, comparable to Norway and Switzerland.

The document, written in 1974 and 1975, argued that the balance-of-payments deficit that dogged Britain at the time would be "swamped" in Scotland by oil revenue and would "transform Scotland into a country with a substantial and chronic surplus".

The Scottish National Party yesterday demanded an apology from the government.

"We have been lied to for a generation, " said Kenny MacAskill, the Holyrood group's deputy leader.

"Thirty years of lies, both Labour and Tory governments have conspired to deny Scotland our rightful wealth.

They knew how wealthy Scotland is and how wealthy our people could be, but they lied to us.

"Some countries discovered oil and made the desert bloom.

We discovered oil and created, in too many places, an industrial desert."

He added: "There can be no delay. It was Scotland's oil then, and it's Scotland's oil now.

"A generation has failed.

Now it is up to this generation to use the oil wealth as it should have been a generation before."

The claims were dismissed by Alistair Darling, the Scotland secretary, who said: "This is typical of the Nationalists, looking to the past. This document is 30 years old.

"The fact is that all recent figures show that an independent Scotland would have a large fiscal deficit, even if oil revenues are taken into account. That would mean cuts in public services, " he said.