Scotland was a “juicy target” for cuts according to one of Margaret Thatcher’s key advisers.
In private cabinet papers from 1986 released under the 30-year rule, David Willetts, who served as a minister in David Cameron’s government until May's election, told Thatcher that she could win votes by inflicting “deep cuts” on the “pampered Scots.”
Scotland, Willetts said, was the “only juicy target” that Thatcher had yet to cut and he claimed £900m more was spent on Scots than people living in England.
The Downing Street papers released by the National Archives on Wednesday show that Willetts, now in the House of Lords, believed Thatcher was being too soft on Scotland in a bid to stop devolution.
“Under the guise of stopping devolution George Younger [then secretary of state for Scotland] is delivering it – your economic policies stop at the English border,” Willetts told Thatcher in a secret review of the Barnett Formula.
“Ultimately, the question is a political one. The position of the Conservative party in Scotland is so bad that it might not deteriorate any further. And the envious north of England might even welcome an attack on the pampered Scots over the border. On the other hand, George Younger is reported to be very ‘emotional’ [this was underlined by Thatcher] on the subject and may well threaten to resign.”
Willetts and senior figures in the Treasury had previously argued to scrap the Barnett formula and referred to Scottish “snouts firmly being in the trough”.
Thatcher made sure the review was held "in strict secrecy" and her private secretary warned of the "sensitive" nature.
Treasury official Sir Brian Unwin wrote in a note to the prime minister: "There appears to be ample evidence of substantial over-provision in Scotland; some over-provision in Northern Ireland but none in Wales."
The papers show that a furious battle between the Treasury and the Scottish Office over cuts ended in stalemate. In July 1986 Thatcher postponed any further consideration of cuts to Scotland for another year.
An SNP spokesman said "no one would be surprised at secret Tory plots to slash Scotland's budget."
Other disclosures in the released documents include the reaction from Thatcher and her advisers to the 1985 Broadwater Farm riot in north London.
Oliver Letwin, currently Cameron’s policy chief and then adviser to Margaret Thatcher, blamed the civil unrest on "bad moral attitudes” and advised against plans to encourage entrepreneurs in black inner city areas, saying they would set up in the "disco and drug trade".
A government source told the BBC it was a "historical" document "written by a policy team whose main task was to challenge orthodox views".
Letwin said this morning that he apologised for “any offence caused.”
The 1985 memo to Thatcher, written by Letwin and future Tory MP Hartley Booth, said: "The root of social malaise is not poor housing, or youth 'alienation', or the lack of a middle class," they wrote in the document, which has been released by the National Archives.
"Lower-class, unemployed white people lived for years in appalling slums without a breakdown of public order on anything like the present scale; in the midst of the depression, people in Brixton went out, leaving their grocery money in a bag at the front door, and expecting to see groceries there when they got back.
"Riots, criminality and social disintegration are caused solely by individual characters and attitudes. So long as bad moral attitudes remain, all efforts to improve the inner cities will founder."
The pair, who were members of the Downing Street policy unit, also dimsmissed plans by government ministers to encourage new black middle-class entrepreneurs.
"David Young's new entrepreneurs will set up in the disco and drug trade; Kenneth Baker's refurbished council blocks will decay through vandalism combined with neglect; and people will graduate from temporary training or employment programmes into unemployment or crime," they said.
Labour MP Chuka Umunna, who grew up in Brixton at the time of the riots, said: "The authors of this paper illustrate a complete ignorance of what was going on in our community at that time, as evidenced by their total and utter disregard of the rampant racism in the Met Police which caused the community to boil over - there is no mention of that racism in their paper.
"The attitudes towards the black community exhibited in the paper are disgusting and appalling. The tone of it in places is positively Victorian."
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