THE Archbishop of Canterbury said independence was "not a magic bullet" for Scotland and admitted he had yet to be convinced of the wisdom of a split from the UK.

Dr Rowan Williams, on his last visit to the General Assembly of the Church of Scotland before stepping down in December, said his attitude towards the issue had changed since, as a young Welshman, he supported his country's independence.

He said if Scotland broke away from the rest of the UK, it would have to find a way of working with England, Wales and Northern Ireland economically, rather than competing against them.

Dr Williams, who made his comments in an interview after addressing the annual gathering in Edinburgh yesterday, said: "As a teenager, I was a great supporter of Welsh independence – I went to school in Swansea – and I have instinctive sympathy with small nations.

"The problem is small nations in a small island have to live together in a sustainable way and that it why independence in itself is not a magic bullet. You have to find ways of working economically together even if there is a higher degree of operational political and fiscal independence.

"There has got to a way of pooling resources once again, like the churches, because it is too small an island to put up with rivalries – we tried that for several hundred years."

Asked if independence is workable, Mr Williams said: "It depends what model you are looking for really. As it is, there is an increasing amount of devolved power in Scotland and Wales which has been broadly a healthy development.

"Whether it would help us to be separate states I really don't know. Personally I still have to persuaded about that."

He added: "If you want devolved parliaments to have some effective control over, let's say education and health policy, you have to have a higher level of fiscal independence built into that – how you raise money and spend it. There is a case for that and it is some way short of separate states."

Ian Galloway, convener of the Kirk's Church and Society Council said: "The Archbishop is correct to say independence is not an end in itself but should only be the result of concluding that it is the best way of bringing about real social justice.

"This debate needs to be rooted in how best we care for the vulnerable, stand by the poor, nurture our children, protect the environment and welcome the stranger rather than simply assume that one form of constitutional arrangements or another will be the answer to those questions."

Earlier, Dr Williams urged the Church of Scotland to unite if it is to maintain its mission of ministering to every parish.

Dr Williams – who becomes Master of Magdalene College, Cambridge, in January – said the only way to maintain the basic tenet common to both national churches is to consider sharing congregations with similar faiths, including Anglican and Catholic.

The Church of England leader told Kirk members: "Faced as we are with the signs of division, irresoluble conflict, preoccupation with internal problems, it is sometimes tempting to focus on the weakness or the chaos. Yet we are called to confidence in the Church because of our confidence in the Church's Lord."

A spokesman for First Minister Alex Salmond welcomed the Archbishop's contribution to the independence debate.

He added: "We look forward to an independent Scotland working together with the other nations of these islands, with the political and fiscal independence that we need to build a fair society and successful economy."

l Significant numbers of ministers are living in fuel poverty in ageing manses, the assembly was told yesterday.

An investigation is to be held to establish the extent of the problem among Kirk clergy but a senior source said it affected ministers across Scotland.