Success of Norwegian Oil fund highlights Westminster failure


By Martin Kelly

The strong performance of Norway’s Oil Fund has highlighted the scale of the missed opportunity resulting from the squandering of North Sea resource by successive UK Governments, the SNP has claimed.
Figures published today have revealed the extent of the success of the Norwegian fund, which now owns over one per cent of all global stock.

Norway’s Government Pension Fund Global began in 1996 with an initial investment of around $300 million, but reports in today’s Financial Times (Monday 20 August) place its value at a staggering $600 billion.

Originally expected to last around 30 years, experts now believe the fund could last a century or more.

Seizing on the new figures, the SNP claimed the mismanagement of North Sea resources had meant the UK was not as well placed to weather the economic storm as it could have been.  SNP MSP Maureen Watt said had a fund been in place then it could have been targeted at capital projects in order to ease the effects of the current recession. 

Commenting, Ms Watt who convenes the Infrastructure and Capital Investment Committee said:

“The speed and the scale with which Norway’s oil fund has grown shows just how big an opportunity successive UK Governments have let slip through their fingers.

“Had the oil and gas resources off our coasts been invested wisely, we would be far better placed to grow our way out of recession by funding capital investments.

“Investing in capital projects is perhaps the single most effective thing that could be done to get the economy growing again, which is why our calls for the Treasury to invest in shovel-ready projects have been backed so widely.

“While the Treasury may have denied itself the resource of an oil fund to fall back on, it is still imperative that George Osborne ends his stubborn obstruction and invests in infrastructure before the damage he is doing becomes irreparable.

“The Treasury may have failed in its responsibility to establish an oil fund, but it would be utter negligence if it now failed to invest in shovel-ready projects.”

The SNP has consistently argued that an oil fund is still possible.  Speaking in May this year, First Minister Alex Salmond pointed out that the UK Treasury was expecting tax receipts worth £13.4 billion from the sector this year.

With ninety per cent of the sector located in Scottish waters, the revenues that would come to an independent Scottish Exchequer would allow a wealth fund to be set up within a couple of years, said Mr Salmond.

Ms Watt added: “Of course the growth of the Norwegian oil fund over a relatively short space of time shows that it is not too late for Scotland to get started with its own oil fund, but to do that we will need the normal powers of an independent country.”

Unionists have argued that the levels of UK debt Scotland would have to shoulder if it became independent would mean such a fund would be unaffordable.

Earlier this year, the Centre for Public Policy for Regions (CPPR) published a report warning that diverting funds elsewhere would put at risk public services or add to Scotland’s national debt.

Speaking in March, CPPR member and former Head of Policy Research at the Scottish Labour Party, John McLaren said of SNP oil fund plans: “If this is a response to the concerns raised about the original proposal, it does not go far enough.  It does not explain when it would be set up, how the books would be balanced or where lost income [for services paid for by oil revenues] would be saved.

“There are many questions that need to be answered.  But in the end, why set up an oil fund when you can pay off national debt instead?”

In August 2010, Nobel Prize winning economist and former Chief Economist of the World Bank Josef Stiglitz stated that it was “imperative” that an oil fund be established after the UK had “squandered” North Sea oil resources.