By Angela Haggerty
More questions have been raised about the behaviour of previous UK governments toward North Sea Oil potential after former Labour leader Lord Kinnock spoke of his regrets that no fund had been set up.
In an interview given to Holyrood magazine editor Mandy Rhodes, Lord Kinnock said the actions of Margaret Thatcher’s Conservative government led to a “prodigious waste of oil revenues” and spoke of his regret that the previous Labour government had not adopted a Norway-style oil fund.
Lord Neil Kinnock was elected MP In 1970 and went on to become the party’s leader in opposition in 1983.
He explained that he’d visited Norway in 1975 and was impressed by the country’s approach toward its oil potential. He returned to the UK with a translation of the Norwegian policy and promptly wrote an article for Labour-supporting newspaper Tribune to argue the case for the UK adopting a similar policy.
In the end, Thatcher’s governments prodigiously wasted those revenues, they did damn all; they didn’t even have a couple of miles of motorway or a new hospital to show for it.
“I made the argument for a different system of licensing and royalties and for a different form of taxation with the hypothecation of oil revenues into a sovereign fund,” he explained. “I don’t remember what I said in terms of the proportions at the time but I had the Norwegian legislation in English and I sent a copy to Eric Varley who was Energy Secretary and I said this would make a great White Paper.
“Fair to say, Eric was quite persuaded by it because he was also going to Norway and looking at what they were doing and could see all the possibilities for us too.”
However, despite the enthusiasm, the approach wasn’t picked up by the Labour party.
Lord Kinnock added: “Of course, looking back, I wish that Tribune article had been adopted as Labour policy because I think the party could have fared better in the late 70s and everybody on our side would have fought harder to become the first government to really benefit from the oil revenues.
“In the end, Thatcher’s governments prodigiously wasted those revenues, they did damn all; they didn’t even have a couple of miles of motorway or a new hospital to show for it. It was just outrageous and things could have been so very different.”
Asked if, as opponents of independence have claimed, it is now too late to set up an oil fund, Lord Kinnock replied “Any time in the next, say, 20 years will not be too late to set up an oil and gas fund,”
The comments come just months after former Labour Chancellor Denis Healey told Holyrood Magazine that Labour “underplayed” the value of oil because of the “threat of nationalism” in the 1970s.
The latest revelations – which come less than a year before people in Scotland go to the polls to cast a vote on Scottish independence – will fuel concerns that the value of North Sea Oil has been hidden from the Scottish public for decades.
When Lord Healey spoke out in May, he claimed that the rest of the UK “would suffer enormously if the income from Scottish oil stopped,” highlighting the political importance of the issue.
“I think they are concerned about Scotland taking the oil, I think they are worried stiff about it,” he said.
Lord Healey added that he suspected the Conservative/Liberal Democrat coalition government was employing the same tactics as the Labour part in the 1970’s as the independence referendum looms.
In response to Lord Kinnock’s comments, SNP Treasury spokesperson Stewart Hosie MP said: “Out of the 20 largest oil-producing nations in the world, only the UK and Iraq have not established oil funds – compared to Norway which has succeeded in creating an oil fund worth £460bn.
“Yet the head of the No campaign, Alistair Darling – who was a shadow minister under Neil Kinnock – still argues that Scotland’s oil is better controlled by Westminster, despite its deplorable record.
“Neil Kinnock himself said ‘any time in the next 20 years will still not be too late’. With independence, an SNP government would establish an oil fund.
“Only with a Yes vote in the referendum next year can we ensure that Westminster’s mistakes are not repeated, and that Scotland’s oil and gas wealth provides a lasting benefit for future generations.”
Westminster claims that North Sea oil revenue will begin dropping after 2014 and would not be a reliable source for an independent Scotland’s economy.
The Office of Budget Responsibility (OBR), set up by Tory Chancellor George Osborne, has claimed oil and gas will generate £33bn up to and including financial year 2017/18. This is around £9bn lower than the Scottish Government’s own cautious estimate, which forecast £42bn.
The Scottish government claims that there still exists £1.5 trillion of oil to be extracted from the North Sea. However a recent study, based on OECD figures, suggested that improvements in technology meant that there could be as much as £4 trillion of oil and gas left in Scottish waters.