Tuesday, 16 April 2013

Thatcher's Disputed Legacy: Squandering North Sea Oil, Norway's Sovereign Wealth Fund

Did the late former Prime Minister Margaret Thatcher squander Britain's 'great black hope'? Paul Coleman outlines another furious Thatcher legacy debate.
  Rewind. It's November 2, 1975. BP's Aberdeen HQ in Scotland. The Queen gently paws a gold-plated button. North Sea Oil starts to flow.
   Outposts like Nigg, Sullom Voe and Aberdeen gush with oil men and money. The Scottish National Party chimes, 'It's Scotland's Oil'.
  North Sea Oil peaks in the mid-1980s. Thatcher's Treasury receives a tenth of its tax revenues from oil companies.

Other way Norway
North Sea Oil's other beneficiary - Norway - stashes revenues in a national deposit or 'sovereign wealth' fund. By 2013, Norway enjoys a growing $700 billion fund.
  Thatcher did not follow Norway's example. Nor did she allow the British National Oil Corporation - created by Labour energy secretary Tony Benn in the mid-1970s - to take a majority stake in the North Sea oil fields and invest in onshore industries, infrastructure and jobs.
  In fact, Thatcher privatised BNOC in 1982, clearing the way for BP to buy it. She spent oil revenues on tax cuts for the wealthy and on welfare benefits for the growing mass of unemployed people.

Sovereign wealth
PriceWaterhouseCoopers economist John Hawksworth calculated in 2008 that had Britain saved and invested its oil revenues, the British people would've now enjoyed one of the world's biggest sovereign wealth funds - comparable to the Arab oil state funds now buying up huge chunks of prime central London land and property.

Opportunity knocks...again
After years of declining oil production, 14 new North Sea oilfields look set to produce 470m barrels of oil in 2013 - rising to 2m barrels per day by 2017.
  But will Thatcheresque deficit reduction austerity and tax cuts dangle the British people over a barrel of 'great black hope' once again?
As new North Sea Oil opportunities knock, who will really benefit from future oil tax revenues?

Paul Coleman, London Intelligence, April 2013

No comments: