Much as been made by
some people about Norway’s relationship with the European Union and about how
it could be the model for the UK’s relationship with the EU in the event of a
‘NO’ vote. It sounds reasonable save for the fact that the Norwegians have been
fiscally responsible for the last 50 years, the same cannot be said the UK,
where Westminster governments regardless of their political hue pursued (at
least since 1979) short term policies with long term consequences.
Norway closely cooperates with its
Scandinavian neighbours (potentially a model for cooperation for the nations
within these isles), it was a founder member of EFTA, yet in 1973 end 1995
voted no to join the EEC/EU. Norway like the UK is a member of NATO and has
contributed troops to NATO operations and has lead
responsibility for NATO's air
policing mission over the Baltic states of Estonia, Latvia and Lithuania.
The big difference,
save for population size and energy policy is that Norway has a sovereign oil
fund which currently stands at around or about £400 billion (around $640
billion); the UK has no sovereign oil fund. The UK rather than thinking in
medium or long term, during the oil boom years, simply blew the North Sea cash
on cutting national borrowing and keeping down taxes. Whatever revenue came in
disappeared into the day-to-day budget.
In Norway for the last 18 years Norway, various governments saved the government's petroleum and gas revenue - arising from levies on oil and gas companies which operating in Norway and from its stake in national energy giant Statoil – into its national oil fund. The income from the fund actually cover 11% of Norway’s national spending. Even more ironically, the UK buys large quantities of Norwegian gas, adding to Norway’s nest egg, which happens to be one of the biggest sovereign wealth funds in the world.
Norway’s global investment arm of the Government Pension Fund, as the oil fund is formally named, is one of the biggest investors in shares across Europe, even though its share holdings took a hammering during the financial crisis, the fund is now acquiring significant trophy properties across Europe. Around 4% of the fund (around £16 billion pounds) is diverted each year to subsidise Norwegian government spending.
This keeps Norwegian hospital beds open, helps pay for social benefits and has paid for significant infrastructure projects across Norway. Norway’s fund continues to grow as levies on oil and gas production and on oil companies bring in around £30 billion annually. As the oil and gas continue to flow and oil and gas prices remain high, then Norway’s fund continues to grow.
The UK, under Labour’s James Callaghan in the mid to late 1970s considered setting up an oil fund, but as economic crisis worsened it simply grabbed the money. In Norway they followed the British, but wisely had second thoughts after the oil price collapsed in the 1980s. So they decided to consciously bank the benefits from the oil bonanza for future generations of Norwegians.
In Norway for the last 18 years Norway, various governments saved the government's petroleum and gas revenue - arising from levies on oil and gas companies which operating in Norway and from its stake in national energy giant Statoil – into its national oil fund. The income from the fund actually cover 11% of Norway’s national spending. Even more ironically, the UK buys large quantities of Norwegian gas, adding to Norway’s nest egg, which happens to be one of the biggest sovereign wealth funds in the world.
Norway’s global investment arm of the Government Pension Fund, as the oil fund is formally named, is one of the biggest investors in shares across Europe, even though its share holdings took a hammering during the financial crisis, the fund is now acquiring significant trophy properties across Europe. Around 4% of the fund (around £16 billion pounds) is diverted each year to subsidise Norwegian government spending.
This keeps Norwegian hospital beds open, helps pay for social benefits and has paid for significant infrastructure projects across Norway. Norway’s fund continues to grow as levies on oil and gas production and on oil companies bring in around £30 billion annually. As the oil and gas continue to flow and oil and gas prices remain high, then Norway’s fund continues to grow.
The UK, under Labour’s James Callaghan in the mid to late 1970s considered setting up an oil fund, but as economic crisis worsened it simply grabbed the money. In Norway they followed the British, but wisely had second thoughts after the oil price collapsed in the 1980s. So they decided to consciously bank the benefits from the oil bonanza for future generations of Norwegians.
Mrs Thatcher was many things to many people (some
of them unprintable on this blog) but she was in no way an investment prime
minister. David Cameron may credit Mrs T for having made Britain great again after the late 1970s but she spectacularly failed to
invest in Britain’s post-Thatcherite future. Capital spending plummeted
and the UK’s national infrastructure was left to rot and public services in
particular were starved of resources.
The Brits chose neither to save nor too invest and squandered a fortune on bailing out the economy and subsidised tax cuts. It did not have to be this way – in Shetland, the council set up an oil fund which contains around £185 million today, even after upgrading roads, ferry terminals and local swimming pools. In Scotland, the Scottish Government has advocated setting up a special fund supported by North Sea oil revenues.
While the North Sea oil is well past its peak, and although oil prices are currently low, the future prospects of West Coast oil fields could seriously deliver for Scotland. The prospect of future energy revenues being banked in Scotland rather than squandered by Westminster may concentrate the mind of the Westminster elite. This may go a long way to explain David Cameron and the leaderless Labour Party’s inherent nervousness about the renewed prospects of Scottish independence – especially in the event of a wrong result in any EU referendum.
As for Cymru / Wales - there is no
reason why our country cannot be a self-reliant prosperous nation; the Welsh
people are not predisposed by way of education, outlook or aspiration to be a
poor people. Yet if you listen to Labour in Wales we will always be poor, we
will always be dependent and we will have few economic prospects beyond
handouts and independence is unaffordable, etc. Like any simple untruth,
keep it simple, repeat it often enough and people will start to believe it.
As pointed out by
Plaid Cymru Leader Leanne Wood during the televised Westminster debates, some
parts of our country are still suffering from a prolonged downward economic
spiral that predates Labour last period in power (in Westminster) and the financial
collapse. What our communities are facing now are the consequences of decisions
generations of unionist (mostly Labour) politicians have consistently failed to
make on behalf of Wales, which are now impacting on our communities from one
end of our country to the other.
Aside from the desire to make things better and the vision (something I believe that Labour in Wales is incapable of delivering) a Welsh government needs to have powers over our natural resources. We need to be able at a basic level to regulate, develop, control and own our sustainable energy (basically wind, water, wave and solar) resources. With the right leadership and some medium to long-term thinking there is no reason why Wales cannot play a leading role in the development of a global low-carbon economy.
As a nation, when it comes to natural resources Wales is rich by way of comparison with some developing countries, our natural resources sustainably used could underpin a first class economy. The current devolution prevents a Welsh government from doing this even if it wanted too. Not for nothing was Water excluded specifically by the Labour in Westminster Government from the National Assembly’s powers and only energy projects up to 50MW (on shore) and 1 MW off-shore come under the control of the National Assembly.
We need a Sovereign Wealth Fund for Wales (initially based around the assets of the Crown Estates in Wales - control of which needs to be transferred to the National Assembly) to make sure that the benefits of the green energy revolution stay here rather than feeding shareholder dividends in the city (and elsewhere) and are used to ensure that the people of Wales get their full share of the energy and wealth created. Such a fund could act as a guarantee for further borrowing and could build to be an impressive multi-million pound source of funding.
Some of which could be used to offer loans for small micro-generation projects. The way things work at the moment wind farm developments tend make token gestures towards feeding some of their subsidized profits towards local communities. At best this might be considered patronizing, especially as local communities (along with the Welsh Government) are effectively excluded from any meaningful participation in the planning process if the development is over 50MW in size.
Aside from the desire to make things better and the vision (something I believe that Labour in Wales is incapable of delivering) a Welsh government needs to have powers over our natural resources. We need to be able at a basic level to regulate, develop, control and own our sustainable energy (basically wind, water, wave and solar) resources. With the right leadership and some medium to long-term thinking there is no reason why Wales cannot play a leading role in the development of a global low-carbon economy.
As a nation, when it comes to natural resources Wales is rich by way of comparison with some developing countries, our natural resources sustainably used could underpin a first class economy. The current devolution prevents a Welsh government from doing this even if it wanted too. Not for nothing was Water excluded specifically by the Labour in Westminster Government from the National Assembly’s powers and only energy projects up to 50MW (on shore) and 1 MW off-shore come under the control of the National Assembly.
We need a Sovereign Wealth Fund for Wales (initially based around the assets of the Crown Estates in Wales - control of which needs to be transferred to the National Assembly) to make sure that the benefits of the green energy revolution stay here rather than feeding shareholder dividends in the city (and elsewhere) and are used to ensure that the people of Wales get their full share of the energy and wealth created. Such a fund could act as a guarantee for further borrowing and could build to be an impressive multi-million pound source of funding.
Some of which could be used to offer loans for small micro-generation projects. The way things work at the moment wind farm developments tend make token gestures towards feeding some of their subsidized profits towards local communities. At best this might be considered patronizing, especially as local communities (along with the Welsh Government) are effectively excluded from any meaningful participation in the planning process if the development is over 50MW in size.
One size does not fit all, our Communities should be able to develop and benefit from small-scale renewable energy projects and regeneration projects in their own areas. If we do this right then we can develop more community leadership, grow local ownership of renewable energy projects and develop more cooperative models of ownership. People living in communities close to renewable energy installations should also receive the benefits of discounted energy and local dividends for community projects.
If we do this right then our communities and our country can become less dependent and we can become more self-reliant socially and economically, ironically Labour in Wales, who are part of the problem rather than the solution, would no doubt come up with reasons to oppose any of this. We also need to ensure that democratic accountability and planning gain is built into the energy development process and that our communities are able benefit from community beneficial energy projects.
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