Westminster's sovereign wealth fund admission is a painful lesson for Scots
When UK Chancellor John Healey finally admitted on TV that a UK sovereign wealth fund established in the 1980s would today be worth roughly £1 trillion he was touching on a painful area for Scots. We know what we have lost. We watched UK governments we did not elect squander what should have been Scotland’s generational wealth.
Scots often ask themselves - “How did Scotland discover one of the greatest oil and gas fortunes in the world, yet end up with so little to show for decades of extraction?” The answer, in a nutshell, was that Scotland had no control over how this asset was managed.
Scots looking around at Aberdeen and the North East; the oil capital of Europe, scratch their heads, wondering why the area has benefited so little in comparison to other oil capitals. Scotland’s economy grew far more slowly than comparable independent countries - even those that didn’t find oil!
Norway used its North Sea windfall to build the world’s largest sovereign wealth fund - now worth a staggering £1.64 trillion (£283,000 for every single Norwegian citizen). Scotland was not able to do the same.
Scotland’s oil and gas bounty was plundered. The UK Government didn’t establish a sovereign wealth fund. It didn’t keep a serious state stake in production or retain a share of the wealth in public hands. Instead, it opened the fields up to multinational operators who turned everything up to 11. They extracted as much as they could, as fast as they could, leaving behind thousands of kilometres of underwater industrial infrastructure, some of it contaminated with toxic mercury.
Norway took a different approach to extraction - it has much more in reserve. It also protected local jobs, so in every downturn, the Norwegian sector saw fewer people thrown out of work.
The UK Government pocketed the tax receipts and spent much of them on funding Margaret Thatcher’s assault on the trade unions and on the enormous welfare bills that followed the destruction of industrial jobs.
We have been here before. The UK government hid the infamous McCrone Report for 30 years. Written by government economist Gavin McCrone, the secret document warned Westminster that an independent Scotland’s oil wealth would make its economy incredibly strong. It predicted that an independent Scotland would run massive budget surpluses and possess a currency so stable it would rival the hardest currencies in Europe. What did Westminster do with this revelation? They buried it.
Former Labour Chancellor Denis Healey later confessed: "I think we did underplay the value of the oil to the country because of the threat of nationalism."
And what happened to the potential for Scotland to build a strong economy? It did not happen because Scotland remained part of the UK. The potential withered.
Then when Grangemouth, Scotland’s last refinery and the one where most of Scotland’s diesel and petrol was produced, was facing closure, the UK government saved British Steel in Scunthorpe instead. Now Scots consumers and businesses are paying the price of that decision at the pump.
Things could have been so different if Scotland were independent. Now we are watching the same story unfold as Scotland’s just transition to renewables is thrown away for lack of care and investment from Westminster.
Scotland can’t change the past - but we can change the future. Independence will put Scotland’s resources and Scotland’s choices in Scotland’s hands.
