Ian BetteridgeI am VERY tempted to write another long post about how the decision in the 1970s not to establish a Norway-style sovereign wealth fund in favour of simply using the oil money to prop up finances at the time, has done more damage to the UK than any other decision in history. LONG THREAD, SORRY.
Without it, Thatcherism would have been impossible. No oil money, and the welfare bill for mass unemployment would have been unsustainable. Without that unemployment, union power couldn’t have been broken, and privatisation would have been far harder.
It was oil revenues that bankrolled the unemployment, the destruction of manufacturing, the high exchange rate, the termination of British coal mining, and the big bang that turned London into arguably THE capital of global neoliberalism.
Oil revenues were used to cut taxes for business and the wealthy and to fund benefits during a wave of industrial closures. The oil money paid for tax cuts at the top and the benefits at the bottom. Despite Thatcher’s reputation as a prudent manager of finance, no money was set aside for the future.
The government could afford a long confrontation with the miners because it had both the fiscal cushion and an alternative energy supply. Without North Sea gas, a miners' strike long enough to threaten power generation would have been genuinely dangerous to the government's survival.
And then, to complete the insanity, Thatcher privatised the industry generating the revenues that were funding the whole operation. The British National Oil Company (BNOC) was privatised in two phases in 1982 and 1985.
BNOC was created by Harold Wilson's government in 1975, specifically to give the British state a direct stake in North Sea extraction rather than leaving it entirely to private multinationals like BP and Shell. It was our equivalent of Norway's Statoil, established around the same time.
And of course the government freed itself in stages from all its equity in BP: 51% state ownership in 1977, down to 46% in 1981, 31.5% in 1983, and fully privatised in 1987.
Labour built the institutional architecture to capture public value from a public resource; Thatcher dismantled it, took a short-term cash payment, and handed the long-term revenue stream to private shareholders.
Norway kept its equivalent. And that is why Norway has the money to subsidise EVs to the point where it barely needs oil for cars, and we do not.
BashStKid@ianbetteridge If you look at the detail, Thatcher was even more unnecessarily generous to the companies than that. Never been able to work out why.
@BashStKid It was for the greater good of the smaller number.
Peter Brown@ianbetteridge @BashStKid What is often forgotten is that before the oil started to flow the British government went cap in hand to the IMF for a bailout.
The UK was bankrupt.
And as we see oil diminishing both in supply and demand the economy has not changed significantly, so we can expect the UK to be bankrupt again when the oil and gas is finished.
And that is why they will do everything legal & illegal, moral and immoral to prevent Scotland becoming independent.
Simon Brooke@BashStKid @ianbetteridge oh yes you have.
@simon_brooke @ianbetteridge No, seriously.
Plenty of others soaked up oil money (Cecil Parkinson as energy secretary!) but Thatcher herself always seemed to be starstruck by oil bosses, especially if American, and could barely wait to give them whatever they asked for.
It was a miracle the Piper inquiry managed a degree of independence, rather than just being stifled like every other.
@BashStKid @ianbetteridge the fact that the corruption was on behalf of other people — especially foreign commercial entities — doesn't make it not corrupt. Quite the contrary.