Bora M. Alper
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.
glasspshr@ianbetteridge how would you imagine coal would have been phased out under the scenario of the British gvt keeping state control of the oil company?
@glasspusher Slowly, is the quick answer. And with proper support for the communities involved.
@ianbetteridge yeah. I’m a big fan of getting rid of coal while giving the miners training and jobs on the next thing.
@glasspusher Yep. For Thatcher, closing the mines wasn’t simply an economical choice: it was political warfare. It wanted to defeat the miners, not to support a transition out of coal.
kim_harding ✅@glasspusher @ianbetteridge There is a myth that Thatcher phased out coal by closing the UK mining industry, she didn't, she just replaced British mined coal with Australian mined coal... the phase out of coal came much later.
Clutha🏴🇸🇩🇺🇦@kim_harding @glasspusher @ianbetteridge
Thatcher’s enemy (according to her) was the unions. Nissan has proven UK staff can reach agreement with employers.
Thatcher’s enemy (according to her) was the unions. Nissan has proven UK staff can reach agreement with employers.
Kim Spence-Jones 🇬🇧😷@Clutha @kim_harding @glasspusher @ianbetteridge
There is the complexity that UK coal was not only deep-mined (expensive!), but also high in sulphur and thus not suitable for burning in a world aware of the problems of sulphur dioxide (remember acid rain?) The UK coal industry was doomed, its death merely hastened and mismanaged by Thatcher (and to some extent also by politically motivated Unions led by Scargill and friends).
There is the complexity that UK coal was not only deep-mined (expensive!), but also high in sulphur and thus not suitable for burning in a world aware of the problems of sulphur dioxide (remember acid rain?) The UK coal industry was doomed, its death merely hastened and mismanaged by Thatcher (and to some extent also by politically motivated Unions led by Scargill and friends).
@KimSJ @Clutha @kim_harding @ianbetteridge
Yes, we’ve had similar problems on our side of the pond. Mines close, and the workers and the community are left to rot. That is morally unacceptable.
My grandfather owned and worked a small mine in Pennsylvania. He died of black lung
Nicovel0 🍉@ianbetteridge maybe a stupid question, but why didn’t the U.K. set one up now? Soon enough it will be a net exporter of energy again, most notably wind.
@Nicovel0 Ideology, timing, and the structural weakness of the British state basically. The money started to kick in at almost exactly the point thatcher got elected, and a sovereign wealth fund was almost exactly the opposite of her ideology. And she wanted the oil money to help “transform” the British economy, by supporting her plan to break the unions etc.
The Treasury treated oil revenues as income - money to fund current spending - rather than as a capital asset that belonged to future generations as much as to the present. That accounting choice was political, not an economic inevitability.
@ianbetteridge oh I got that, I was wondering why not setting one up now, say on the back of the new British energy company, whatever it’s name is.
@Nicovel0 It’s too late. To set up a fund, you need to be running surpluses. The “National Investment Fund” Labour announced is really a bank, rather than a fund. And GB Energy, which is supposed to effectively be a state owned energy company, currently employs 13 people.
@Nicovel0 @ianbetteridge wind is certainly a massive resource but most of that resource resides in Scotland (25% of the resource for the whole of Europe!)
So the last thing the UK government wants to do is to draw public attention to the predominance of Scotland in energy yet again.
Keeping the electorate in the dark by suggesting that renewables cost much more than old-fashioned gas, coal and nuclear is far more important for the moment.
@peterbrown @Nicovel0 @ianbetteridge
Oil companies stole gas that was produced with the oil & used it to fuel platform generators. Tony Benn found out & made them pay fuel tax. One wonders if they got fined.
Oil companies stole gas that was produced with the oil & used it to fuel platform generators. Tony Benn found out & made them pay fuel tax. One wonders if they got fined.
Taran Rampersad@ianbetteridge This was a really cool thread for me as an outsider.
Thanks for writing it. :)
@ianbetteridge it was important to move BNOC out of public ownership because from the 70s there was a growing call for devolution or independence.
Moving the revenues out of the public domain meant they could maintain the fiction of Scotland was a poor country incapable of becoming independent, which was the narrative of the time.
So it was a win-win. It fed her privatisation lust and kept the lid on Scottish aspirations.
The only areas to get a better deal were Orkney and Shetland
@peterbrown Yes - I’ve (slightly deliberately) left that out of the story!
John William David Thomson@ianbetteridge is this the other people's money we inevitably run out of? The money that was ours until she sold it to a mate?
Lydia Trivia@jwdt @ianbetteridge yep, the trouble with Thatcherism is that you eventually run out of other people's society to flog to your mates
Ross Burton@ianbetteridge Spent a week in Bergen last year and sobbed quietly every time our guide said "sovereign wealth fund" and explained how much it does for the country
Nick Silkey 📻 N5ILK 🪓🪵 🪣💧@ianbetteridge thanks for sharing this perspective! ✌️💙