Britain never could have had a wealth fund from North Sea oil
Here’s Polly Toynbee bemoaning Margaret Thatcher:
The one that most upends her claims to a grocer’s daughter’s thrift is her squandering of North Sea oil proceeds that came onstream just as she arrived in No 10. After too-cheap privatisation, she spent the tax income; had she saved like Norway, her bequest would be a sovereign wealth fund of hundreds of billions.
The thing is, Britain never really could have had a national wealth fund built up from those North Sea oil revenues. In theory, obviously it could, as a matter of practical politics no chance at all.
For such a wealth fund means running a budget surplus. Government must collect in more revenue than it spends out. Only then can some of that revenue be saved, d’ye see?
We did indeed have a - short - period when there was a budget surplus. In fact, one unsustainable one at the end of the Lawson Boom, another that could have been maintained in the early years of the Brown Terror. That latter reaching near 2% of GDP at one point - that could have been saved over the long term. In theory, but not in any political reality. For we do actually recall people shrieking that such money, those potential savings into wealth, must instead be spent upon solving the immediate problems of society. Here is one such commentator looking back at what was achieved by doing so:
Labour's extra spending went mostly on improving services – hiring doctors and nurses, more and better qualified teachers, rebuilding leaking schools and aged hospitals, free nurseries and 3,500 Sure Start centres. Too few homes were built, but 90% of social housing was brought up to "decent homes" standard, rescuing estates from chronic disrepair. The gap in infant mortality rates between manual workers and the whole population closed by 10%. Education results improved markedly, with the gap in GCSE results between social classes beginning to narrow.
Cast your mind back to the heady days after the 1997 election. After years of neglect, Labour inherited a public realm in decay, squalid public buildings and neglected human lives that formed a social deficit as expensive as any Treasury debt.
Well, it’s possible to praise all that spending. It’s possible to argue for a wealth fund. But it’s not - logically that is - possible to argue for both running up the budget deficit to solve immediate problems and also run a budget surplus in order to create a wealth fund. Obviously, it’s politically possible to make both wholly contradictory arguments at the same time because that’s how politics works. You know, run with the feelz and damn the logic?
Yes, it is Ms. Toynbee, P. in both cases.
The reason Britain could not have had a national wealth fund from North Sea oil, that one Polly complains Maggie did not set up, is because of Polly*. The moment there was any budget surplus Ms. Toynbee would have demanded it had the heck spent out of it solving immediate problems. As she, in fact, did. You know, run with the feelz and damn the logic?
Tim Worstall
*If you force us, at gunpoint, to be fair to Polly we’ll add “and her ilk”. If we must.