Thursday, 16 January 2014

Dude, we've spent it.

The Guardian runs the following twattish article:

Last Wednesday, every single Norwegian became a millionaire – without having to lift a lillefinger. They owe the windfall to their coastline, and a huge dollop of good sense. Since 1990, Norway has been squirreling away its cash from North Sea oil and gas into a rainy-day fund.

... converted into pounds, the 5.11 trillion krone becomes a mere £100,000 for every man, woman and child... We pumped hundreds of billions out of the water off the coast of Scotland. Only unlike the Norwegians, we've got almost nothing to show for it.

Yes, we've seen this sort of drivel in The Daily Mail and at ConHome plenty of times, the only variant is the next bit:

Our oil cash was magicked into tax cuts for the well-off, then micturated against the walls of a thousand pricey car dealerships and estate agents.

How the oil money was allegedly spent seems to depend entirely on the prejudices of whoever is writing the twattish article. The Mail and ConHome would say "We wasted it on welfare payments to scroungers", UKIP would say "We wasted it on payments to the EU", the Islamists would say "We wasted it on wars of aggression against our peace-loving Brothers in the Middle East", the BNP would say "We wasted it on aid payment to nig nogs" etc etc.

Even worse is the SNP who say that "Westminster stole our oil money", well fact is, the extra Barnett money the Scots get back from Westminster has been broadly equal to the North Sea oil tax revenues and it all nets off.

(I might as well point out that the £5 billion of North Sea oil money we've spent was at least publicly collected and pales into insignificance compared to the amount of taxpayers' money wasted by selling off council houses at undervalue and then having to pay Housing Benefit instead, we're talking tens of billions, maybe as much as a hundred billion, pissed up the wall right there.)

Boring, boring, boring:

Politics aside, the salient points here these:

a) There are only 5.1 million Norwegians. Pro rata for the UK population, our fund would have been £8,000 each.

b) That money has been building up over forty years, so divide £8,000 by forty, the UK has been spending £200 more per person per year, that's your £8,000 gone.

c) Both Labour and Tory governments have appalling records on public spending, that £200 is only about 2% of the total amount they spend per person each year anyway, i.e. the square root of f- all.

d) There's not much point whining about a non-existent £0.5 billion oil fund when the UK has run up a national debt of £1,000 billion (or whatever the horrifying figure is). In relative terms, it's the square root of your answer from c). Maybe our national debt is £0.5 billion lower than it otherwise would have been, who knows?


Bayard said...

"How the oil money was allegedly spent seems to depend entirely on the prejudices of whoever is writing the twattish article."

So, if you want to discover someone's political prejudices, simply ask them what happened to all the North Sea oil money.

Kj said...

Exactly, had the Norwegian shelf brought the same oil rent revenue per capita as the UK or Denmark, it wouldn´t have bothered with a SWF, it´s a way to avoid Dutch Disease, that´s all. Norway still spends over 2000 GBP per capita of oil revenues annually over the budget, which is ten times more the annual figure of the UK, and still manage to put away 2/3 of that free rent money.

Mark Wadsworth said...

B, in which case i have no political prejudices whatsoever. What do you think they spent it on?

Kj, good maths!

Bayard said...

Mark, everything. There was no big pot marked "Oil Money" as far as I know, it just went into general revenues along with all the tax. I suppose if you really studied the public finances of the last forty years really closely and talked to a lot of ex-chancellors, you might be able to isolate some items of expenditure that wouldn't have happened if the government income had been reduced by the amount that North Sea oil was contributing to it. Then you could really say what we spent all the oil money on, but really, would it be worth the effort? I'd guess that it wouldn't be any of the big ticket items that are usually cited as North Sea oil money-pits, but lots of little obscure things.

The Stigler said...

It's just tedious Guardian Thatcher-bashing. Find a story about someone doing better than us, tell the readers that the reason we didn't is because of Thatcher. It's like the Two Minute Hate for morons.

Mark Wadsworth said...

B, good answer. We don't have hypothecated taxes in this country.

TS, agreed, but t'other side are just as bad, that was my point.

The Stigler said...

Sorry, Mark. Posting late, didn't sink in properly, but you're quite right. And I think Bayard's point is interesting and I might have to test it out.

neil craig said...

Also the Norwegians get the benefit that their kroner is 11 to the £1 otherwise they would be mere hundredthouandaires.

George Carty said...

Would independent Scotland have been as rich as Norway, given that there are about as many Scots as there are Norwegians?

Mark Wadsworth said...

GC, it would certainly have been mathematically plausible for an independent Scotland to be on par with Norway.

But given the politics, highly unlikely.