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After a half-century wait, the United Kingdom now has an oil fund.<\/b><\/p>\n
Chancellor John Healey announced the creation of an Energy Wealth Fund at the Jackdaw gas approval announcement on Wednesday, with \u00a32bn of funding housed in the National Wealth Fund.<\/p>\n
A selection of energy exporting countries, mainly in the Gulf, but also including Norway, over the years have amassed multi-trillion funds using oil and gas revenues to create epic national piggy banks.<\/p>\n
It has been a long-standing debate in UK economic policy circles. If neighbouring Norway has amassed a $2.4tn war chest from the same North Sea, where exactly did the UK’s sovereign wealth fund go? <\/p>\n
It is an apposite question on the week when the national debt also hit \u00a33tn for the first time.<\/p>\n
“The proceeds of this oil and gas coming ashore now can be invested for the future generations,” the chancellor said.<\/p>\n
“If we had done this when North Sea oil was first discovered in the 1980s, we’d have a British Sovereign Wealth Fund now that would be worth probably a trillion pounds.”<\/p>\n
On Wednesday, for the first time, Treasury officials actually calculated how much that missing British fund could have been worth. <\/p>\n
The trillion pound number comes from internal Treasury modelling. The assumption was that the UK’s historical North Sea receipts of \u00a3200bn had been invested, with no withdrawals and grown at a rate comparable to Norway’s. <\/p>\n
“Norway demonstrates the power of long-term investment: the government wants to learn from that principle, rather than copy its model wholesale,” one insider told me.<\/p>\n
It was a “missed opportunity” which “had we systematically invested those receipts, we could have built a huge national asset for future generations”, they said.<\/p>\n<\/div>\n