In the ConservativeHome manifesto, we proposed “the creation of a UK Sovereign Wealth Fund into which all new public windfall revenues – for instance, the tax revenues from offshore gas and oil extraction – would be paid”.
Bang on cue, the Daily Mail reports that the Government “”is preparing to announce plans for a sovereign wealth fund to hold the revenues from fracking for the north of England”.
The news comes via Matthew Hancock, who is to make a speech today announcing the creation of a new National College for Onshore Oil and Gas.
The paper says that the Chancellor is expected to announce details in the Autumn Statement when it is delivered next month.
The Mail says that “such state-owned funds have been set up in the Middle East and Norway to generate huge sums from the proceeds of oil and gas exploration”.
We noted that “Britain may not enjoy the same endowment of natural resources per head of population, but there is scope to use windfall revenues in the same way”, and recommended that:
- Independent trustees be appointed to manage the fund on the Norwegian model.
- The fund be mutually owned by all British citizens thus safeguarding its assets from predatory governments.
- The ownership structure guarantee that all dividends are paid out on a per capita basis, though with the option of doing so for particular age groups – for instance the fund could be used to endow school investment portfolios [a separate manifesto proposal].
- Any dividend scheme be approved by a two-thirds majority in Parliament.
An objection to the Sovereign Wealth Fund proposal is that the shale revenues are needed to eliminate the structural deficit, and that the plan is a distraction from that necessity.
To which the answer is that if there isn’t popular support for shale extraction, it will never be got out of the ground at all.
Gaining that support means local people and the public as a whole sharing in the wealth that shale produces. A Sovereign Wealth Fund is a means towards the latter end.
Furthermore, the fund would in effect be “a savings account for the whole population”, as we put it – so against the liability that is the deficit there would be a national asset to set.
As ever, the devils will dance in the detail, but congratulations will be in order for the Chancellor if this news is indeed announced next month.