In the 1970’s Britain discovered that nature had given her a wonderful gift – North Sea Oil. Over the years since that initial discovery the proceeds from North Sea oil have been used to transform areas of our country. Meanwhile new technologies have meant that there was more oil than was originally believed and the means to exploit it now exist.
Nevertheless it is a finite resource and one day, probably not too far into the future, it will run out.
Other countries which have made similar discoveries have not always spent it all the proceeds immediately. They have created Sovereign Wealth Funds which receive a proportion of the proceeds which are then invested to provide the country with an income far into the future.
Norway is one such example. As a result of its Sovereign Wealth Fund Norwegian Government Bonds are some of the most highly rated in the world. In addition the country has achieved a remarkable degree of short term financial stability.
Now Britain may be about to receive a second gift from nature. As a result of the technological changes familiarly called fracking we appear to be sitting on trillions of cubic feet of gas.
If this turns out to be the case should we spend all the proceeds at once? Or should we put some part aside to benefit future generations? I argue that there is a strong case for setting up a UK Sovereign Wealth Fund and not just acting selfishly.