The chancellor has said Britain would now hold a sovereign wealth fund worth around £1tn had it invested North Sea revenues from the 1980s, a figure the BBC reports is drawn from internal Treasury modelling produced for the first time this week.
The estimate accompanied the government's approval on Wednesday of the Jackdaw gas field in the North Sea and the announcement of a new Energy Wealth Fund, described in reports as a £2bn fund backed by North Sea proceeds. The Treasury has not published the modelling behind the £1tn figure.
The number puts an official value on a question that has run through British politics for four decades: what the country gave up by spending its oil receipts rather than saving them, as Norway did. Until now only outside analysts had attempted the calculation.
"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," the chancellor said, in remarks reported by the BBC.
The chancellor presented the new fund as a late correction. "The proceeds of this oil and gas coming ashore now can be invested for the future generations," the chancellor said.
The BBC's economics editor, Faisal Islam, quoted an unnamed government insider who called the failure to save the receipts a "missed opportunity". The insider said: "had we systematically invested those receipts, we could have built a huge national asset for future generations".
The same source said the government did not intend to replicate Norway's approach in full. "Norway demonstrates the power of long-term investment: the government wants to learn from that principle, rather than copy its model wholesale," they said.
Norway established its Government Petroleum Fund in 1990, according to the Norwegian government's petroleum information service, and the first capital transfer to it was made in 1996. The BBC puts the value of the fund, now the Government Pension Fund Global, at $2.4tn.
The Treasury's £1tn is roughly double an earlier independent estimate. In 2018 the Institute for Public Policy Research calculated that a UK fund begun in the 1980s would have been worth more than £500bn by that point. The same research found North Sea oil raised £166bn in taxes between 1981 and 1990.
The BBC reports the modelling assumes £200bn of historical North Sea receipts were invested with no withdrawals and grew at a rate comparable to Norway's, but not whether the total is expressed in today's prices. The chancellor's use of the word "probably" signals a rough estimate rather than a precise one.
The premise is contested. The Adam Smith Institute argued last year that Britain "never could have had" a wealth fund from North Sea oil. Figures from the Natural Resource Governance Institute, cited by the Economics Help blog, suggest the UK government has taken around $11 a barrel since 1970 against about $30 in Norway.
The scale of the new fund also invites comparison. At £2bn, it is a fraction of the counterfactual the chancellor described, and current North Sea revenues of about £4bn a year have been projected to fall sharply, according to the Office for Budget Responsibility.
The Jackdaw approval drew a welcome from Donald Trump, according to CNN. Scotland's First Minister has asked the government for clarity on long-term North Sea revenue, Deadline News reported.
Offshore Energies UK, the industry body, called last month for a firm date for the Treasury's new North Sea tax regime ahead of the Budget.
The government's formal announcement describes the £2bn as an initial injection, with future North Sea revenues flowing into the Energy Wealth Fund over time.
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