Like us, Norway hit the North Sea oil and gas jackpot in the 1970s… but their politicians created the world’s biggest wealth fund – while ours frittered the money away: ROBERT HARDMAN

Just imagine that a quarter of Britain’s working-age population decided to call in sick for an entire year – on full pay and with the taxpayer picking up the tab. Or that it was a basic student right to keep on studying until the age of 30 – with interest-free loans all the way.

Or that the number of foreign-born citizens quadrupled in 25 years, with the option of full benefits for all, while ministers built themselves new offices costing £1million per desk.

In next to no time, Britain would be bankrupt and, in all likelihood, in the throes of civil disorder.

Not so here in Norway, though. That is the current state of affairs in this safe, clean, largely contented – and very wealthy – nation of 5.6million. So what if Britain had made better use of the same geological blessing which we share with our North Sea neighbours: massive energy reserves beneath the same seabed?

In a week when our new Prime Minister has signalled the end of Whitehall’s puritanical celibacy towards oil and gas, we already have a glimpse of the potential rewards. 

The mere suggestion of a resumption of British drilling has not only raised the prospect of billions for the Treasury. 

By yesterday morning, it had already kickstarted the £2billion sale of BP’s previously moribund North Sea operation.

Crowds meander around Oslo’s spectacular waterfront, dominated by the new Opera House, a gleaming marble-clad iceberg every bit as striking as its Sydney counterpart. People simply stroll up its sloping sides to walk all over the roof.

No litter, dog mess or graffiti. At street level, they queue patiently for a table at busy restaurants where a beer starts at £15 and pizzas go for £20. 

Back on the quayside, business is brisk at the floating saunas, with people hopping between their log-fired ovens and a dip in the harbour.

Year after year, Norway ranks at the top (or second) in the official league table of civilisation: the UN Human Development Index.

So far, so very Scandinavian, except that Norway spends far more on benefits than its Nordic neighbours in Sweden and Denmark but without charging higher taxes.

It can do so because, in the 1970s, it hit the same oil jackpot as Britain. The story of what happened next goes in two very different directions.

For the Norwegians put the profits from their new-found fortune into a government wealth fund which is now the largest in the entire world – at two trillion US dollars. 

They are also continuing to pump out oil and gas to meet the demands of an unstable world, while charging a 78 per cent tax on what emerges.

Today, its Oil Fund earns far more from its global investments – from a brewery in Malaysia to a cheese firm in Australia, a huge chunk of Microsoft and a quarter of Regent Street in London’s West End – than from the seabed.

Here in Britain, by contrast, we blew all our North Sea profits paying day-to-day government bills and keeping down taxes. We have since decided that oil and gas are a very bad thing. 

So they stay in the ground while we strive to get by on wind and solar power. Since that is impossible – for now – we will just have to buy in oil and gas from countries like, well, Norway.

That, at least, was the status quo as long as Net Zero zealots like Ed Miliband were in charge of the Department of Energy. 

Now he has gone to the Foreign Office, our new Prime Minister has indicated that we might actually open two new fields in the North Sea.

And if Andy Burnham is serious about this, then we can advance the national debate on from an argument about fossil fuels – and the vital matter of our own energy security – to the question of what to do with the proceeds.

In short, should we just pour them into the bottomless pit of the public sector? Or should we follow those crafty Norwegians and build a fund? 

Their one was established with clear, cast-iron rules. Overall, it was to ‘create a qualitatively better society’. 

Nor could a desperate government just stick its hand in the till. The state can merely expect up to 3 per cent of the pot while the rest is allowed to grow. 

Nor can it invest inside Norway, for fear of destabilising local markets and the national currency, the kroner.

The result has been simply astonishing. For that fund now dwarfs those of Saudi Arabia, Qatar and other oil-rich nations. 

Spread across stock markets, bond markets and real estate around the world, the Oil Fund is the ultimate example of what can be done when wise politicians take the long view. It means that every single Norwegian has a personal trust fund of £350,000, not that they can touch it. 

Instead, each year, the fund now pays around £45billion into the Norwegian treasury, amounting to between a fifth and a quarter of national expenditure.

To put that into a British perspective – in a nation with 12 times the population – it would be like the Chancellor of the Exchequer receiving a cheque for nearly £500billion every year. 

Never mind gimmicks like £2 bus fares or a few quid off the electricity bill. Andy Burnham could give the entire country a new car.

Of course, Britain would not achieve 12 times Norway’s oil and gas production. But such a windfall would help sort out our welfare and defence budgets without any talk of a wealth tax.

‘Being the finance minister of Norway is a pretty easy job compared to any other European country,’ says Kjetil Alstadheim, political editor of the newspaper Aftenposten. 

‘So, if you decide you want to give more money to Ukraine, you have it.’ Despite its small size, Norway has handed billions to Kyiv since Russia invaded.

Professor Ulf Sverdrup of the Norwegian Business School, says ‘Oil Fund’ is a misnomer, adding: ‘First, it’s not just about oil, but gas, too, and the taxes from oil and gas are much smaller now than the return on investment.’ 

He highlights another important point, namely transparency. ‘Most countries with major oil resources have had corruption or mismanagement. In Norway, the politicians should be very proud of what they have achieved.’

Such is the transparency of the fund that I end up talking to the Norwegian in charge of it while he is on holiday. 

Back in 2020, Nicolai Tangen was the London-based founder of a global hedge fund with £15billion in the pot. 

An Anglophile with a postgraduate degree from the London School of Economics, he and his wife raised three children in the UK.

He remains especially proud of the fund’s holding in Regent Street (for which it paid the Crown Estate half a billion pounds in 2011). 

He had already been giving away a substantial chunk of his fortune to philanthropic causes when he decided to swap the life of a downsizing gazillionaire to go home, become a public servant and run the national piggy bank on a civil service wage.

He has no regrets: ‘It combines all the things I feel strongly about.’ He puts the success of the fund down to three ingredients: strong cross-party political ‘anchoring’, a strict spending policy – ‘so that you can’t just plunder the whole thing’ – and ‘a very high level of transparency’.

As the world’s most powerful asset manager, he must be the financial equivalent of Norwegian striker Erling Haaland. 

He laughs. ‘I am not a celebrity. But if I meet someone in the forest, they might say they like the way we run the fund.’

That is the general consensus wherever I go. Student Elsa Marino, 20, tells me that, thanks to the fund, the state can help fund her education at Boston University in the US. 

Former fisherman Kag-Inge Flode says it’s the fund that helps build roads and keeps down fuel costs. 

The effects are felt in the poorer parts of town. I head to Stovner, an outlying suburb with the largest immigrant population in Norway, and the local shopping centre is calm and clean. 

‘Sweden’s got cars and we’ve got oil – and I’d much rather be here,’ says former factory worker Tedke Helvik, 77.

Crime, such as it is, is most prevalent in Oslo’s eastern suburbs, like Gronland, though it’s not a patch on the worst bits of Manchester or London. 

‘It’s fine and peaceful here,’ says pharmacist Abdul Karim, 29, who came to Norway as a young refugee. 

‘I went to see relatives in London but came home after two days as it felt dangerous. Sweden’s the same. But this is a good place.’

However, there is one tiny glimmer of satisfaction for despairing Brits. All this prosperity comes at a price. 

One of last year’s best-selling books here was a study of Norwegian complacency by former management consultant Martin Bech Holte. He called it The Country That Got Too Rich. 

‘The fund is a test of human nature,’ he tells me. ‘If you are used to working hard, you have grit and you put in the effort to get results and then you win a lottery, will you continue towards long-term success? Or do you take shortcuts?’

 He has no quarrel with the fund – and even Nicolai Tangen calls it ‘an important book’ – but Bech Holte has kickstarted a major debate on how the windfall should be spent. 

‘We have the highest sick leave in the world, we have the highest share of our population on welfare in the world. 

‘Whenever there’s a problem, the government bails people out. Gas prices or electricity a little bit high? OK, the government pays everyone out.’

He also points to some of the state’s profligate ‘pork barrel’ projects, like futuristic government offices costing more than £1.2million per desk. There are also two new national museums housing Norway’s most famous painting.

Edvard Munch painted The Scream twice. I find one in the National Museum, a huge metal box (£100million over budget) that replaced the empty Museum of Decorative Arts. 

The other is in the Munch Museum, another huge box that replaced the equally empty Edvard Munch Museum, which came in at £180million over budget.

Both are cheaper than another stupendous project that will kick off with a very loud bang next year way up north.

High explosives will blow a hole in a cliff face and work will begin on the world’s first shipping tunnel. Cut through a mile of rock, it will enable ships and fishing boats to avoid a notorious headland called Stad. 

The tunnel will save a 35-mile trip around a point that has cost 33 lives since 1945. The downside: an estimated cost of £800million and an economic return of £1 for every £9 spent. 

Considering that Norway’s annual maritime death toll is around 100 people, it is hardly the most efficient use of public funds to preserve human life.

Yet Norway’s great ship tunnel is expected to open five years from now. To put this into a UK perspective (ie multiply by 12), imagine the squawking if Andy Burnham splurged £10billion on a subway for fishing boats. But Norway will soak it up.

Professor Einar Lie, of Oslo University’s history faculty, points out that Norwegians have started to feel insulated from global monetary woes. 

‘During all the financial crises of recent years, problems were always reported on the foreign pages of our papers,’ he says. 

‘That has led to a feeling of invulnerability in Norway – a sense that the state can handle anything discomforting.’

There is one point on which everyone seems to agree: The fund is a great asset and the ‘handlingregel’ – the rule preventing the state taking more than 3 per cent of the annual total – is correct.

The debate is what the government should do with its annual windfall – currently some £50billion. 

Lefties want it to divest from big tech and anything with the faintest whiff of Israel. Mainstream parties agree that, subject to an ethical code, it should still invest in whatever maximises returns for everyone.

Martin Bech Holte, whose book has caused this great debate, has no problem with the fund itself. He believes it is the government’s mollycoddling that is storing up problems. 

When I ask him what would have happened if Norway had never had oil – or else blown it all like Britain – he points to life before the Oil Fund really exploded. 

‘In 2013, the mainland economy of Norway had a higher income per capita than the US and almost all European countries,’ he says. ‘That was because we were the country that utilised digital technology faster and better than any other country.’

In other words, Norway used to be made of the Right Stuff – but it’s gone soft. The falling birth rate is also a problem. 

As Kjetil Alstadheim points out, only half jokingly: ‘We are going to run out of people before we run out of cash.’

I drop in on the Norwegian parliament, the Storting, where I meet Tom Staahle, an MP from the Right-wing opposition Progress Party, the second-largest parliamentary grouping.

He sits on the committee that monitors the fund and thinks the 3 per cent rule is fine. He is just fed up with the waste. 

‘Cut taxes, cut official spending, stimulate more private investments,’ he says. ‘Give families more money in their pockets to spend. People are smart. It’s not necessary for the state to think for them.’

For now, we see a nation cheerfully shelling out record sickness benefits while writing blank cheques for big northern infrastructure (sound familiar?) – all paid for with an oily magic wand.

Yes, the Oil Fund might raise a few awkward questions about Norway’s long-term capacity to get back to work. 

Yes, it has led to some serious waste. But, right now, would that not be a nice problem for Britain to have?