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My Lords, I did serve on the soft power committee and I have to say that the countries with sovereign wealth funds are not exercising soft power; they are exercising hard power because they are lending us money to keep going. Every year we are spending roughly £100 billion more than we have income. The leader of the Opposition forgot about the deficit in his speech at his party’s conference. I have to say that I have very considerable respect for my noble friend, but he seems to have forgotten about it too. He did mention at the end of his speech that there is the issue of debt, which might be a reason why people would oppose this policy. It is certainly why I would oppose it.
The national debt will have doubled during this Parliament. The coalition Government are absolutely determined to reduce it, but it is still growing. We are not meeting our targets in terms of bringing the deficit under control. The idea that we should pre-empt resources that may or may not come from shale gas is like going along to the bank manager and saying, “I would like to borrow £1.4 trillion and, by the way, I would also like to open a savings account into which I shall put the proceeds from shale gas”. This is a noble thought. It would be great to have a sovereign wealth fund, but it would perhaps be a first step to live within our means and pay back the debt that we have accumulated.
My noble friend has talked about the importance of recognising our obligations to future generations and the finite nature of the resources. However, this national debt that we are growing is a charge on those future generations. It is a millstone around their necks. At the very least our priorities should be to pay that down and not to think of new ways of spending money that we do not have.
I agree with my noble friend Lord Jenkin of Roding. When we discovered North Sea oil inflation was running at something like 24% and interest rates were not much below that. I suppose that we could have argued that we would have got quite good interest, but the inflation would have taken away any benefit. We had a country that was haemorrhaging billions from the nationalised industries and that was dependent on industries with a great past but no future. That money, particularly in Scotland, was used to transform the economy, and create new industries and new opportunities. At that time, Scotland had more public housing than the communist countries of central and eastern Europe.
The economy was transformed in the 1980s. The blessing of North Sea oil provided for that. To use the word “squandered” is grossly irresponsible. That money was invested in building a new future for our country. As we have just heard repeated over and over again by the leader of the Scottish nationalists, Scotland is now the richest part of the United Kingdom outside the south-east, and that is not just because of the Barnett formula. It is because of the way in which the prosperity from North Sea oil was invested and developed by the private sector. There is an argument that we could have achieved even more if the tax burden on those in the private sector who took the risks had not been so high.
We have just won a referendum in which we discredited the nationalist leader, Alex Salmond, for wanting to set up a sovereign wealth fund with the proceeds of North Sea oil while at the same time spending the money from North Sea oil. We are not in a position to be taking any tax revenue, whether from shale gas or anything else. We should not be doing anything other than paying down the debt that is due to us.
If we embark upon this idea that we need to set up funds for future generations, why should we limit it to shale gas? Why do we not have other sources of revenue? My noble friend said that the Treasury was concerned about hypothecation. This is not hypothecation. The definition of hypothecation is surely to take a certain quantity of revenue and apply it to a certain purpose. That is what his amendment does. It says that,
“the fund shall receive no less than 50% of any revenue received by the United Kingdom Government”.
I have another objection to my noble friend’s amendment. He said that we need to put down a marker because, if we do not, when the money starts coming in the Treasury will not want to hypothecate it for this purpose. If we put a marker down with 50% of the revenues given to this purpose, the Government will have every incentive to raise the tax on the people who are developing the shale gas and the industry. But with a new industry, we should be ensuring that as much of the available revenues as possible are used to invest and develop and take the thing forward. I very much regret that this is a proposal that we should not accept. I was slightly dismayed to see the Chancellor over the weekend appearing to smile upon it, and to describe the alternatives as squandering the money at a time when we do not have the money we need to fund public services may have been a slip of the tongue.
I very much hope that my noble friend will reject this amendment and put to one side any thought that we should do anything over the next five or 10 years other than to reduce our deficit, eliminate our deficit and eliminate the debt. I do not know quite how we can do that: £1.4 trillion is an enormous sum and if we are not going to have inflation eroded, it is a superhuman task to pay it off. I hope and pray that shale gas will help to provide some of the revenue that we need to do that for the sake of those future generations that my noble friend has spoken of.