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Cameron fails to pour oil on troubled North Sea waters

It would be a lie to say I let out "a little cry of joy" on hearing David Cameron talk this week of Scotland, oil, tax breaks and the broad shoulders of a suddenly burly United Kingdom economy.

Around here, the Prime Minister has never provoked quite that David Bowie effect.

Instead, there was what is best described as a quiet little sigh, followed by a question: "Really?" That had to do with Mr Cameron's claims concerning taxation and the North Sea. As our editorial yesterday explained, and as the Prime Minister should know, the UK Government holds no copyright on tax breaks. Oil firms win those where they can, in every corner of the world.

It was odd, nevertheless, to see an entire British Cabinet wending its way to the terra incognita far beyond the M25 - Aberdeen, to you - for so little political reward. Mr Cameron wanted to say that a London government is best placed to secure the remaining benefits, still vast, from the North Sea. To many ears he seemed instead to allege that an independent Scotland would be incapable of exploiting its own natural resources.

That, as Mr Cameron well knows, has been a big part of the argument for a very long time. Four decades of oil wealth have not been transformative for the UK, far less for most of this country. Instead, revenues have been akin to an overdraft facility, money expended on the bills as they have arrived. No-one suggests that the proceeds of luck have been invested, wisely or otherwise. So why should anyone believe things would be different if independence is refused?

For my money (and yours), Mr Cameron missed a trick. Why didn't he announce, in one of his favourite phrases, that lessons have been learned? Why didn't he say that it is not too late to create a UK sovereign wealth fund from the remaining North Sea windfall? It might have counted as a cosmetic exercise, but that would be nothing new for the coalition. It would certainly have been a direct counter to the offer from Alex Salmond's Government.

In fact, Mr Cameron got out of Scotland without being asked the simple question. If there is (at minimum) £200 billion still to be had from the North Sea, how would a future government under his leadership propose to spend such a sum? Trident replacement? In this argument, the Better Together parties insist on what they understand as facts. One fact is that four decades of North Sea oil wealth has disappeared into various drains. If the Prime Minister asks to be trusted with what remains in the kitty, what spending or investment does he have in mind?

The Cabinet away day to Aberdeen demonstrated that an oil fund, of any description, is not on the agenda. Even those inclined to vote No in September might wonder if that is wise. It is certainly typical, however. Despite energetic attempts to show that Gavin McCrone was simply shuffling civil service paper in 1974 by describing the potential wealth of an independent Scotland, we know two things: his opinion to ministers was marked "secret", and it was not far off the mark.

Now Mr Cameron says, in effect, "Trust me". He believes the UK can do the job of maximising revenues better than an independent Scottish government, but he fails to say - conspicuously fails to say - what he or a successor would do with those revenues. If history is any sort of guide, that fact doesn't count as encouraging.

After all, the Prime Minister assembled his Cabinet in Aberdeen to mark the publication of the Wood Review, otherwise "UKCS [Continental Shelf] Maximising Recovery Review: Final Report". Under the leadership of Sir Ian Wood, this inquiry concludes that a new regulator is required, that there is "an urgent need for enhanced stewardship" of resources, and that UK governments have failed to do the job.

Which is to say: the Department of Energy and Climate Change, currently charged with North Sea regulation, is "significantly under-resourced and far too thinly spread" to manage the assets at stake. Mr Cameron accepts the conclusion, yet still maintains (talking to the BBC) that "what we see with the North Sea is a great success story for the United Kingdom". But the Government Pension Fund of Norway, global and domestic, has $800bn to stake against the Prime Minister's word.

As the Better Together parties tend to insist, there is no point in talking about what might have been. Where the North Sea is concerned, four decades of opportunities have come and gone for Scotland and the UK. Norway has husbanded its wealth with a fierce and pragmatic determination and achieved a national prosperity for a small country that can sound almost surreal. Collectively, five million Norwegians are the biggest stock market players in Europe.

Mr Salmond argues that there is still time to follow that example, albeit - inevitably - on a smaller scale. His Government has two funds in mind, one to deal with the issue of oil price volatility, another to invest for the long term. Professional pessimists counter that an independent Scotland would need the revenues just to balance the books, that there would be no surpluses worth the name, that the value of North Sea revenues diminishes by the year. Mr Cameron, perhaps oddly, chose not to adopt that line during his visit to Aberdeen.

In his words, the oil industry has been, and remains, a "success story". Big money is still at stake. Thanks to hydrocarbons, Scotland represents 10% of the UK's GDP. Our contribution to the balance of payments alone is not something that London can afford to deride or disdain. But for all his talk of "family" the Prime Minister fails to identify a strategy for a strategic resource beyond a touch more regulation. A Tory belief in that idea has rarely been wholehearted.

You could grant Mr Cameron half the argument and still be left with questions. Whether Scotland remains part of the UK or not, oil resources will have to be managed for perhaps another 40 years. No-one now says that the bounty was well handled in the first four decades. No-one asserts that Scotland approaches Norway in terms of wealth or social cohesion. But all the Prime Minister offers are metaphors, not plans. And he makes no promises.

It ought to be clear. Will there be a UK sovereign wealth fund if we vote No? If not, why not? Is Mr Cameron confessing that those redoubtable broad shoulders claimed by a London-run economy would not cope, or does he have a philosophical objection to collectivist notions?

That might be like asking why Norway still has a powerful state-owned oil company and we, Scottish or British, do not. Whatever the difficulties, irrespective of the language, Mr Salmond's offer is clear enough. His is a plan for the near-future. The First Minister's opponents, to use their own words, simply make assertions.

Where the wealth of the North Sea is concerned, we have one last chance to get it right. That fact is not exactly uppermost, it seems, in Mr Cameron's mind.

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