Opportunity Knocks - an interview with Neil Kinnock

There’s a small glass phial of crude oil that sits on a shelf in the bedroom of the north London home of Neil and Glenys Kinnock. It’s a curious memento from the 1970s but a tangible reminder of opportunities lost.

And for a man that spent nine years as the leader of the Labour Party as it struggled in opposition – struggled with itself, with the unions and with Militant – Kinnock, now a Lord, plays a lot of games of ‘if only’ but one of the most regrettable is his party’s role in what he calls the tragedy of the Thatcher Government’s “prodigious waste of oil revenues” which he describes as “the most untransparent and unfaithful act in the history of modern government”.

In 1975 and as a mere backbench Labour MP, having entered parliament in 1970 as the elected member for Bedwellty in his native Wales, Kinnock travelled to Norway with the select committee on nationalised industries to see for himself the scale of that country’s response to the recent oil finds in the North Sea.

He returned to the UK fired with enthusiasm about the “gigantic operation” he had witnessed and crucially, also armed with an English translation of the Norwegian legislation that had put in place an oil fund, a compensation package for areas affected by the exploration, and a regulatory process that put strict demands on the licensing of and exploitation by the companies involved in the burgeoning industry.

He used this information to pen a seminal article for the Labour-supporting newspaper, Tribune, which he said argued the case for the UK to replicate Norway’s “compelling logic”.

“My recollections were, firstly, I had never seen an oil platform before and it was stunning, and secondly, that the Norwegians had taken the potential for this industry with such pious seriousness right from the start. I guess what it did was bring home to me the potential of this new-found resource for the UK. We had struck oil at the same time as Norway and while there was all the speculation with lots of noughts on the end of it, which was very exciting, it was not illuminating but the visit to Norway was firstly, very illuminating, and secondly, apart from having their policies well worked out, they had also had their legislation translated into English for us, which was very helpful and I will now frankly confess that my Tribune piece, which I had published when I returned home, was a straight lift from their legislation but obviously, with lots of quotation marks included.

“Their legislation established three things: first of all, the regulation of ownership of the blocks of holdings in the North Sea – and while it didn’t go as far as to regulate the rate of exploitation, it does appear that they did undertake a more steady form of exploitation and therefore, their reserves will probably last longer than ours; the second thing was the compensatory fund for areas most directly affected by the oil exploration and they had funds set aside for restoration works, training, accommodation and so on and then thirdly, and most importantly, the establishment of their sovereign wealth fund so that from day one, resources went directly from the North Sea royalties and from taxation straight into their fund. That all made complete sense to me and I couldn’t see why anyone didn’t see it made sense and I must say, Eric Varley [then Labour MP for Chesterfield] who for a brief time when I came back from Norway was Energy Secretary, his attitude was very well disposed to the idea. It basically had a compelling logic and the analogy I used was that if even as late as the 1970s there had been full recognition of the economic and strategic significance of coal in south Wales, this is what I would have recommended for it and this was much nearer the dawn of oil, only 10 years after Douglas-Home’s legislation that took national sovereignty of the Continental Shelf, so this was at the beginning when literally, the first oil was trickling through and I couldn’t find anyone to disagree with me.”

Kinnock says he then made concerted efforts to persuade his Labour colleagues in government, including the then Prime Minister, Harold Wilson, and his soon-to-be successor, Jim Callaghan, to publish a White Paper based on his Tribune article and to legislate.

“I made the argument for a different system of licensing and royalties and for a different form of taxation with the hypothecation of oil revenues into a sovereign fund. I don’t remember what I said in terms of the proportions at the time but I had the Norwegian legislation in English and I sent a copy to Eric Varley who was Energy Secretary and I said this would make a great White Paper. Fair to say, Eric was quite persuaded by it because he was also going to Norway and looking at what they were doing and could see all the possibilities for us too.”
But despite Kinnock’s clear enthusiasm and to his deep regret, Labour did not produce legislation. He describes a complex mix of events, personalities and circumstances that transpired to collude against the creation of an oil fund.

Britain of 1975 was a troubled place. It was governed by a minority Labour government led by Wilson and with just three seats separating it from the Tories it was a fairly sticky time, politically. The country was in recession, inflation was running at almost 20 per cent and the party itself was riven with internal difficulties and with a good deal of political brinkmanship going on. Kinnock describes a government in turmoil, forced to build unlikely associations with other parties just in an effort to get legislation passed and a working day that could easily drift into the next. On a personal level, he also had a young family to concentrate on but says now that despite all of this, he wishes he had been more forceful in regard to Labour adopting the Norwegian approach to the UK’s oil finds.

“I guess I wasn’t sufficiently involved for a number of reasons, some political and some purely personal – my kids were growing up and we were in a minority and I was regularly in the Commons until two or three in the morning and frankly, I was spending enough time there without getting stuck into this any more than I already was and as a result, I didn’t take my view on the sovereign fund further than the many suggestions, conversations, proposals, etc that I took to ministers, lots of ministers.

“You also have to remember what else was going on at this point and in the wake of the 1975 referendum [held to gauge support for continued membership of the EEC], Harold Wilson reshuffled the Government and put Varley in industry and shifted Tony Benn to energy and in the days ahead of this when it was being chewed over, Benn asked me to go and see him in the Department of Trade and Industry and asked me what he should do if he was demoted to energy. I said to him, ‘how the hell could you see that as demotion, it is the best job in the government’. He would have coal, and following on from the two bloody big coal strikes we had just had, there was new investment going in on the back of that – the pits were becoming modernised for about the first time since 1948 and he would have oil and that was going to transform everything. I said to him, ‘Tony, you’ll be the minister for oil, how could that be a demotion?’ He didn’t seem convinced, so I said to him, ‘here is a test of Harold Wilson’s good or bad faith. If you are made the Secretary of State for Energy and you get to be the policymaker on the revenues, then he is acting in good faith and you must grab it with both hands because it’s a bloody good job’, and off I went. The next day or thereabouts, the reshuffle was announced and sure enough, Eric was Secretary of State for Industry and Tony was Secretary of State for Energy but the next day the junior ministers were announced and a little Scottish doctor who was quite right wing, Dick Mabon, was made minister of state and the financial secretary to the Treasury, Harold Lever, had the oil revenues so I sent a note to Tony saying, ‘I don’t know if you may now want to reconsider your position’ because basically, with Dick Mabon and Harold Lever in place, I believed Benn would be left being the Minister for Cutting Ribbons. And so it turned out. Funnily enough, years later in the European Parliament in the early 1990s, I was speaking to Ken Coates, the MEP for Nottingham, and this somehow came up and he was a great supporter of Tony Benn and I told him the story and blow me, he had had the same conversation with Tony back then as well. So giving Dick Mabon responsibility for oil and Harold Lever policy on the revenues, that really left Benn, despite the title, effectively at the margins with the Treasury and someone who would be faithful to the orthodox line in terms of oil policy really in charge. I know Benn would have listened to the Norwegian argument because it made sense on all kinds of levels.

“Why didn’t Wilson do it… well, that I will never know but I suspect it was just orthodox Treasury thinking that they were acting in the interests of safety. My assumption has always been, in as far as I have thought about it, was the Treasury resistance to earmarking funds like hypothecation was like sunshine to Dracula. I think the Treasury would have resisted that form of hypothecation. I don’t honestly think Denis [Healey] would have done it and I remember talking to Harold about it and to Varley and Benn and to Willie Ross about it. The one guy I wish I had talked about it to was Michael Foot and also Jim Callaghan and if I had said it to Jim, I think it would have happened.

“Although I do remember in the summer of 1978 I was pressing for us to go to the country in the October of 1978 and I believe that would have made a difference because even if Thatcher had won, it would have been an unstable, bare majority government, and I felt we could do better than that but Jim and Michael believed it wouldn’t be the case. My logic, and there was a Scottish implication, was that once the Government had lost the March 1st referendum in 1979 in Scotland and Wales, it would be too late for us because there would be no reason at all for the SNP to continue their benign indifference policy towards us – they either didn’t vote or didn’t vote when we could have lost in a confidence vote, which were pretty frequent then – and I said to Jim, apart from anything else, and apart from the arithmetic, we have to do anything to stop the Tory bastards getting their hands on the oil because they will just burn it and we could change the world with it. I remember the conversation in his office at the Commons and I also remember urging Michael that we should have the election in the October and catch Thatcher a bit giddy and not in control of the party. I knew once we had had the referenda and lost, that the Nationalists would have no interest in supporting us, they would be gone straightaway. As it was, it took four weeks and of course, they voted against us and that gave Thatcher a majority of one, well, that as well as the fact that Gerry Fitt [leader of the SDLP] from Northern Ireland refused to vote with us that night…
“Looking back, not doing something about an oil fund was a massive lost opportunity and for a democratic socialist government, and we could speak in those terms then, which was in extraordinary difficulty in getting through any progressive legislation – even the Health and Safety at Work Act was a bloody miracle to secure – this would have been an ideal proposition and would have even got some Tories on board with it.

“I have to say that those years were such giddy chaos with the beginnings of the SDP split and the ultra lefties getting control and to some extent, that was a preoccupying battle and my battle was almost always with the Government over its public spending policy and I led the rebellion that caused the defeat on the 1976 White Paper on public spending which, as it turns out, I was right about because when the figures were eventually published in 1982, they showed we hadn’t needed to have gone to the IMF for a bailout after all – and I suppose there are only so many fronts you can fight on but that is no excuse… it was a tragedy and of course, a regret.

“It wasn’t just that we didn’t do the sensible thing and establish the sovereign wealth fund and the renovation fund and the compensation fund, like the Norwegians did, but the fact that this country had nothing in the end to show for it all.

“In retrospect, I could have done a lot more and you do think that on these things, had I seriously sat down and thought about what the crucial targets were; not fighting the Nats, not having constant quarrels with the Government, not trying to beat the ultra left in argument, which you never can do, not going to see my boy play football so often or hear my daughter sing so often, and if I had stopped and asked myself, what are the objectives, well, oil was the big one which I had identified, to the extent that I had said to Callaghan, ‘we have to stop the bastards getting their hands on it’ and, in truth, I should have just tried harder… we weren’t without a little guile and maybe if I had deployed more of it on oil and a sovereign wealth fund than fighting those other battles, things could have been different but I didn’t, I bloody didn’t, and is one I regret.”

I tell Kinnock that Denis Healey, who was the Labour chancellor during that time, had told me that he believed the value of oil had been underplayed in an attempt to thwart support for Scottish nationalism and perhaps that helps explain some of the intransigence from those around him.

interview-3“Well, it might have been that Denis, who I have undying love and respect for, felt he underplayed it but the reality is that the Tories then didn’t underplay it, they completely obscured it whilst taking the swag and I think it was one of the most untransparent and unfaithful acts of modern government, in terms of the way they treated oil and its potential and the point is that had we had a sovereign fund, it would have made it much more difficult for Maggie to squander the revenues, which some people put at over £200bn, certainly well over £120bn, and what was an obvious resource for the total renovation of the British social and economic infrastructure: schools, hospitals, old people’s homes, motorways, computers, whatever, we had nothing to show for it because it was all given away in tax concessions, most of which were exported.

“The other thing is that a sovereign fund would either have made the UK much better equipped or it would have been a fairly decent nest egg to withstand the pressures that came in 2007 and 2008. I would be stretching it to say that there would have been a huge sovereign wealth fund financed by oil and gas 30 years after the 1970s but in the meantime, what we could have done in terms of social and economic infrastructure would have been transformative…”
And is it now too late?

“Any time in the next, say, 20 years will not be too late to set up an oil and gas fund, even if it was hypothecated to help to meet the costs of ‘greening’ energy supplies. Obviously, a fund couldn’t make up for the gigantic sums that have been used as general revenues and it wouldn’t now get near to meeting the whole cost of developing and implementing alternatives, but dedicated investment would be a very good and transparent way of generating growth while meeting some of the bills for modernising and cleaning energy supplies.

“Of course, looking back, I wish that Tribune article had been adopted as Labour policy because I think the party could have fared better in the late 70s and everybody on our side would have fought harder to become the first government to really benefit from the oil revenues. In the end, Thatcher’s governments prodigiously wasted those revenues, they did damn all; they didn’t even have a couple of miles of motorway or a new hospital to show for it. It was just outrageous and things could have been so very different.”

Kinnock talks a lot but far from being the ‘Welsh windbag’ that the tabloid press of the ‘70s and ‘80s cruelly dubbed him in a relentless campaign of ridicule which culminated in the infamous election-day headline in The Sun: ‘If Kinnock wins today will the last person to leave Britain please turn out the lights’, he is fascinating. He is living history and for people of my generation, he helped define our politics, one way or another, and while he may have said in 1992, when he lost yet another general election, that he had wasted eight years of his life, he says now that that statement was more to do with the moment than the reality. But undoubtedly, whatever he sees as his failings, he prepared the Labour Party for election in 1997, he enthusiastically backed Ed Miliband for leader in 2010 and is now back in the spotlight over media regulation and specifically the treatment of Miliband who he clearly admires but says is not his prodigy.

interview-4“I had immediately, in my own view, to acknowledge my part in the failure to win and since politics is not a game and since you play continually to win – and I have applied that view in sport and politics and some would say I apply it even playing whilst with my grandchildren – I had to say that my objective was victory and what did I get, defeat, and so saying I had wasted eight years of my life was a rational conclusion to draw and, in the 21 years since then, I have had reason to be glad that I was so absolutist about what I perceived to be my failure because that meant that I haven’t spent a minute in all those years eating sour grapes.”

Kinnock certainly strikes you as an eternal optimist – he takes succour from the Italian socialist, Antonio Gramsci, who said that for a socialist, there is only one mindset: pessimism of the intelligence and optimism of the will – and while he has had a long time to reflect on how he might have done things differently, you get the impression that his never-ending philosophical contortions are fuelled by curiosity of ‘if onlys’ rather than by the grudge of grievance or as he says ‘sour grapes’.

“I can give you three or four plausible ‘ifs’ that would have entirely changed the nature of the 1980s,” he says. “It is almost like the good shot that comes off the back of a heel of a defender that changes the direction of the ball altogether and the result is a one-nil victory in the World Cup – a tiny deflection that can end up a couple of yards on as a huge change in direction.

“No second oil price hike, a majority Labour government with just another three seats, the election of Denis Healey as leader of the Labour Party – and that could have gone in one of two directions with possibly even worse fracturing, the decision of the SDP leadership to form an organisation within the Labour Party rather than splitting off which divided the anti-Conservative vote very damagingly, a decision by even one, say Shirley Williams, not to join the Gang of Four but return to parliament and run for leadership, which would have stopped me spending my 40s and my mid-life crisis running the Labour Party, and the various feeble attempts of coups against Margaret Thatcher by the Wets would have changed things and made the ‘80s fairly consensual. If Joe Gormley [president of the NUM] had backed a different candidate or rather had not changed the rules to prevent Mick McGahey becoming the leader of the NUM, which I always believed he should have been because he was a great man, capital ‘G’, capital ‘M’ and then Scargill wouldn’t have been president and that fulcrum period in the mid ‘80s would have been radically different because Mick would have negotiated and secured at least great mitigation if not victory for the miners on the basis of a democratic ballot. All those things could have altered the 1980s very considerably. It was a time of conflict with fights being picked all the time. Mrs Thatcher picked fights and it was essential to contest her reasons, her application, and indeed, even the nature of her ideology.

“Certainly for me, it was one thing after the other but you keep going because of the cause with a capital ‘C’ and the cause is always to try and address the present and build for the future. That’s why you are in democratic politics in the first place and it is certainly why I am a socialist.”

On the question of democracy, I ask Kinnock why he voted with George Cunningham, the Labour MP for Islington who unexpectedly lodged an amendment to the 1978 Scotland Act which brought in the controversial 40 per cent rule and effectively caused Scotland to fail in its referenda bid to get a Scottish Assembly despite the majority voting for it.

“My fundamental reason was that I believed, correctly, that the form of devolution being offered would isolate and expose Wales and the public expenditure deficit that we necessarily had with the rest of the UK and it would work to the disadvantage of Wales and in the 1979 referendum, Wales agreed with me by 4 to 1 and my constituents by 9 to 1 and with a big turnout. That is the basis I fought it on and also because of the great support I got from Tam Dalyell, other Scots and some north-east MPs too which enabled Leo Abse [Labour MP for Pontypool] and myself to get the referendum in the first place, so I felt obliged when they took the initiative of the 40 per cent George Cunningham threshold and while I had huge reservations about that, they had, nevertheless, been very supportive of me in sometimes sticky circumstances, so I felt obliged to support them on that.

“There was an element of unfairness about the effect in Scotland, however, I thought that the same disadvantages inflicted on Wales as a consequence of having what I called sore-thumb devolution – that we would stick out like a sore thumb – which I felt wouldn’t work to our interests, would be similar on a slightly different dimension for Scotland.

“On the day that we won with a ‘No’ vote, I said it settled the question for pretty much a generation and so it turned out pretty much but there did remain a desire for devolution among Labour MPs and to a limited extent, in Wales.

“In terms of the referendum next year, there is, what I call, the accidentability of history, the unforeseen consequences and I think I can foresee, with some foreboding, the political situation after the referenda which I believe will be a ‘No’. If we ever get the conjunction, even in the middle of the century, of a Tory government in Westminster that feels it owes nothing to Scotland and that the Union is a matter of sentiment and a little bit of property and not much else, then they will set up a dynamic that will end with the fragmentation of the United Kingdom.

“If you vote ‘No’, you will get the continuation of the UK with what I consider to be its substantial benefits and I would urge, vehemently, that my many Scottish friends reject separation. A Labour government can do a hell of a lot more than a Labour opposition and if people vote ‘Yes’ they effectively disable the British Labour Party and that means not just that England and Wales would be governed by Tory governments but Scotland’s neighbour will be Tory and while I don’t think anyone should vote out of fear or to save Labour, that is the reality they will confront and I think we have to make arguments based on reality and that is a solemn reality.”