Former Energy Minister and Labour icon Tony Benn has said that Britain's oil wealth has been largely squandered by the refusal of successive governments to establish a dedicated oil fund and choosing instead to channel the money into general revenue.

Benn told Holyrood: "Well, we sold off the oil I acquired, and yes, truthfully, I do think the oil wealth was to some extent wasted, yes, I do."

Benn also says that the Callaghan Government was in fear of multinational oil companies, preventing a system similar to the Norwegian oil fund being set up which would have "transformed" Britain.

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"Nowadays, with the price of oil up to this level, $130 a barrel and it could even rise higher, then even the non-economic fields in Scotland become economic. And that's a very important factor now, and properly used, if it had been properly used, if we'd owned the whole thing, this country would be absolutely transformed but I couldn't persuade a Labour government to do that.

"They (Cabinet colleagues) took the view that the oil companies were very powerful and we couldn't oppose them. But actually, the oil companies desperately needed the oil and the reason I was in a strong position is I was able to say to them If you want to come into the North Sea, you've got to comply with these requirements: first of all, you've got to give us 20 per cent of it, secondly, you’ve got to employ Scottish workers and in order to develop the equipment, you've got to buy equipment for the rigs in Britain and I had a struggle with Europe about that, because the European Commissioner said to me that it was actually European oil," he said.

(GK/JM)