Sean O'Grady: Is this a Nordic vision of the future for Britain?

Returning from holiday is often a depressing experience, all the more so when the country you are returning from has the highest living standards in the world. According to the United Nations Human Development Index – which takes into account levels of literacy and health as well as cash in the pocket – it is Norway that is the fabbest place on earth to live.

Thoughtful, if eccentric (it's not a popular destination), tourists like me will attest to the dramatic beauty of the crinkly coastline, the strange grey stillness of the arctic landscape of Spitzbergen and the safe, efficient, clean way of going about things that puts shabby old Britain to shame. A nation built on timber and surrounded by fish and oil wealth. So wealthy that they can take the European Union or leave it (they rejected it, twice, as it happens). But are the Norwegians happy with their Nordic paradise? Do they appreciate all that have? Do they want to thank their Government? Nei!

On a very poor turnout, the ruling Norwegian Labour Party has just gone down to its worst defeat since 1924 (and Norway has only really existed as a modern separate state since 1905). I knew this was going to happen because a Norwegian Christian Democrat told me so on Tromso High Street, and a Christian and a Democrat wouldn't lie. He also told me, a little curtly, that pollution from Britain and other mucky southern neighbours was reducing the sperm quality of the polar bears and, indeed, Norwegian men. But then, I was going on at him about whaling, and they all get a bit emotional when you mention that.

However, whales, apart from a spirited campaign by the Coastal Party, who organised a tasty whale barbecue at their stand on the High Street, were not the main issue in this election. No. The reason why Jens Stoltenberg charismatic Labour prime minister in his forties has just given power to a lacklustre older Conservative is because, despite all the taxes they pay, Labour wasn't delivering. Could what happened to Norsk Labour hit New Labour?

Certainly, the Norwegians pay a lot in tax, rather more than we do, even if less than, say, the Finns. It's not just that a bottle of beer will set you back ?4, something that has more to do with the Norwegian drinking "culture" than anything else. Tax runs up to about 50 per cent on higher incomes, and they levy about 12 per cent VAT on food. And there's a wealth tax. But despite all these subventions to the state, the Norwegians became disappointed that the public sector just wasn't coming up with the goods. It is a familiar sounding tale to us, but surprising to hear it told with a Scandinavian accent. Patients going abroad – to Sweden and, for heavens sake, Scotland – for heart surgery; the crippling cost of student loans; a series of botched reforms in education. Norwegians started to complain that their public services had declined to "Balkans" standards. Food for thought for Mr Duncan Smith? Hope for our own Conservatives?

Up to a point. First, we are talking about a nudge on the tiller here. Even if the Conservatives' more ambitious goals are realised, Norway will still be a model of social democracy compared with Britain. More to the point, the historically poor showing of Norway's Labour Party disguises the stronger performance by the more purely socialist parties to its left. While the British electoral system allowed Tony Blair to move rightwards without opening up much of a flank on his left, proportional representation allowed his Nordic counterparts, pursuing a similar strategy, no such safety, although we can see in the relatively robust performance of the Scottish Nationalists, Plaid Cymru and the Liberal Democrats something of the same effect, here.

There again, the performance of the Norwegian socialists and of the populist anti-immigrant Party of Progress, may simply confirm that the electorate are looking for ways to protest. Either way it is a very fractured system, unfavourably compared to Italy by former prime minister Gro Harlem Brundtland. It means that change can only be incremental and subject to the whims of coalition building.

Second, there is the slightly complicating factor of North Sea oil. We have oil too, of course, but the Norwegians only have to share it out among 4.5 million people. Unlike the Dutch, who blew their North Sea gas revenues on their welfare state in the 1970s, the Norwegians have been busily investing their money, storing it away like so much torrfisk (dried cod). They could, if they wanted, like the Dutch 20 years ago, "square the circle" of high social spending and lower taxes using the oil money, except that they may not trust the public sector to deliver and prefer to spend more of their kroner themselves.

Norway has turned away from old nostrums of "solidarity". To put it at its most authentically folksy: "Mye vil ha mer" – when you have a lot, you want more.

s.ogrady@independent.co.uk