Offshore Oil and Gas Industry

Debate between Alan Whitehead and Peter Aldous

Thursday 3rd March 2016 Westminster Hall

[Dr Whitehead]

I thank the hon. Gentleman for that information, which emphasises what the prospects can be if the process is undertaken carefully. I do not say that there should not be decommissioning, because clearly there will be a substantial amount to undertake, but it should be undertaken in the full knowledge of what is in store if it is not done carefully and of whether there may be different uses in future for elements of what is in the North sea, particularly for carbon capture and storage and gas storage. The infrastructure could assist with that in the future, establishing jobs and skills for the long term, when different circumstances may apply.

The theme that has come out of this afternoon’s debate on the future of the North sea is collaboration. As for what we and the Government should be doing, what has emerged is that support needs to be given now for careful investment in collaboration, and for establishing the circumstances for a bright future in the North sea, in the context I have set out. One of the investments that the Government have already considered is the question of joint seismic work for possible explorations, whose results will be publicly available—a point that highlights collaboration in exploration for the future. Investments and assistance with that approach in mind seem to me to be the most important way forward.

In the light of the good sense and harmony that have prevailed this afternoon, I should perhaps not venture down this route, but I wonder whether I should remind the House that as late as 2011 Her Majesty’s Treasury imposed a windfall tax on North sea oil and gas, by putting up the supplementary levy from 20% to 32%. One thing I must say to the Treasury about future arrangements and assistance for the North sea is: “Don’t do that ever again.”

[Peter Aldous]

I was a relatively new Member at the time and remember distinctly the unsettling impact that that measure had on the industry, because it came completely out of the blue. This is a risky business anyway, so it really knocked confidence. To be fair—I remember exactly what happened—the Treasury got the message from that very clearly. I remember attending the conference in Aberdeen that September, and the present Secretary of State for International Development, who was Economic Secretary to the Treasury, was surrounded by people from the industry. She brought the message back here, and it has been here ever since. We need to build on the new regime that we have had since then.

[Dr Whitehead]

I thank the hon. Gentleman for that intervention, which reminds us of the circumstances in which that began and the lessons learned fairly early on. Certainly, over the past year or two the Government’s activity and their approach to taxation and investment in the North sea show that the lesson was taken on board. I just want to make sure that we build on it. We should bear in mind the need for investment, to bring new players into the field and ensure the longer-term certainty and security of those investments for the future. Perhaps some kind of floor and cap investment arrangement might be undertaken, whereby, should volatility return to the North sea, there would be guarantees for the Government and, if it does not, there would be guarantees for the investor.

We need to think about new forms of investment for new times in the North sea to make sure that its long-term legacy will be that it did its best for UK plc, both for the jobs and skills that now exist, which it is vital to retain, and in making sure that the UK was fuelled as well as possible. I hope that it will be entirely uncontroversial if I conclude by saying that we are engaged in a joint enterprise that it is in all our interests to get right.