Oil and Gas Industry

Debate between Colin Clark and Kirsty Blackman

Tuesday 9th October 2018 Westminster Hall

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Falkirk (John Mc Nally) for obtaining the debate. The timing is good, as other Members have mentioned, given that we are in the run-up to the Budget.

I want to talk first about Brexit, which several colleagues from throughout the House have mentioned. The economic report put out by Oil & Gas UK makes the point that 7% of the offshore workforce are from EU countries and refers to the fact that before Bulgaria joined the EU it took four days for goods to come from there to Aberdeen to be used in the oil and gas industry, but that they were routinely held up for an additional week because of customs controls. If we do not have a customs union deal that allows for those goods to come through the border without being held up for a week, it will cause problems for our supply chain companies and for the wider industry. A fifth of people living in Aberdeen were not born in the UK. We have done immensely well at attracting immigration, which has been good for our industry. It is a huge concern that that might be less easy after Brexit, particularly if the immigration plans mentioned at the Conservative party conference go through and we end up in a situation where very few immigrants are allowed to come to the UK. That would cause a real problem for my city and for the oil and gas industry as a whole.

The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) set out particularly clearly the requirement for a stable taxation regime for the oil and gas industry. One of the points most often raised with me is that if there is a story in the Financial Times about the possibility of the Treasury increasing, or massively changing, tax in relation to oil and gas, that story alone causes a problem for the industry—it makes a dent. We need a clear commitment from the Chancellor in the Budget to stability and predictability in the taxation regime.

[Colin Clark]

We were both at the same meeting when the Exchequer Secretary to the Treasury came up. I think it was the myth being peddled that did the damage—he clarified it from the Treasury. Does the hon. Lady agree?

[Kirsty Blackman]

I do not disagree at all. I understood that that was a private meeting, so I did not want to talk about what that Minister said during it, but it would be good if the Chancellor could make a clear statement in the Budget. I agree that it was the myth, rather than any statement by the Treasury, that caused the problem. I am sorry; I thought I had been clear on that point.

There are other asks for the Budget. I have not heard anyone on the Opposition Benches being negative about transferable tax history. I apologise to the hon. Member for Gordon (Colin Clark), but I was calling for that in March 2016, which was more than a year before he was elected. We have consistently called for changes in the taxation regime for late-life assets. I have made the case for that on many occasions, and I am pleased that it may be coming through—we hope it will. It is a good example of the industry working together. Things have happened a bit more slowly than I would have liked, but the industry worked well with Government, and the conversation went well about trying to make the tax regime work from the point of view of both the Government and the industry.

The importance of transferable tax history is because of what happens when assets at the end of their life are transferred to another company. Something that belongs to a big company with many different onshore installations will probably not be its No. 1 priority, but if it belongs to a new entrant and is all that it is concentrating on, it will be a priority. That is why transferable tax history is so important for maximising economic recovery.

The point about end-use relief is a good one. My hon. Friend the Member for Falkirk and the hon. Member for Waveney (Peter Aldous) both mentioned it. Whatever happens, it is vital that the Government should speak to the industry about the best way to make the change work, if there is to be a change, and that as much notice as possible should be given of changes to end-use relief. We nearly had a big disaster in July, with the pulling of end-use relief. It is clear that that cannot happen. The industry and the Government need to continue to speak to each other to make it work better.

The final Budget matter I want to speak about is the sector deal. If the Chancellor could announce progress on that it would be phenomenal—excellent. I would be really pleased. If not, it would be good to know when a commitment is likely. My impression from speaking to those in the industry who worked on the deal is that they feel they worked together incredibly well on it. They feel that the proposal that has been put forward to the Government reflects the industry’s needs and requirements, so it would be positive if the Government brought it forward sooner rather than later.

I want to talk about “Vision 2035” and focus on the subject of the debate—the future of the oil and gas industry. I will not talk much about the industry downstream—I apologise to anyone involved in it—because I represent Aberdeen and because my hon. Friend the Member for Falkirk, who represents Grangemouth, and the hon. Member for Waveney have spoken about that important aspect of the industry. “Vision 2035” is the Oil & Gas Authority’s vision for securing the supply chain and the oil and gas industry in the north-east of Scotland to ensure that, in 2035, it still makes money for the Treasury, supports our local economy and provides jobs in the local area. That will happen only if the Government provide support now, including the stable fiscal regime that we spoke about earlier and support for the supply chain. They must talk positively about the industry, consider its asks, and make changes if need be.

The North sea field is a late-life asset—it is incredibly mature. It was one of the first fields in the world to reach that level of maturity, so our engineers who go out there are doing incredibly innovative things. They are working on enhanced oil recovery, bringing in tech in the supply chain, and using longer tiebacks so that small pools can be exploited. It is groundbreaking, world-leading stuff; this is the first time some of it has been done. If we get the technology right, we will be able to export it around the world even when there is no oil and gas in the North sea, but we must ensure that those companies stay anchored in the north-east of Scotland and the wider area.

The hon. Member for Gordon mentioned how many oil and gas companies he has in his constituency. I am sure he has more than I do, but I have the services that support those companies—two local authorities, the hospital and all the other vital things that the industry requires. As the hon. Member for West Aberdeenshire and Kincardine said, it is hon. Members from the north-east of Scotland and those who represent constituencies with oil and gas industries who come to speak in debates like this. I have taken part in many such debates in my time as a parliamentarian, and it is interesting that we and Conservative Members are largely asking for the same things: transferable tax history, the sector deal and support for the Oil & Gas Technology Centre, which is doing absolutely phenomenal work. Previously, we were asking for the Aberdeen city deal. We are calling for the same things because we all go out there and speak to people who work in the oil and gas industry, and the companies involved in it. We ask them what they need, and they say pretty consistently that the most important things are stability and predictability.

Support for exploration is also hugely important just now. Anything that can be done to encourage exploration and help big projects be signed off will be incredibly important. More big projects have been signed off in the past year than in the previous couple of years, which is hugely welcome news, but we need them to keep coming through the pipeline so that we can secure the future economic benefit.

Hon. Members in the Chamber largely speak with one voice and have the same asks for the oil and gas industry, but I sometimes feel like we do not make as much headway with Ministers in the Department for Business, Energy and Industrial Strategy and the Treasury as we could. I hope that the Minister hears everything we are asking for. We are all calling for the same things, because we are reflecting the voice of the industry. I would very much appreciate it if he would ask the Chancellor to make a clear commitment to a stable fiscal regime in the Budget.

UK Oil and Gas Industry

Debate between Colin Clark and Kirsty Blackman

Thursday 19th April 2018 Westminster Hall

[Colin Clark]

Yes, but many parts of the country feel they are underinvested in. The engine room of the Scottish economy is taxed that much more than other areas—if we do not invest in it, we risk killing the golden goose. That is the important thing. I am not saying that other areas are not deserving; I am saying that if we do not invest in the north-east of Scotland and the surrounding area, it will not be an attractive place to live, and it will be very difficult to attract people to work there.

[Kirsty Blackman (Aberdeen North) (SNP)]

Does the hon. Gentleman agree that the same concepts apply to the £330 billion of oil revenues that came to the Westminster Parliament?

[Colin Clark]

I will not disagree, save that the principle is that that £330 billion was to the UK Treasury, which invested for many years throughout the United Kingdom. As the hon. Member for Stockton North will remind me, not only the original Scottish sector has oil, but the islands, the rest of the UK east coast and now the west coast of Scotland as well.

--- Later in debate ---

[Kirsty Blackman]

I appreciate the hon. Gentleman’s question. To be perfectly honest, I am not clear that an inquiry is widely called for; an awful lot of information has been published. If lots of individuals from my constituency and from the industry more widely asked me for such an inquiry, I absolutely would look at that. I am not saying no, but that is not something that people generally have asked me for. They have looked at the evidence that has been published so far and taken decisions on that basis.

I will talk first about the oil and gas industry in general, although obviously I will speak particularly from the perspective of the north-east of Scotland, as Members would expect of an Aberdonian. I will talk about where we have come from, where we are and where we will go with the industry, and about how to get to those places. As I said, some of my asks are not dissimilar to those of the hon. Member for Gordon.

We were in a situation where the industry was overspending significantly. When it was told that it could have a widget today for £400 or tomorrow for £4, it chose to have it today for £400. There was an awful lot of fat in the system. Now the industry is able to make more profit at $60 a barrel than it was at $120 a barrel, just because it has slimmed down a lot of those costs. One of the most important things for us to do is to capture that—to ensure that, whatever we do, we do not lose the gains we have made.

We have undoubtedly been through an incredibly painful period. We have had an awful lot of pain and suffering in the north-east of Scotland. I get that. A number of people have found alternative jobs—they have been supported in that by various organisations; the Scottish Government have put a lot of effort into that—but some have not. We do not want to forget that there are people who still have not got through the pain of having to go through a redundancy process. We need to remember that and ensure that, whatever we do, we do not set ourselves up for another fall like the one we had. That is really important.

We had a very competitive system, in which companies were unable to work together or point in the same direction. Local authorities were not particularly good at that, either. What really brought local authorities, the business society and civic society in all of Aberdeen city, Aberdeenshire and the north-east of Scotland together was the bidding process for the city deal. Working together on that was really important. I am pleased that we got a city deal. Anyone who has read anything I have said about the deal will know that I was unhappy about how low level it was—I would have liked significantly more money for my city, and I am not sure that many people in the north-east of Scotland would disagree—but the process was very beneficial, as was the direction that the city and the shire took. I hope that we keep hold of that.

[Colin Clark]

The hon. Lady is gracious in giving way. Does she worry that there is a perception that the north-east of Scotland is relatively wealthy and therefore will take care of itself, and that sometimes that affects investment in the region?

[Kirsty Blackman]

I certainly worry that the city deal that was signed was looked at on a different basis from some other city deals. The Scottish Government have put in significant additional funding to the city deal, particularly recognising the issues with infrastructure. I was pleased to hear the hon. Gentleman talk about looking at additional infrastructure projects and so on. The Aberdeen western peripheral route will make incredibly positive changes. No one can wait for it to come—I think we are expecting it in the autumn. It will be hugely positive and will make a big difference, and I think that it will help encourage people to come to the north-east.

Let me turn to where we are now. Companies are working together like never before. I was at the forefront of calling for changes to transferable tax history, but other parties supported them; the Conservative party was behind the call, too. I very much appreciated the Chancellor making those changes in last year’s Budget. I would have preferred them to happen more quickly, but we cannot have everything. We are looking forward to their implementation later this year. I could not be clearer about how important they are, and I am sure the Government recognise that.

Just for a bit of information, if a big company owns a number of rigs and one of them is nearing the end of its life, the company has a choice: it could put a lot of work, capacity and people into that installation to try to get the maximum recovery from it, or it could say, “Look, this is not a priority for us. We are focusing on other things.” That is completely understandable, but the transferable tax history allows a new company—a new player in the market—to take over that asset to ensure that the maximum recovery is made from it. That is really positive, and I am pleased that it has happened. That is a helpful measure in terms of maximum economic recovery, which we are fully behind.

Where are we going? I was pleased to hear the hon. Member for Gordon mention Vision 2035, because it is incredibly important and people do not talk about it enough. It is the vision for the future of the Oil and Gas Authority, which so far seems to be doing a good job. It focuses in particular on the north-east of Scotland, but also on the wider industry across the whole of the United Kingdom. Vision 2035 is about ensuring that we get maximum economic recovery, extract oil and gas from the small pools and have a supply chain that is anchored—particularly in the north-east of Scotland—so that once we get to the stage when no oil and gas is coming out of the North sea, everyone will know that the very best supply-chain companies for oil and gas are in the north-east of Scotland and parts of the wider United Kingdom. Then, rather than seeing those companies lifted and based in the US or other countries, they could continue to sell their expertise, with a tax take continuing to come in and be spent here—preferably in Scotland.

We must anchor the supply chain now for the future, and there are a few ways to do that. In relation to small businesses, all too often such businesses in oil and gas come up with a great concept, start working on it, grow the business to a point and then they are sold. I get that that is a way forward for some, but both the Scottish and UK Governments are beginning to ensure that if such companies have the potential to grow, they do not get sold and their concept lost within a bigger international company but can access the finance they need to anchor themselves and have that next step of growth, whether that is through beginning to export or ensuring that their intellectual property is turned into something real that can be sold. That is really important for the supply chain, rather than seeing companies sold on to somebody else who may not pay as much tax here because they are not a wholly owned United Kingdom company.

On maximising economic recovery and exploration, even though we have a super-mature basin we should still be doing exploration; there is more that we can do. I think someone from Statoil said to me, “You’re most likely to find oil and gas somewhere you have already found oil and gas.” We should do exploration in those areas. We have better ways of surveying now than ever before, and of trawling through and understanding the data from that surveying, which will be important going forward. Anything the UK Government can do to ensure that exploration continues, even in a super-mature basin, would be welcome.

--- Later in debate ---

[Kirsty Blackman]

Thank you, Mr Sharma. In terms of ideological decisions, the onshore wind decision, taken on a blanket basis across the whole United Kingdom, could be applied flexibly to Scotland, and we would very much like that. There would still need to be a planning process, but it would be great if the blanket ban was not there.

[Colin Clark]

Almost 50% of turbine applications called into Holyrood to the reporter are then given permission. The hon. Lady just said that the Scottish Government have decided not to allow fracking—as I said in my speech, I think it is nimbyism, frankly, but fair enough, because that is their right—but if local communities and local councils say—

[Colin Clark]

Thank you, Mr Sharma. I will keep my question to the hon. Lady. Does she agree that there is a contrast between the two positions? Can one give permission for turbines that people do not necessarily want in their local community when one may not believe in having fracking in Scotland? Perhaps she does believe in having fracking onshore.

[Kirsty Blackman]

I do not believe in having fracking onshore in Scotland, and I am sure the hon. Gentleman would not expect that. The benefits of fracking are not as big as they are made out to be. Were it to be allowed, it would bring very little in the way of jobs or tax take, and the loss to our communities and the upheaval caused in them would be so significant that it would not balance out those jobs and tax take.

I am incredibly pleased to hear the Minister talk so positively about carbon capture and storage. What happened previously in relation to that was a train wreck—it was horrendous. It was awful how the rug was pulled from under it; I could not be clearer in my condemnation. I recognise that it was not the Minister’s responsibility at the time and I do not blame her in any way for that. I am pleased that she is being so positive.

We need to ensure that, whatever we do on decommissioning decisions and changes to allowances made by the OGA, we do not prejudice future carbon capture and storage opportunities. For example, we should not prematurely decommission a pipeline that could be useful for carbon capture and storage. As we do not yet have a full grasp of what carbon capture and storage technology will look like, it is very difficult for such decisions to be made. However, I ask that whatever is looked at is considered carefully in those terms and that carbon capture and storage is considered when any decommissioning decision is made. Any decision on any of that needs to be made very carefully.

I am also of the opinion that decommissioning, if done right, can bring some jobs and some revenue. However, I do not think it will be the biggest windfall in the entire world. I appreciate the action that the UK Government have taken on decommissioning through the OGA, and I also appreciate what the Scottish Government are doing through the decommissioning challenge fund. All those things are positive.

When I spoke to the Oil and Gas Technology Centre, which I will move on to in a moment, it said something interesting about decommissioning. On some rigs, there is an ability to do enhanced extraction techniques, but it is not possible to do them because of all the stuff on the rig that is doing the current extraction techniques. There is a need for a level of enabling decommissioning; taking off some of the widgets currently on the platform in order to put on new widgets so that the platform can be used to do things, but with different technology on it. There are smart things we can do on decommissioning that will ensure that we have jobs, but also that we have a positive way forward and get the maximum economic recovery out of the North sea.

The issue of STEM, which the hon. Member for Gordon mentioned, is important. I have been concerned as an Aberdonian, feeling the pain and seeing the changes and the negative atmosphere in the city, that we would have a situation in which young people would come through school saying, “No, I don’t want to go into oil and gas,” exactly as he said. The Oil and Gas Technology Centre is encouraging young people to get into STEM. Aberdeen Science Centre is doing similarly cool things to encourage STEM, and so is TechFest, which takes place every autumn. Those are all positive things that are supporting young people into STEM.

We do not have the same problems with the numbers of engineers that the north-east of England does—I have previously been told that it is much more difficult in the north-east of England to find some of the engineering skills that are required, but I could be wrong. That is something we could probably work together on quite positively, sharing the information and the positive things we have been doing on that, to ensure that best practice is shared and lots of people are encouraged into engineering.

As the hon. Member for Gordon said, some of the digitisation skills are important. One of the things I talked about with the Oil and Gas Technology Centre was the transferable skills that people get from studying something such as gaming, with the advanced interfaces they use, and how the virtual reality that can be created from that is incredibly positive and useful.

I have a couple more things to say—I am probably beginning to try your patience, Mr Sharma—and a couple of specific asks for the Minister. First, there is the oil and gas sector deal. I know that she is probably being heavily lobbied on that, but it could not be more important for the industry. We recognise that the Government have been working with the industry on that, and we look forward to that coming through.

Secondly, on the industrial strategy challenge fund, I understand that the bids for wave 3 closed at some point this week. Concern has been raised with me about the length of time the decision-making process will take. That is not so much the time in which funding will come through, but the decision-making process. If no shortlist is created until November, and we are looking at having a shortlist at some point late this year, no decision will be taken until a bit later than that. In reality, the chance that people can employ people and get up and running at the beginning of April next year becomes slimmer and slimmer. The quicker the decision can be taken—not necessarily the quicker the funding can come through—the better for projects being ready to go as soon as possible.

There are a couple more challenges. It is the case that Brexit is a challenge for the industry and that varying suggestions have come out about how much Brexit could cost the industry. I am still concerned about how visas are operating. I do not think the current situation works particularly well. I make a plea for post-study work visas to be brought back for the University of Aberdeen and Robert Gordon University. That would be a huge positive change for us. I know that the pilot took place in three universities in England and has been broadened out slightly, but it still has not come to the two universities in my city, and it would be incredibly positive for our industry.

On another specific offshore industry-type issue, I had a constituent come to me recently who is an EU citizen, but is not eligible to apply for the right to remain because he has spent so much time out of the country working for his oil and gas job that he cannot fulfil the residence requirements. He is a high earner, he pays tax and he is a good contributor to our city, and I am concerned that in these individual cases the Home Office’s policies are obstructive to ensuring that those highly skilled people are able to stay in our city. That is a specific plea.

I have one last specific plea for the oil and gas industry. I have requested a meeting with the Financial Secretary of the Treasury and I hope that will happen in the near future. There is a major issue brewing around customs, because there is something called the shipwork end-use relief that is heavily used by oil and gas operators. Basically, it is a customs relief that occurs for stuff that is going offshore; the stuff is not eligible for the same customs fees that it currently would be, because it is going offshore. I received reassurance from the Financial Secretary that that would continue to be applied post-Brexit, but the action that Her Majesty’s Revenue and Customs is taking contradicts that.

There is a similar issue on manifests. Currently, paper manifests are okay for making a customs declaration, but we are looking at moving to a situation where electronic manifests are required. I understand that is because of changes in EU rules, but post-Brexit, the Taxation (Cross-Border Trade) Bill is not the same as the EU customs code, so they will possibly be able to revert to paper manifests, but we are not clear. There is an awful lack of clarity around that, and I am concerned that what the Financial Secretary is saying and what HMRC is saying are not the same.

That is becoming really important, because the changes have to be made in the early summer of this year. Companies are gearing up to make changes on the basis of HMRC guidance that is being contradicted by the Financial Secretary. Any assistance that can be given to ensure that those meetings take place and that clarity is given to companies would be incredibly useful.

The industry is in a good place, which is surprising after everything it has been through. There is a positive future. One of the amazing things it is doing is focusing on decarbonisation. That seems a bizarre thing for the oil and gas industry to do, but it has more of a need to do it, and more of a responsibility to do it, because it is the oil and gas industry. I am pleased that that has been written into what the Oil and Gas Technology Centre is doing, and that all the oil and gas companies, working together in ways they never have before, are positive about looking toward decarbonisation.

There is a positive future for the oil and gas industry. We must get it right. We must continue to encourage companies, we must continue to support and work with organisations such as the Oil and Gas Technology Centre and, when industry bodies and companies come to us and say, “This specific issue is a blockage,” we must look at those specific blockages and ensure that we do what we can to get rid of them, listen to industry and make the changes that are required.

Duties of Customs

Debate between Colin Clark and Kirsty Blackman

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I am pleased that the Government have finally brought forward something that is at least a bit more solid than things were previously, albeit not yet very solid.

The customs White Paper says that we should refer to the future partnership agreement and to the Northern Ireland position paper, and the Northern Ireland position paper says that we should refer to the customs White Paper—this is a complete guddle! Having read all these things, not only am I still not clear about how customs will look after the UK leaves the EU, but I am not clear about how the UK Government want customs to look. The only thing that I am even vaguely clear about is that they want the process to be as close to frictionless as possible, yet they have not made any clear commitments about exactly how they expect that to work. Let us look at some of the things they have said in their various papers. With regard to Northern Ireland, for example, they want to agree

“at an early stage a time-limited interim period, linked to the speed at which implementation of the new arrangements could take place, that allows for a smooth and orderly transition.”

I might be wrong, but I think that now is an early stage. In fact, before now would have been a good time at which to make decisions and commitments, and to be clear to business about at least what the direction of travel is, but we are not there yet. We are very close to Brexit day. Brexit day is coming in March 2019—who knows at what time?—and the Government have not been clear with businesses about even their aspirations for how customs will look.

It is undoubtedly the case that we benefit from being members of the EU single market and members of the customs union. Even those who are most vociferously in favour of Brexit agree that we benefit from those things. The lower estimate of the effect on GDP due to leaving the customs union and the single market is that we will lose 3.8%. The upper estimate of the effect of the trade deals that we will strike with Japan, the USA, the Association of Southeast Asian Nations, Canada, Australia, New Zealand and India all added together is a gain of 2.37 percentage points. That is significantly less than the 3.8% that we are going to lose, so even on the best estimates, we are going to be down. The EU is pretty close to striking a trade deal with some of those countries anyway, so the benefits to us are notional rather than actual.

The single market and the customs union continue to benefit us. We are told by the independent and respected Fraser of Allander Institute that a hard Brexit could cost Scotland 5% in GDP growth. A really interesting paper by the National Institute of Economic and Social Research told us last year that if we have these free trade arrangements instead of being a member of the single market and customs union, Scotland will lose £5 billion of exports in services alone. That is very significant. Analysis by the Scottish Government states that Scottish GDP could be around £11 billion a year lower by 2030 than would be the case if Brexit did not occur.

For those reasons and many others, we in the SNP have been clear from the beginning that we are against Brexit. We are against driving off this cliff, and we are against the incredibly hard landing that will happen when the Brexit bus hits the bottom. Despite our opposition to all these things, we are trying in this House to mitigate the impacts of Brexit. If the Government are determined to drive us off this cliff, we will try to make sure that there are fewer spiky things at the bottom for us to be impaled on.

I do not know how many Members have read the Government’s White Paper on customs, but it refers to the Government’s two proposed scenarios for the working of the future customs relationship. It also talks about contingency options for if the Government do not achieve their aspirational, bespoke deal—nobody has ever managed to get such a deal, and the Government do not really know what it is—and I think that people at home will be really interested to hear what it says. In a contingency situation, there would not be a £15 VAT-free threshold on parcels posted to people by family members, businesses and organisations in the EU. The Ways and Means motions that we are supposed to be agreeing today would allow the Government to charge VAT on gifts sent to people from the EU, which is ridiculous. If somebody gets a parcel worth less than £15 from a person in America, no VAT is payable on it, but the Government propose that such an exemption would not apply to things that came from the EU in a contingency situation. A lot of people would be pretty unhappy to discover that they will have to pay a customs charge on presents or other items that have come from the EU. Such things have not been spelled out to people or fully discussed.

I have referred to the various papers—I think we are up to four—that the Government have published on this matter. They have been pretty comprehensively savaged not just by experts, but by businesses, which are the real experts in this area. The Minister talked about roll-on/roll-off ports and the speed at which things have to come through ports. The Government have tried and failed to solve the problems with Operation Stack at Dover. Only last week, the Under-Secretary of State for Transport, the hon. Member for Hereford and South Herefordshire (Jesse Norman), put out a statement to say, “Our plans for sorting out Operation Stack are, basically, dead in the water, and we’re going to have to start again. But don’t worry: we’ll definitely have something done by March 2019 when the UK leaves the customs union and the single market.”

[Colin Clark (Gordon) (Con)]

The hon. Lady will agree that the oil and gas industry, which is important to both our constituencies, largely trades internationally outside the EU. It does not fear international trade. Is it wrong?

[Kirsty Blackman]

I am not saying that anybody should fear international trade. International trade is a very good thing, particularly for productivity, for example, which the oil and gas industry has been quite good at bringing up. The more international trade a country has, the better its productivity growth, but Brexit is not going to result in more international trade—[Interruption.] Brexit is going to result in the UK having more say over the terms of some trade deals with third countries. It will not result in more international trade, because the EU is international—it is made up of a number of other countries—and there is going to be a reduction in frictionless trade to the EU as a result of the changes. [Interruption.]

Finance Bill

Debate between Colin Clark and Kirsty Blackman

Tuesday 12th September 2017 Commons Chamber

[Colin Clark (Gordon) (Con)]

I rise to welcome the Finance Bill and to recognise the success of this Government’s financial policy, and I am delighted to follow the eloquent speech of my hon. Friend the Member for North West Hampshire (Kit Malthouse). Opposition Members often endeavour to play down the United Kingdom’s economic success—three million jobs have been created nationally since 2010—but my constituency has blazed a trail in the north-east of Scotland. In Gordon, which is to the north-west of Aberdeen, unemployment is at 1.6%, which is up from 0.8%, but the past few years have been painful for the big north-east employers: the oil and gas industry and the service companies that support it. Many jobs have been lost in the sector, and particularly hard hit have been the people who live elsewhere in the UK, but the green shoots of recovery are beginning to show. I am sure the Minister will join me in welcoming Oil & Gas UK’s economic report, which shows that confidence and investment are returning.

I have visited the European offshore oil and gas exhibition, which is on the boundary of the Gordon constituency. The hon. Member for Aberdeen North (Kirsty Blackman) had to point out to me that it was being held just inside her constituency, but she is welcome to visit the new £400 million Aberdeen exhibition centre, which has been built in my constituency. The exhibition displays a showcase of many Aberdeenshire and Aberdeen-based companies, and the technology is breathtaking. The sector has made it a priority to be outward-looking, exporting equipment and skills to wherever there is oil and gas and, increasingly, renewables. It is imperative that oil and gas are at the heart of the Government’s industrial strategy and at the top of their fiscal priorities.

A key part of our recovery is attracting investment to the UK continental shelf, and Oil & Gas UK recognises that the UK’s fiscal policy puts it in the top quartile of places to do business. Coupled with competitive corporation tax and attractive levels of personal income tax, companies and skilled professionals are choosing to operate in the UK. I thank my right hon. Friends the Members for Forest of Dean (Mr Harper) and for Wokingham (John Redwood) for highlighting the oil and gas industry in their speeches. The Government’s fiscal policy is key to the continued prosperity of many areas in the UK that depend on oil and gas. Without a raft of attractive tax policies, we would risk a brain drain, and the oil industry moves rapidly, so the availability of facilities and skilled employees is essential. It is therefore disappointing that the Scottish Government’s empty property rates policy has led to the tearing down of properties in my constituency.

[Kirsty Blackman]

I do not know whether the hon. Gentleman has seen the Finance Secretary’s announcement today about the Barclay review, but it would be a good idea for him to have a look at it, particularly the part about property rates for new empty properties.

[Colin Clark]

I welcome that intervention. Considering how long I have been sitting here, I will have to read it after I have left the Chamber.

The UK oil and gas industry employs 300,000 people—largely well-paid workers who contribute to the Exchequer. It underpins a highly skilled workforce and invests vast amounts in training and R and D, such as at the centres that the hon. Lady and I have visited. I ask the Minister to look closely at the tax history of oil assets, their transferability, how that will affect decommissioning and how best to promote the UK to be decommissioning experts for offshore oil and gas.

SMEs are the bedrock of the UK economy, and, like my hon. Friend the Member for North West Hampshire (Kit Malthouse), I am a businessman and must declare an interest here. At £200,000 a year, the value of the annual investment allowance is significant for small to medium companies. Instead of the spending that the Opposition would have us do, the allowance encourages investment, leading to more jobs, and it is important that the Treasury concentrates on investment in our economy. I ask the Minister to consider widening the AIA to include facilities, potentially creating local construction jobs.

Finally, whisky is a mainstay of the Scottish economy and probably the most popular export—very popular in the bars of this House. My constituency is home to several distilleries and, along with the rest of the north-east of Scotland, produces malting barley, but the constituency of my hon. Friend the Member for Moray (Douglas Ross) clearly takes the title of having the most distilleries. Perhaps the Minister will look fondly on the whisky and spirits industry when sampling Scotland’s greatest export, so I have a suggestion: if I invite the Treasury team to partake of the distilleries in my constituency and in those of my hon. Friends the Members for Moray and for Banff and Buchan (David Duguid), perhaps the Finance Bill will not be so painfully long.