James Cartlidge
Main Page: James Cartlidge (Conservative - South Suffolk)
Lisa Nandy (Wigan) (Lab)
North sea oil and gas production has helped us to fund our public services, such as the national health service, through the taxes it has generated which are worth hundreds of billions of pounds. It has improved our national security by reducing our dependence on imports from other countries. It has bettered our energy security by providing a reliable supply of gas and oil, fuels that will continue to play an important role in our energy mix, particularly for heating and transport, as we become a lower carbon economy. Crucially, the North sea also sustains hundreds of thousands of skilled jobs in Scotland and the north-east of England and in world-class supply chain businesses right across the country.
For these reasons there has been a cross-party consensus for some considerable time that we should do everything we can to protect those jobs and to continue to maximise investment in our North sea oil and gas industry. The incredibly tough economic conditions faced by businesses operating in the waters off our shores because of the major fall in the price of oil only underlines the need for parties across this House to work together to get on and implement the recommendations of the independent review produced by Sir Ian Wood.
James Cartlidge (South Suffolk) (Con)
The hon. Lady talks about the oil price. Does she agree with her hon. Friend the Member for Swansea West (Geraint Davies) that we should be trying to lobby the American Government to reduce shale output and increase the oil price?
Lisa Nandy
One of the most important things we can do to help boost jobs and skills in the North sea is to have a long-term plan. I will say more about that as I make progress.
Callum McCaig
Yes. I am coming on to that point now. I have spoken about carbon capture and storage many times and I will continue to do so. We fully support that. However, there is a requirement, which the shadow Secretary of State talked about, to have the review and the strategy in place before it can be imposed as one of the principal objectives of the OGA. If we dilute the core functions of the OGA, we distract from that attention. We should remember that the OGA and the Wood review come from a time when oil was over $100 a barrel. Those were the circumstances required to support the industry, which was going through difficult times, at a very high oil price. Those pressures are much higher today. I agree that we need to allow the OGA to bed in. Perhaps in future, once there is a strategy in place and it can be demonstrated that it has the support of the Government from both a financial and a strategic point of view, that might be something we want the OGA to do. At the moment, however, I think that is premature.
As I said, the Wood review comes from a time, two years’ ago, when oil was $110 or $115 a barrel. It is now $29 a barrel. The game has changed significantly. We have to accept that, while this is a vital step in supporting a vital industry, it will not be enough in and of itself. We need fiscal changes to the tax regime, particularly on incentives, and to review the tax level as a whole.
Immediately following the autumn statement, the Oil & Gas UK economics director, Mike Tholan, said:
“Since the last Budget, the oil price has declined further, and we must continue to do as much as we can to help boost confidence and encourage investment in the UK Continental Shelf. If the oil price continues to be lower for longer, there is little doubt that alongside industry’s own concerted effort to improve its efficiency, we will need to work with Treasury on additional measures, including revisiting the current headline tax rate—consistent with the government’s commitment to the sector’s tax rate falling over time.”
James Cartlidge
This issue clearly has to be approached through partnership between the UK Government and the Scottish Government. That being so, and given that the Scottish Government are about to get new tax-raising powers and that this is currently a real crisis for the key UK and Scottish strategic economy, will it be the policy of the Scottish Government to use those powers to raise funds to support the industry, if need be?
Callum McCaig
Frankly, I am not sure how income tax could be used to boost the oil and gas industry, but if the hon. Gentleman has any concrete suggestions—[Interruption.] On my understanding of the Scotland Act 2012 and of the progress made on tax-raising powers, I do not see how the Scottish Government would have the ability to do anything that would materially affect the fiscal regime. If the hon. Gentleman wishes to join us in calls for corporation tax for oil and gas revenues to be devolved to Holyrood—or, indeed, for full fiscal autonomy—he would be more than welcome to do so. The suggestion that the minimal powers devolved to Scotland for raising tax revenues and achieving economic objectives such as boosting the business environment could in some way be used to boost the oil and gas sector is, at best, naive.
James Cartlidge (South Suffolk) (Con)
It is a privilege to speak about this Bill and to be asked to serve on the Bill Committee, as well as to follow so many excellent contributions, especially from my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), and my hon. Friend the Member for Hertsmere (Oliver Dowden), who made a passionate defence of the beautiful English countryside.
It is also an honour to follow the hon. Member for Wakefield (Mary Creagh), although I will not attempt to spell or pronounce the age that she said we live in. She spoke a lot about fuel poverty, but I cannot think of a single measure to help my constituents tackle fuel poverty that even begins to compare with the fact that, with so many people heating their homes with oil tanks, it is now 60% cheaper to fill those tanks than it was a year ago. The same goes for petrol and diesel, although the percentage falls are not as steep. I welcome that fall in oil and diesel prices, particularly for our hauliers who have been so hard hit of late. I was intrigued to hear the hon. Member for Swansea West (Geraint Davies) call on those on the Labour Front Bench to lobby the American Government to curtail shale production, so that we can increase oil prices. I would be interested to know what the leader of the Labour party thinks about that policy.
Oil prices are key, and the most important part of this Bill is that it establishes the Oil and Gas Authority in what is clearly a time of crisis for the industry. Hon. Members have mentioned the cost of oil falling to $29 a barrel. In fact, according to the internet, today it fell to as low as $27.70, and Ladbrokes are now offering odds of 10:11 on its falling to below $25 in the coming weeks, and 10:1 on oil being below $10 a barrel—incredible prices.
As several hon. Members have said, 65,000 jobs have been lost in the oil sector since the beginning of 2014. It is a difficult time for the industry, but there are roughly 24 billion barrels of oil left in the North sea, which one day will not sell for tuppence ha’penny. We need an effective regulator, because that can bring stability and encourage investment.
I have no expertise or background in the industry—my background is as a director of a small business that was regulated by the Financial Services Authority and is now regulated by the Financial Conduct Authority. It is fair to say that the FSA was not a brilliant regulator—it failed fundamentally—but it is incredibly important that there is now a trusted regulator in the sector. I am sure it will be the same in the oil and gas industry. Oil & Gas UK has said:
“We believe the OGA is a critical catalyst for the work being undertaken to sustain offshore oil and gas activity and the associated employment in the sector, and its tools and capabilities should remain focussed solely on this task”.
I have one other point to mention on oil and gas. I am glad the hon. Member for Aberdeen South (Callum McCaig) is back in his place. When I intervened on him earlier and asked what the SNP could do, he suggested that it was naive to think that the Scottish Government should try to do anything about the crisis. It is a UK crisis, but it is hitting Scotland hard, particularly his constituency.
Callum McCaig
That is not a fair assessment of what I said. In response to the hon. Gentleman’s suggestion that the Scottish Government should use their new fiscal powers to support the oil and gas industry, I said that I did not see that as manageable, and that to think otherwise would be naive. Support is being provided by the Scottish Government and is being well received.
James Cartlidge
The Scottish Government will have the power to raise tax. They can do that and say to the Chancellor, “We are extremely worried about the crisis hitting our countrymen and countrywomen. We will contribute to a fund to reduce the tax rates on North sea oil.” What is so controversial or naive about that? We had all that passion from the SNP at the referendum about Scotland. Now that we have a crisis in Scotland, what are the SNP Government doing about it? They have a duty to pull their finger out, put their hand in their pocket and step up to the breach.
On the subject of devolution, we also have devolution in England. I have a question for my Front-Bench colleagues. There is an important measure in the Bill on planning and onshore wind. The result of the Bill is that power will go to local people, but I ask the Minister what will happen if a combined Suffolk and Norfolk authority has strategic economic powers. Will that take over the planning powers that will be devolved to local authorities under the measure in the Bill? That is a question about the impact of the measure and English devolution.
As in other constituencies, there have been significant cases in my constituency. In the run-up to the general election, there was a major case of a wind turbine in Pannington farm in Wherstead, near the famous “Jimmy’s Farm” of BBC TV fame. I am pleased to say that it was soundly rejected by Babergh District Council, with great support from the affected communities of Pinewood, Belstead and Wherstead in the northern part of my constituency bordering Ipswich. Of course, those communities will very much welcome the measures in the Bill.
On the subject of planning, several hon. Members, including the hon. Member for Wigan (Lisa Nandy), asked this question: if communities have a say in onshore wind, why should the same not apply to fracking? I see the point they make, but that planning currently rests with the minerals planning authority of the higher authority—in Lancashire, that meant Lancashire County Council. As a result of the time that it is taking, I understand that the decision will eventually go to the Secretary of State. [Interruption.] Is the hon. Lady trying to intervene?
Lisa Nandy
I wanted to make the point that Wigan rests within Greater Manchester.
James Cartlidge
I did not say that it did not; I was talking about Lancashire, which obviously has an extremely important fracking issue at the moment.
My position is that fracking is clearly incredibly controversial. The point is that, because of some of the stuff coming out in the media—warnings of terrible things that could happen—I do not see how a district council in that climate would ever approve a fracking application, and yet that industry potential offers so much. We at least have to give it a go. Indeed, shale production could create up to 74,000 jobs, many in areas of high unemployment. It has to be said that it is easier for the MP for South Suffolk to support it—east Anglia apparently has no shale deposits—but we have to recognise the different context. Renewables is a developed industry and shale has not got going. We have exploratory drilling but no commercial drilling. We at least need to give it a chance to get commercial drilling going to see what impact it has in reality, so that we can get away from some of the hysteria and examine the potential. It could be a vital economic resource for this country.
Lisa Nandy
I am sorry to detain the hon. Gentleman on this matter, but is he really arguing—I cannot honestly believe he is—that, because fracking is incredibly controversial, communities should be denied a voice? Surely that is a reason why communities should be given a say.
James Cartlidge
That is the point I am making. If there is a lot of hysteria about a sector, it can be very difficult to achieve a rational, objective decision. Let us not forget that the whole point of planning applications is that they must be considered in a semi-judicial and balanced fashion. That might not be possible—that is just a statement of fact—and yet, strategically, we need that industry. That is my view. I know it is divisive and that not all hon. Members share that view. As I have said, if I were an MP in Lancashire and had the problems that some of my hon. Friends have had, it would be difficult to cope with that pressure, but there is no doubt that shale has huge strategic potential.
Simon Hoare (North Dorset) (Con)
Does my hon. Friend share my view that, with the plummeting price of oil and while the oil price is as low as it is, there is no way that the OPEC countries will allow another country to develop a commercial fracking enterprise, and therefore that the costs associated with the planning process, land acquisition and so on will not present a sufficient dividend on the investment to support a UK fracking sector?
James Cartlidge
That is a very interesting question and I am not sure I am qualified to comment. I saw in some of the City commentaries today the first predictions of US shale production falling in response to the price of oil and predictions that they will go lower.
James Heappey
Be that as it may—US shale production might be about to fall—but the US has not yet started to export what it has. When it does, it will undoubtedly have a big impact on the liquefied natural gas markets both in Europe and the far east.
James Cartlidge
I hope that that is the case. The point I was about to make is that there is no doubt that US shale has had the single biggest impact on the falling oil price, although it is not the only factor—there are many factors. I am grateful for that because the economic impact will be huge. Many in the other place said in that debate that, because the oil price was so low and energy prices were falling, we should use the opportunity to introduce new charges for renewables or whatever. First of all, we know those prices will not be temporary. Secondly, energy prices are low but there are other, negative impacts of the energy crisis, such as loss of jobs, lack of confidence and the up and down in the stock market. In effect, falling energy prices are an automatic economic stabiliser—they relieve economic pressure and help the economy to keep growing, supporting the consumer and so on.
I support the Bill because I believe it will give stability and a future to an industry that is struggling. That is the single most important part of the Bill. I also support the measures on the renewables obligation. I look forward to going through it thoroughly in Committee.