North Sea Oil and Gas (Employment)

Margaret Curran Excerpts

Tuesday 20th January 2015 Westminster Hall

[Margaret Curran (Glasgow East) (Lab)]

Mr Streeter, it is a pleasure to serve under your chairpersonship—I do not know whether I am permitted to use that word, or whether that is a precedent, but I have done it now, so so be it. I congratulate my hon. Friend the Member for Aberdeen North (Mr Doran), whose contribution demonstrated his depth of knowledge of the industry and his enduring commitment to it and the people who work in it, which is greatly respected in this House and throughout the country.

The entire debate has demonstrated the magnitude of recent events and the sweeping impact of such a significant decline in oil prices. As we speak, oil is currently trading at below $50 a barrel. In July 2008, the price stood at $145 a barrel, and as is well known in Scotland the White Paper that was used by the Scottish National party during the recent referendum was based on financial planning with an oil price of $110 a barrel. This debate is therefore a significant one.

It may not have been said today but it will certainly be said in other forums that although the price might offer some relief to Scotland’s motorists it has significant impacts on the oil and gas industry. Many Members have referred to the key facts and figures, which I will emphasise once more. The production of oil and gas contributed £30 billion to the UK balance of payments; the supply chain, which has been a focus of the debate and is of great importance throughout the country, generated over £20 billion in the past year and, as my hon. Friend the Member for Glasgow North West (John Robertson) said, the industry supports 450,000 jobs across the United Kingdom.

It is an industry of international importance that is vital to the UK and iconic for Scotland, and has particular significance for Aberdeen and the north-east of Scotland—the effects of the fall in oil price will be felt throughout the country, but most deeply there. We heard about the loss of 300 jobs announced by BP but know that there are more to come.

[Dr Whiteford]

In the past half an hour or so, while we have been having this debate, a further 300 job losses have been announced by Talisman. I have stressed the importance of urgency and am worried that there will be further similar announcements between now and March. The Government need to give confidence to the industry that they will cut taxes. Does the hon. Lady share that view and will she urge the Government to act with more haste rather than waiting for announcements of yet more job losses in the North sea industry?

[Margaret Curran]

I will indeed emphasise that very point when I come to it later. I will begin by addressing the hon. Lady’s primary point about job losses. We are deeply concerned about them. As my hon. Friend the Member for Aberdeen North made clear, operators and trade unions are warning about job losses and their impact. Of the 30,000 jobs directly linked to the industry, 23,400 are in Aberdeen itself. One can only imagine the conversations taking place not only in companies but around kitchen tables in Aberdeen and the north-east. Jake Molloy of the National Union of Rail, Maritime and Transport Workers drew parallels with 1986, when the fall in oil prices led to long-term job losses and a very significant impact on the industry. We certainly do not want that to happen again, and need to take action. Sir Ian Wood, who has featured in many contributions this afternoon, indicated that there could be between 30,000 and 40,000 job losses. It would not be surprising if that were the long-term impact.

The Scottish Parliament information service said that 15,750 jobs could be lost in Scotland as a result of what is happening. The core question we must ask ourselves is, can we be assured that the Government and the Scottish Government get the magnitude of what is happening and what needs to be done? The trade unions have said that it would be the largest loss of jobs since the Ravenscraig steel works closed its doors 23 years ago in Scotland—23 years later, we still remember the impact of Ravenscraig. Let us take action now to ensure that does not happen again. The message of this debate must be that we have to work together on a cross-party basis to properly challenge the Government when they are not doing enough. The oil and gas industry is a strategic industry of critical importance, and it needs a long-term, predictable context in which to operate.

I congratulate, as one Member did, Jenny Laing, the leader of Aberdeen city council, who took immediate action, called for an oil summit and managed to get all the key players together. That was the right thing to do, and I expect that it will be successful, but the UK and Scottish Governments must take decisive action.

The UK Government’s 2011 tax reforms created difficulties and undermined confidence—I hope the Minister will acknowledge that. In the autumn statement, the Chancellor indicated the difficulties that it caused, and he hinted that there must be a new strategy for oil and gas. I concur with the hon. Members who said that we need action now. I hope the Minister will indicate that the Government will take action and respond to the industry’s call for support.

I ask the Minister to use his good offices to put pressure on the Scottish Government to publish the oil and gas bulletin as soon as possible. Scottish National party Members have said that they are looking for a range of actions, but we are asking the Scottish Government to provide the evidence on which they based their recommendations. They previously published a number of oil and gas bulletins and figures showing the impact that the industry will have on their revenues. I hope they will publish another one as soon as possible so our approach can be evidence-led, and so we know the basis on which we can take action.

My right hon. Friend the Member for East Renfrewshire (Mr Murphy) called for a resilience fund to help strategic industries and to enable us to address local needs, including issues affecting local companies, local industries and the devastating impact the downturn will have on local communities. He has also talked about reducing business rates to help people through the downturn. As my hon. Friend the Member for Aberdeen North said, my right hon. Friend is in Aberdeen this afternoon with my right hon. Friend the Member for Morley and Outwood (Ed Balls). They are calling for profound, strategic action to address these issues. We need a road map—a strategic plan—for the industry that is not about short-term changes but comes to terms with the profound shifts that we are seeing. It must create certainty so the industry can be sure about the tax rates over a Parliament and firms can invest in the long term. It must be about sustainability, and it must put oil revenues in a UK public finances framework so we can protect ourselves against oil price volatility. It must not create high levels of risk that could jeopardise Scotland and our public finances.

We must ensure transparency. We must not make short-term, ill-thought-out tax changes, but consult with the industry to ensure a transparent regime. We must have the flexibly to meet immediate challenges. As many hon. Members have said, we must implement the Wood review. Will the Minister tell us when the new Oil and Gas Authority will be established? That demand is coming straightforwardly from the industry.

This has been a very good debate, and we have covered a lot of ground. Hon. Members have demonstrated a great depth of knowledge about the industry’s demands. We need to tell people—not only those in the north-east, but those in Scotland and elsewhere in the United Kingdom—that we understand the scale of the job losses that may be imminent, and that we can take action to address that. We must let them understand that, as we gather here together, we will challenge the Government, who must stand up and do more. That is what the industry is asking the UK and the Scottish Governments. We are prepared to work together to support our iconic oil and gas industry, of which we are so proud in Scotland, through this challenge to prevent job losses and to ensure that it has a healthy, sustainable future. We do that best when we recognise the true depth of what is happening and do not try to duck it. Government action can have results, but we need to see it now.