North Sea Oil and Gas (Employment)

Debate between Mike Weir and Thomas Docherty

Tuesday 20th January 2015 Westminster Hall

[Mr Weir]

I accept that. This is going on throughout the industry—in direct employment and among subcontractors.

Within their limited powers in this area, the Scottish Government have taken action. The First Minister has announced a new taskforce to focus on supporting jobs across the energy sector, with an initial emphasis on the oil and gas sector, and to secure an employer apprentice guarantee, under which firms would commit to taking on apprentices facing redundancy to ensure that they completed their training. That commitment would be supported by the Adopt an Apprentice recruitment incentive—currently, there is a one-off grant of £2,000, which is to be increased to £5,000—and by Skills Development Scotland staff.

If we are to protect Scotland’s vital oil and gas sector, however, the UK Government, specifically the Treasury, need to step up to the plate and to make immediate tax changes. We have already called on them to take urgent action to support investment and exploration. The Scottish Government have consistently called for measures to be implemented without delay, including an investment allowance to provide support for the development of fields that incur higher costs. That would support technically challenging, high-cost fields and sustain future investment. Professor Alex Kemp, a respected oil economist at Aberdeen university, estimates that an investment allowance could increase investment by £20 billion to £36 billion to 2050 and boost production by 1.2 billion to 2.2 billion barrels. Scottish Government estimates suggest that it could support between 14,000 and 26,000 jobs per year across the UK.

The Scottish Government have also called for a reversal of the increase in the supplementary charge implemented by the UK Government in 2011. The high overall tax burden faced by the sector is damaging its international competitiveness. The supplementary charge was increased by 12% in 2011, and the 2% cut announced so far does not go far enough in the current context of falling prices. Professor Kemp estimates that a reversal would increase production to 2050 by 500 million barrels and boost investment by £7 billion. Scottish Government analysis suggests that such a move could support up to 5,600 jobs per year across the UK.

In addition, the Scottish Government have called for the introduction of an exploration tax credit to help increase levels of exploration and sustain future production. As most of us are aware, levels of exploration in the North sea are low, which will inevitably reduce future discoveries. An exploration tax credit would help to increase exploration and, in turn, sustain future production. A similar approach was adopted in Norway in 2005. In the three years following its introduction, the number of exploration and appraisal wells drilled in the Norwegian North sea increased fourfold.

We have previously highlighted and backed industry concerns about the speed with which the new Oil and Gas Authority is being established, and we have called for appropriate resourcing of the new OGA to be put in place swiftly. The industry is concerned that the investment allowance the Chancellor is expected to announce in the March Budget will not be nearly enough at current oil prices, and we share that concern.

It has also become evident that an early commitment to reduce the supplementary charge rate would have the benefit of instilling confidence in operators and the sector, while discouraging premature decommissioning, which is obviously important for future work in the North sea. To significantly enhance the industry’s long-term competitiveness, we have recommended that, at the very least, the industry requires a reversal of the supplementary charge increase implemented by the Government in 2011.

That substantial package of measures should be announced without delay to safeguard investment, jobs and the long-term sustainability of the North sea. If it is not forthcoming, UK Government policy on the industry will be found seriously wanting once again. Despite what other Members say, reform of the fiscal regime must not wait until the Budget, but must be implemented now, and that should include a commitment from the UK Government to a substantial reduction in the supplementary charge rate.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I have a genuine question on a point of interest. Is Scottish Enterprise putting together a taskforce at this time? I understand what the hon. Gentleman says about the fiscal measures that may be needed, but what is Scottish Enterprise doing right now in terms of practical help on the ground?

[Mr Weir]

I have already referred to that; the hon. Gentleman should listen a bit more carefully. I did mention the First Minister’s announcement about what the Scottish Government were doing.

The Scottish Government have endorsed the findings of Sir Ian Wood’s review on maximising recovery on the UK continental shelf and particularly his recommendation of a stronger, more effective regulatory body, and so, too, did the UK Government. We welcomed the long-awaited announcement of the appointment of the OGA’s chief executive. However, it is imperative that progress is much quicker so that we can start to reap the benefits that an effective, well resourced authority has the potential to bring the industry and the nation.

Scotland Bill

Debate between Mike Weir and Thomas Docherty

Tuesday 15th March 2011 Commons Chamber

[Thomas Docherty]

I am grateful for the hon. Gentleman’s question, which lets me clarify that this is purely about the franchise because the functions of Network Rail are already devolved to the Scottish Parliament. That is part of the absurdity of the situation. Scottish Ministers have responsibility for everything except, rightly, health and safety, because that needs to be regulated in a different way, and the franchise model itself. The funding, letting and monitoring of the franchise are carried out by the Scottish Parliament, but it does not set its own model. I look forward to the Minister’s well-chosen words of response to my case.

[Mr Weir]

Much to my surprise, I support what the hon. Member for Dunfermline and West Fife (Thomas Docherty) has said. He made a good case, as it would be sensible to devolve this function to Scotland, although he ruined it a bit by making a totally unnecessary attack on the Scottish Government, who have supported the railway industry throughout Scotland and put a great deal of money into upgrading it and opening new lines and stations.

--- Later in debate ---

[Thomas Docherty]

I think that the hon. Gentleman’s time is up.

Alternatively, my hon. Friend the Member for Dumfries and Galloway (Mr Brown) could leave his house, travel the 12 miles to Carlisle train station, and find that he is catching a train an hour earlier than he left his house. That is ludicrous.

[Mr Weir]

I am puzzled by this obsession with train times. Does the hon. Gentleman recall that for many years Switzerland, in the centre of Europe, had a different time zone from all the countries round about, and had trains going through on both sides? They did not vanish into thin air—they went in one end and came out the other. There is no problem about measuring time; this is utter nonsense.

[Thomas Docherty]

The hon. Gentleman takes me back to our debate on the railways. It might be helpful to certain Members to know that the railways are the reason we have a unified time zone across the United Kingdom. Up until the Victorian era, which certain Members clearly wish to drag us back to, there were different time zones in the west country, for example, from those in East Anglia. That was a ludicrous way to run a transport system, and that is why this is a mad idea from a fairly mad individual.

The other logistical issue touches on the point made earlier about Barnsley. In a general election, there could not be any exit polls or opening of ballot boxes until every area’s voting had closed at 10 o’clock. The people of Scotland would have voted from 7 am until 10 pm, according to their time, but in England it would have taken place from 6 am until 9 pm, so we would have to wait another hour before the opening of the ballot boxes, which brings us back to the debate about telling on the following day.

That goes to the heart of the fact that this is a nonsensical argument from a party that is trying to get independence. All SNP Members’ arguments about other countries arise from the fact that they cannot win the debate at the ballot box. They are going to be beaten in May harder than certain people were beaten in Barnsley last month, and this is another of their back-door efforts that should be rejected out of hand.

Scotland Bill

Debate between Mike Weir and Thomas Docherty

Monday 7th March 2011 Commons Chamber

[Mr Mike Weir (Angus) (SNP)]

rose—

[Thomas Docherty]

rose—