Offshore Oil and Gas Industry

Debate between Peter Aldous and Alan Whitehead

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.

Offshore Wind Infrastructure Competition

Debate between Peter Aldous and Alan Whitehead

Tuesday 12th October 2010 Westminster Hall

[Dr Whitehead]

My hon. Friend anticipates some of the comments that I am going to make shortly. It is right to say that not only do we need the Government to be the greenest ever in terms of their ambitions, but that to will the ends yet deny the means of arriving at those outcomes would be difficult to countenance.

The offshore wind infrastructure competition was first announced on 24 March this year. It was described in the following words:

“The competition will consider bids from site developers who have a viable plan for developing their site into a centre for offshore wind manufacturing and assembly. We intend to make funding available for the development of these sites...We expect that sites will need to demonstrate that they have the capability to provide: sufficient land capable of being developed into a manufacturing site for offshore wind turbines; access to facilities for the transport of large and heavy products; and heavy duty surfacing capable of bearing heavy loads. Bids will need to be supported by intent from a manufacturer(s) to locate on that site if the site is successful in the competition.”

Remarkably, on the back of that announcement, tectonic plates did begin to move. A day later, GE Energy announced that it intended to invest £90 million on turbine manufacture in the UK. Less than a week later, Siemens announced that it intended to invest more than £80 million in UK-based offshore wind turbine production. When we add to that Clipper turbines siting a 70-feet blade manufacturing plant on the Tyne, Burntisland Fabrications announcing two new factories building underwater jacket substructures in Fife, and Welcon producing 100-metre towers in Campbeltown, the surge in the direction of UK-based manufacturing and support seems to be under way if—I do not think that this is overstating matters—that priming process remains in place.

[Peter Aldous (Waveney) (Con)]

I am grateful to the hon. Gentleman for securing the debate. I share his enthusiasm for wind energy—offshore renewable energy—and ensuring that we make the most of the opportunity that it has presented to us for our industry and for securing manufacturing in the UK. To my mind, we need to be adopting a three-pronged approach—

[Peter Aldous]

Thank you, Mrs Main. I was referring to the green investment bank, developing the skills base and Government—does the hon. Gentleman agree that Government acting as a catalyst to attract that investment is vital?

[Dr Whitehead]

I agree that Government acting as a catalyst—I mentioned pump-priming—is vital, not by providing underwriting and a subsidy for ever, but by priming the process whereby, precisely as the hon. Gentleman mentioned, manufacturing brings about the added value that I am certain will be part of the process in a relatively short time.

It is important that the pump-priming process remains in place, giving the manufacturers confidence that there is a future for them in the UK and that the plans for getting the supply chain in the UK right for wind are serious. However, the announcement of the competition, archived on the Department for Business, Innovation and Skills website, has, subsequent to its initial appearance, had this message affixed to it:

“Current policy under review. Site will be updated as soon as we have a clearer view of the new Government’s policy”.

That is it, in a nutshell. Will the competition now proceed? My view is that for all the reasons that I have outlined, it is imperative that it does. Cancellation or even a delay of the competition would seriously hamper the development of the infrastructure necessary to make what all sides are committed to, start to work in practice.