FERGUS Ewing yesterday became the first SNP minister to criticise Jeremy Corbyn since his election as Labour leader, saying his plan to nationalise the energy industry would spell a “dire” future for oil and gas production in the North Sea.
The Scottish energy minister was renewing demands for the UK Government to step in to offer more support to the sector and to use tax incentives to stimulate exploration when he made the surprise attack.
His comments came after Labour public services spokeswoman Jackie Baillie said her party supported the Scottish Government in supporting further tax incentives, and asked the minister whether any analysis of cost to the industry had been done because of the plummeting oil price.
“I am very pleased to hear that the official Labour position is that we should recognise that reduction of costs is a requirement for the oil and gas industry,” Ewing responded. I was in a state of not entire certainty following the election of their new leader at the weekend, who has previously expressed views that the industry should be nationalised.
“Were there to be any mention of that, then the future of the exploration and production companies which is challenged at the moment would be dire indeed.”
In his statement to Holyrood, Ewing said the oil and gas industry required “a stable fiscal environment, not subject to damaging tax rates like in 2011”.
“It is imperative that the UK Government commits to no tax rises during the lifetime of the UK Parliament and that any significant policy proposals will be consulted upon with industry and the Oil & Gas Authority,” he said.
He welcomed steps taken in recent budgets to help the industry, including a basin-wide investment allowance and reduction in the headline rate of tax, but added that the announcements had been a “missed opportunity” for wider fiscal reform.
Ewing said: “To drive further reforms, decisions on fiscal policy should be underpinned by the principle of maximising economic recovery (MER). The MER policy will only work if the UK explicitly commits to using their fiscal levers appropriately. Without that, the operators will simply invest elsewhere.”
Falling oil prices have impacted severely on the North Sea industry, rendering many projects uneconomical and leading to thousands of job losses.
In its 2015 report, the industry body Oil and Gas UK reported that the number of jobs supported by direct, supply chain and indirect employment from the industry had fallen by 15 per cent since the start of last year, from 440,000 to 375,000 jobs. Almost 30,000 of the 65,000 job losses are estimated to be in Scotland.
Last month Scottish Government figures showed oil revenues from the North Sea fell by over 75 per cent in the first three months of 2015. The quarterly national accounts revealed that the amount received in tax receipts between January and March was £168million, down from £742m in the final three months of 2014.
Responding to Ewing’s statement, Labour’s Public Services spokesman Lewis Macdonald said the job losses were larger than when the Ravenscraig steel plant in Motherwell closed in 1992 with almost 11,000 job losses and said the Scottish Government’s response to the crisis had been “woefully inadequate”.
He added: “They must publish an assessment of the impact this has had across Scotland, this crisis goes beyond the shores of the North Sea and into homes across the country.”
A Scotland Office spokesman said the UK Government had brought in a range of measures to “help the country move towards a lower tax, higher wage, lower welfare economy which are helping to reduce the deficit, boost growth and create jobs”.
Neil Findlay, Labour MSP for Lothian, said: “Rather than trying to divert attention away from the crisis in the sector the Scottish Government should be putting all its efforts into helping oil and gas workers keep their jobs.”
Right-wing press loses the plot as Corbyn hits at 'poverty deniers'
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here