GORDON Brown has come under attack over his vision of an economic revolution in Scotland, including the creation of a North Sea reserve fund to help the oil industry.
Brown believes the fund would help maintain and upgrade infrastructure and could provide last-resort debt finance for companies which want to keep fields open. He will tell an audience in Glasgow this evening that the Government could even take over fields in partnership with firms to keep them open and viable in future.
The Kirkcaldy and Cowdenbeath MP, who is stepping down in May, also wants to see young people encouraged to work in hi-tech medical, environmental and engineering jobs as manufacturing work continues to decline.
However, SNP deputy leader and Treasury spokesman Stewart Hosie said Brown was “responsible for undermining investment” in the North Sea during his time as chancellor, and called on him to back the Scottish Government’s action plan for the industry.
The Scottish Government said in a statement that the industry would continue to be a significant asset for Scotland and for the Scottish economy, but the fiscal regime had become overly complex, burdensome and uncompetitive.
Speaking before delivering the inaugural John Wheatley lecture for Parkhead Housing Association, Brown said the best estimate was that oil production would fall from a peak of 4.3 million barrels per day in 1999 to 1.3 million in 2018.
"One Budget initiative would be to recognise the tipping point we are at – the structural damage that could be done if fields are summarily abandoned – and create a North Sea reserve to maintain and upgrade essential infrastructure and to provide last-resort debt finance for companies which want to keep fields open.
“I suggest we help where help is really needed: a partnership to keep fields in existence by sharing production costs.”
Brown said this could be done in three ways – public-private partnerships (PPP), loans and advance purchase agreements – but he warned: “These all depend on a shared effort from the operators to invest their own money. In the most extreme cases, to avoid the field being mothballed in its entirety, the Government could go into partnership for a takeover of the field.”
“If it is temporarily abandoned, the Government should act to ensure that some time in the future it is possible to come back and exploit the oil.”
Addressing other parts of the economy, Brown will say: “In 10 years’ time, manufacturing – once 40 per cent of the Scottish economy – will harbour just seven per cent of Scottish jobs. We must aim to create high-quality, hi-tech, secure jobs based around medical, information and environmental technologies."
But Hosie hit back: “As a chancellor who ... imposed the supplementary tax on the North Sea industry in the first place, then doubled it – and left office having failed to set up an oil fund to deliver any long-term benefit from our own natural resources – Gordon Brown is responsible for undermining investment in a vital industry.”
The Scottish Government highlighted a policy paper in which it set out a range of taxation changes.
“Our proposed fiscal changes will not only boost the economy but analysis based on industry data shows that they will support thousands of jobs,” it said.
“We are calling for an investment allowance – as recommended previously by the Scottish Government in 2011 and Scotland’s Oil and Gas Expert Commission last year.
“Last year, the UK Government announced a two per cent reduction of the supplementary charge rate – this reduction doesn’t go far enough,” it concluded.
Jake Molloy regional officer of the RMT, said it was good to see Brown supporting what the union had been saying for some time.
“We asked them to support our proposal for incentivised tax relief for maintenance programmes to ensure the existing infrastructure was fit for purpose going forward, what Brown is now suggesting the Government does.” he said.
“Unless the Government intervenes with tax incentives, or considers nationalising or PPP, the remaining oil could be left in the ground.”
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