The North Sea’s future is too important for Sturgeon to brush off questions with a dismissive chuckle, writes Brian Wilson
There is nothing quite like a Nicola Sturgeon interview to remind us of the glib shallowness of the separatist case. I chanced upon a classic of the genre yesterday morning when the subject ostensibly under discussion was the North Sea oil and gas industry.
It would be fair to conclude that the Deputy First Minister’s knowledge of the topic would fit comfortably on the back of a buff envelope, but when did that act as an impediment?
Armed with a couple of saloon-bar “facts” and the hallmark Incredulous Semi-Chuckle which greets any challenge to her flow, Nicola was off and running.
Her big key fact is that Norway has a very large Oil Fund and we don’t. That is as indisputable as it is irrelevant to current challenges. It is a product of an episode in history, which I am delighted to remind her of if she insists – the defeat of the Labour government in 1979 when the SNP followed the coat-tails of Margaret Thatcher into the division lobby.
Of course, that happened 34 years ago before half the current population of Scotland was born. It is tedious to hark back to it. But by exactly the same token, so is the attempt to deceive on the reasons why Norwegian policy went in one direction and the UK’s in another – starting with the destruction of the Glasgow-based British National Oil Corporation, which Labour had established as the equivalent of Norway’s Statoil.
Rewriting history is a stock-in-trade of nationalism, which always merits challenge and the fact is that it was not constitutional structures that dictated how, for better or worse, the North Sea evolved. More relevantly, coming up to the present time, constitutional status will play little part in determining how its future is managed for maximum economic benefit.
Unless, of course, the Nationalists want to tell us differently? The Scottish Government greeted the arrival of George Osborne in Aberdeen yesterday with the allegation of “hypocrisy” – not very statesmanlike language from one government to another, I would have thought, though par for the course now that the distinction between party and civil service has been abandoned in Edinburgh.
But the charge can easily be thrown back. On the one hand, the Nationalists girn endlessly about Norway. On the other, they attack every Chancellor who tries to extract more tax revenues from the oil moguls. Yet the tax rate in the Norwegian sector of the North Sea, broadly speaking, is 78 compared to 62 per cent in the UK sector. That’s why the Norwegians have an oil fund.
Are the Scottish Nationalists planning to increase the tax rates in an independent Scotland to Norwegian levels? Are they planning to establish a Scottish Statoil with massive international investments? And if they are planning to do neither of these things, is it not sheer hypocrisy to pretend that the analogy with Norway carries any current relevance, other than as a grievance which relies on gross historical distortion
Any fair-minded person can recognise that Osborne’s tax concessions on the development of new fields have been extremely beneficial in stimulating the current boom in North Sea investment, particularly West of Shetland. It took a lot of foot-stamping from the industry and wise counsel from more disinterested sources to get there. But then any politician who, as a starting point, simply accepted everything the oil industry told him would not be doing his job.
The current use of the North Sea industry as a political playground for throwing about phoney statistics is insulting to the people who work in it and who actually produce all this wealth. Only a fool would gamble – far less bet a nation’s future – on how much the North Sea will be producing, or what its value will be, 20 or 30 years from now. The only certainty is uncertainty. Instead of trying to prove the unprovable for political purposes, we should concentrate on the practical task of maximising the benefits in terms of jobs and prosperity.
Anyway, as far as the constitutional debate is concerned, the key reality was spelt out with admirable clarity by finance secretary John Swinney in the leaked paper that the public was not meant to see. Quite simply, Scotland would become disproportionately reliant on a price-volatile resource and if things went wrong, then this would lead to difficulties in meeting the bills for welfare and pensions, never mind an oil fund. As straightforward as that.
When Swinney’s warning was put to Nicola Sturgeon yesterday, she ignored the question, conjured up another Incredulous Semi-Chuckle and started wittering on again about Norway. I suspect that even the most inattentive listener at that time in the morning might have spotted the evasion. Yet the truthfulness and seriousness of the structural problem that Swinney identified cannot be blustered away. It should simply be taken as a “given” within the wider debate.
By far the most important words out of Aberdeen that I have heard this week did not come from a politician but from Bob Keiller, who now heads the ultra-successful Wood Group. During the past decade, he said, the cost of extracting a barrel of oil from the North Sea has risen fourfold. The second half of the North Sea story is going to set a whole new range of challenges and the industry will have to respond to them with efficiency and imagination.
This takes us back to the real world and it reminds me of the situation in the late 1990s when the price of oil fell to less than $10 a barrel and the North Sea industry seemed fated to decline. At that time, the industry and government came together to develop plans that would, by fiscal, regulatory and technological means, do everything possible to extend its life and create new incentives to invest. It was a great success story.
That is what is needed at the present time. There has been a massive decline in North Sea production, which has accelerated over the past two years because of ageing infrastructure. There is now an investment programme that reflects the huge costs of developing new fields and will result in lower net returns than in the past. But none of that needs to be a counsel of despair – simply a set of challenges to be met, which the Scottish constitutional debate should not seek to impose itself upon.
The role of politicians is to create a framework within which these challenges can best be addressed – not to make idle boasts about how much they will have to spend once others have overcome them.