Yesterday is history, and the SNP’s credentials on developing North Sea oil don’t stand up to close scrutiny, writes Brian Wilson
Most people simply think of the North Sea oil and gas industry as a great success story to be celebrated and given thanks for – still the source of well-paid employment for some 300,000 people and the starting-point for hundreds of companies which now market their expertise around the world.
As the Piper Alpha commemoration reminded us in stark terms, it is a history which has carried its own high price in terms of human life and sacrifice. It has been sustained for four decades through skills, hard work in extreme conditions and levels of technological achievement which few who are not in regular contact with the industry can really begin to understand.
I doubt if many who have devoted their working lives to the North Sea industry and take justifiable pride in what it has delivered will share Alex Salmond’s gloomy view that it has all been about “squandered opportunity”, any more than they grudge the revenues that flow from it being shared with the good people of Newcastle and Liverpool as well as those who live on this side of the Border.
In short, the history of the North Sea is too rich and too fabulous to be reduced to the level of a political football, being kicked about by vested interests with a point to prove about what will happen in the unprovable future. Whatever transpires, it will be due more to the genius of geologists than to any academic commission; and to the guys who leave their families at home to fly out in helicopters rather than to political posturers and predictors.
My guess is that just about everyone who works in the industry sincerely wishes that both sides of the Scottish constitutional debate would simply leave them alone. The absolute certainty is that nobody knows what the price of oil will be in 2041, so what on earth is the point in arguing about it? Equally, the rate of extraction over the next four decades will be controlled by factors which are far beyond the control of any transient politician or statistician.
There is a valid historical debate about how the North Sea should have been managed, but it is now so far in the past as to be pretty irrelevant to the present or future. What Alex Salmond omits to remind us of is that, until 1979, there was a state-owned oil company called BNOC, while the chancellor, Denis Healey, was (according to his own recent testimony) considering the establishment of an oil fund of the type which Norway created more than a decade later.
As Healey said: “Of course, all of that disappeared with the election of Mrs Thatcher”. And so it did, just as everyone who voted for the downfall of the Callaghan-Healey government by a single vote knew would happen – including 11 SNP MPs. If we are going to delve into the oil history of the 1970s, then let us not be quite so selective about the memories as Mr Salmond might wish.
Norway chose a different route and so there is still a state-owned oil company and an oil fund. But Norway also has a very different economic history. While the sensitivity of stewardship would have been very different if Mrs Thatcher had not been ushered into power, it is doubtful if any government could have avoided the use of North Sea revenues to aid the economic transition which Scotland and the rest of the UK went through in the last quarter of the 20th century.
The idea that successive governments have stood idly by while Salmond alone could “provide optimum conditions for the oil and gas industry to innovate and thrive” is so far from the truth as to be ludicrous. The proof of the pudding and all that. If everyone else has made such a mess of it, why are there 300,000 jobs? And if everyone else has got it wrong on tax, why is there all this promised investment that he refers to?
In fact, successive UK governments have been pretty good at both encouraging the North Sea industry and declining to kill the goose that has laid 40 years of golden eggs. Part of the reason that Norway has an oil fund is that it taxes the industry at 78 per cent as compared to 62 per cent in the UK sector of the North Sea. Yet every tax increase imposed on the oil industry by either Labour or Tory governments has been attacked by the Nationalists.
I was involved as a minister, in the late 1990s when the price of oil went below $10 a barrel, in painstaking efforts to ensure that this would not lead to an investment drought in the North Sea which might never have been recovered from, government and oil industry came together in a body called Pilot, which produced innovative ways of tackling the problem. It was a great success and these measures have stood the test of time. I do not recognise that little bit of history as either failure or squandered opportunity by wicked Westminster.
Last week the Office for Budget Responsibility came up with revised projections for oil and gas revenues up to the fabled year of 2041. There were lots of headlines about “black holes” in the independence case. But frankly, I didn’t think much of these projections either. The OBR statisticians had changed their view by 12 per cent within a year – so what chance is them of getting it spot-on over four decades?
The North Sea sector deserves better than this pointless argument. Everyone should be focused on the goal of extending the life of the industry for as long as possible in the interests, primarily, of the people who work in it. The question of whether revenues should then go to the whole of Britain or to Scotland alone has been around for as long as the industry itself and Salmond’s attempt to breathe new life into it is unlikely to be any more successful now than in the past.
There are many sectors of the Scottish economy which deserve urgent attention but which do not carry the headline-grabbing potential of inflated claims about what might or might not happen in the North Sea. Yet nothing much is being done about them because of their lack of usefulness within the context of a constitutional debate which will, when it is over, not have delivered a single job or a scintilla of economic benefit.