Erikka Askeland: Scotland as one Enterprize Zone would be a good start

MAKE the whole of Scotland an Enterprise Zone. Why not? And cut corporation tax to 12.5 per cent while you are at it. These were just two of the suggestions made by prominent Scots business folk this week, including Sir Tom Hunter and Jim McColl.

Chancellor George Osborne's 17 million bung to Scotland in his Budget this week was seized upon by the SNP, who said the money should be used to fund four EZs in Scotland, compared with 21 in England. The Scottish Lib Dems backed this plan, although Scottish Labour did not.

The EZs, as proposed, focus on a cut in business rates, simplified planning and superfast broadband. These fall easily within the remit of a devolved government. But the real mojo behind the zones - capital allowances, otherwise known as tax breaks for rich investors - are still under consideration by the coalition government and will be available only for assisted areas where there is a focus on high value manufacturing.

Expect these to be doled out like sweeties at a diabetics convention.

Although business rate cuts and slick planning are pretty good incentives, it's the tax breaks that bring investors out from under their rocks to actually build the factories, offices, warehouses that the companies will live in.

But perhaps the benefits of low rates and smooth planning are underestimated. And maybe this is where the modest proposal to make the whole of Scotland an EZ makes sense.

Not that Osborne's 17m would even start to fund any of this.

But put an EZ in an urban regeneration company area and give it some tax incremental financing powers and, hey presto, you might be able to galvanise some commercial activity.

Three in a bed was always going to cause trouble

IT IS actually quite doubtful whether Bob Dudley, chief executive of BP, was taken much by surprise that his Russian oligarch partners won an injunction to jam up his bumper share swap deal with Roseneft. But it does suggest a level of brinkmanship to which only an increasingly desperate search for oil has driven him, the industry and the government.

Before he was drafted in to replace the beleaguered Tony Hayward, Dudley was head of BP's Russian operations, TNK-BP. And he knew very well the sort of people he was dealing with at Alfa-Access-Renova (AAR), the Russian billionaires' vehicle that is a 50 per cent partner with TNK, which is so desperately trying to muscle in on BP's tie-up with the Russian government-backed Roseneft.

Documents lost somewhere in the deluge of Wikileaks in January show that Russia, and in particular its Arctic oil reserves, has long been a serious back-up plan for BP, and one that Dudley brought with him when he rose to the top table.The documents also threw up comments from BP about the "bruising boardroom disputes" going on with AAR.

If Dudley thought for a moment that the oligarchs were going to play nice, or that they didn't have at least a chance in an arbitration tribunal, then that would be the corporate equivalent of a complete boob.

Interestingly, Russia was where Hayward, oil-stained but still a big hitter, was dispatched after his fall from grace to become a non-executive director of TNK. Perhaps ignominy is not liability when rubbing shoulders with oligarchs.

The stakes are high. The deal BP aims to sign with Rosneft sees the two companies create an offshore drilling area equivalent in size and reserves to the UK North Sea. But the region is still highly contentious, bringing Russia into potential conflict with the other countries bordering the Arctic including Norway, Canada and the US. And drilling in the arctic is fraught with risks to the fragile ecosystem, which makes it an even more extraordinary move for a company that caused one of the worst environmental disasters in history.

But it is increasingly looking like BP's future relies on the deal with Russia. And the enthusiastic support it has received from ministers all the way up to David Cameron shows that Britain thinks it needs it too.