THIS week Alex Salmond made a speech in Scotland. That came as quite a surprise. It was the kind of speech I suspect he rather enjoys giving.
commentary on issues, affairs or matters of state. This one was to the Scottish Council Development and Industry’s gathering about the first 40 years of oil and gas exploration in the North Sea and the potential for another 40.
As Scotland is now in the independence campaign, I had thought the senior audience would be treated to a polemic setting out how a Nationalist administration would tax the oil and gas industry. After all, Mr Salmond says he would cut corporation tax in an independent Scotland. He also says that public-sector pensions would be higher and social security benefit payments more generous than in other parts of the United Kingdom. So someone or some industry is going to have to pay for all this.
Salmond has also set out a plan for a Norwegian-style oil fund, although his speech this week was remarkably lacking in any detail on this. Perhaps that is understandable. To establish an oil fund and to, therefore, detail what it could do would depend on knowing how much would be in it and what rate of tax would be applied.
Mr Salmond never mentioned any of that, but lots of oil company people did over coffee.
They also mentioned their concerns over asking any such question of Mr Salmond’s Nationalists for fear of being branded “anti-Scottish” or worse.
Salmond set out some broad taxation principles that should be followed, not by his government, but by the UK one. A tax system that helps the recovery of oil and gas in the North Sea. Certainty for the industry on tax relief for decommissioning the 900 or so oil rigs to be brought ashore by 2020. And finally, the central approach, as Salmond saw it, to taxation. That there should be consultation with the industry prior to any changes in the tax regime. I agree. Philippe Guys, managing director of the French oil giant Total, explained that the North Sea industry has had three big fiscal changes in nine years. That is more than in some South American or African states. So there is a higher degree of political risk here in Scotland compared to elsewhere in the globe as a result.
But these principles would be all the better if the Nationalists practise what they preach.
The Nationalists introduced new business taxes in Scotland without any consultation whatsoever. So when asked if independence would mean lower oil taxes, the oil executive who manages a successful Scottish headquartered company said all politicians say so before they have to set the rate. Indeed.
It is, therefore, easy to see why no oil business is expecting any detail on a Nationalist tax regime until after the independence referendum. So, until then, Mr Salmond, far from being a player, is just a commentator. And that is exactly what he wants. But to assume such a role underestimates an industry which knows how to play politicians and governments.