SNP demands package to reverse North Sea decline

The SNP government has demanded a package of action from George Osborne at next week’s Budget to show the ailing North Sea oil and gas industry is “open for business”.
The SNP has demanded for a series of tax breaks and investment sweeteners to help the ailing North Sea economy. Picture: PAThe SNP has demanded for a series of tax breaks and investment sweeteners to help the ailing North Sea economy. Picture: PA
The SNP has demanded for a series of tax breaks and investment sweeteners to help the ailing North Sea economy. Picture: PA

Energy minister Fergus Ewing called for a series of tax breaks and investment sweeteners to ensure new fields are brought into operation.

The North Sea decline is now Scotland’s “worst economic crisis in years” opposition leaders warned yesterday.

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Thousands of jobs have been axed in the key Scottish industry in recent months as the falling global oil price has forced oil and gas giants to make sweeping cuts.

“The potential risks simply cannot be over-stated – inaction is not a rational option,” Mr Ewing said as MSPs at Holyrood debated the issue.

He set out a series of measures for “urgent and substantive tax reform” at next week’s Budget to reverse the decline.

“Firstly, the UK government must reverse the misguided supplementary charge increase from 2011. This will provide a strong signal to investors that the North Sea is open for business.”

He also called for an investment allowance across the entire North Sea sector of 62.5 per cent to encourage firms to get invest, along with an exploration tax credit to aid the discovery of new fields.

“Failure on the part of the UK government to bring sufficiently strong measures to address the dearth of exploration would be a series error,” he said.

Mr Osborne must introduce all these measures with “immediate effect” at next week’s Budget. The global oil price now stands at about $60 a barrel – about half the level of last summer – and many experts warn it could stay this way for some time.

Earlier this year oil industry giant BP announced 300 North Sea job losses, following on from Shell and Chevron, which last year also unveiled plans to axe hundreds of jobs.

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The oil and gas industry is worth £35 billion annually to the UK economy, but a recent Scottish Parliament ­report suggested that the current crisis could see 15,000 of the 200,000 posts north of the Border being axed.

Labour’s energy spokesman Lewis Macdonald said the problems in the North sea are the “biggest economic crisis Scotland has seen in months and indeed years”.

He hit out at the absence of a “proper assessment” of the impact of the falling oil price on the Scottish economy by Scottish ministers.

“A low oil price is bad news for their policy of full fiscal autonomy – in that respect their reticence is not surprising.

Given their responsibilities for enterprise and economic growth, they need to carry out a full assessment of the economic impact of that low oil price without delay and publish the results.”

He added: “We need to know – simple question – how many jobs have actually gone?”

Labour has called for a “resilience fund” to be set up which would help mitigate the impact of sudden shocks across the Scottish economy by providing support to bodies like councils in the areas affected.

Tory energy spokesman Murdo Fraser claimed the SNP government is “too afraid” to publish regular oil revenue projections as the price tumbles.

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“Everyone remembers Alex Salmond saying there was ‘little doubt’ Scotland was on the cusp of another oil boom,” he said.

“It’s clear now he was talking out of a hole in his head, but what happened to the famous oil and gas statistical bulletins which came out with such regularity prior to the referendum?

“Is the reason we no longer see them because the figures are so dismal the SNP is afraid to publish them? Today Scotland will be breathing a sigh of relief that we didn’t vote Yes based on the false promise of a second oil boom.”

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