Ed Balls urges action on North Sea oil industry

Jim Murphy and Ed Balls at Aberdeen harbour, during a visit to the Granite City. Picture: Hemedia

The shadow chancellor unveiled plans for an “oil industry road map” to offset the impact of the price of a barrel falling below $50, which has resulted in hundreds of recent job losses in the North-east. The measures would be introduced if Labour wins the May election.

His plans were unveiled as the International Monetary Fund (IMF) cut world growth forecasts for this year and next and warned weakness in developed countries would offset the advantages of lower oil prices.

Chancellor George Osborne indicated yesterday he will bring forward fresh tax breaks in his March Budget – but was warned this would be too late by Mr Balls.

• Calls for North Sea oil tax breaks to avert crisis

First Minister Nicola Sturgeon has pledged she will raise the issue of tax breaks for the industry when she meets Prime Minister David Cameron in Edinburgh tomorrow.

Mr Balls – who was joined by Scottish Labour leader Jim Murphy in Aberdeen yesterday – said changes were needed to the tax regime to support the sector.

He said: “This is a worrying time for oil workers and their families. Hundreds of jobs have already been lost, with thousands more at risk.

“Everybody who can take action should do so. Walking by on the other side isn’t the response of a government in control. That is why we need to see urgent action to improve the tax incentives for North Sea oil investment.

“If George Osborne fails to act then a UK Labour government will. Failure to act will risk jobs and investment now, and cost the UK taxpayer in the long-term as we lose revenue from oil that gets left in the ground.”

Talisman Sinopec said yesterday 300 jobs are being axed at its Aberdeen base. Energy giant BP has already said it is also cutting 300 jobs.

Labour’s road map sets out action to protect jobs, secure investment and protect the long-term future of the sector, based on the principles of “transparency, sustainability, flexibility and certainty”. Mr Murphy said the Scottish Government should carry out and publish an economic assessment of the impact of the fall in oil prices. He said: “The oil crisis is the biggest threat to jobs in Scotland since Ravenscraig [steelworks closure]. It is time Scotland’s governments treated it like one.”

• Comment: North Sea oil at point of no return

Tumbling oil prices mean motorists enjoy cheaper petrol at the pumps, but the impact has been dire for an industry worth about £26 billion annually to GDP before the downturn. About 11,000 of the 133,000 oil industry jobs in the North-east are believed to be under threat.

Yesterday Mr Osborne told the Commons Treasury select committee: “I took decisions in the Autumn Statement to reduce taxes on North Sea oil, anticipating the pressures the falling oil price would have on the industry, and I’m sure we are going to have to take further steps at the Budget.

“But we can only do that because we are United Kingdom and we pool our risks.”

Mr Osborne ridiculed SNP referendum predictions about the finances that North Sea oil would generate as “wildly optimistic”.

The Institute for Fiscal Studies (IFS) has suggested the price fall would have left an independent Scotland £7bn worse off.

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