Labour has called for a long term “oil industry roadmap” – to give immediate help before the Budget and long term certainty for investors – to underlie its four key principles to protect jobs and promote investment in the UK oil industry.
Labour’s oil industry roadmap would be underpinned by four key principles:
Transparency: a commitment to consultation with the industry on the development and implementation of the oil industry roadmap so that they are not undermined by sudden changes, and a full assessment of the impact of the tax rates and reliefs by an analytical unit, drawn from the industry, HM Treasury and the Finance Directorate.
Sustainability: putting oil revenues in a UK public finances framework so that the wide volatility of revenues can be managed, reducing the high level of risk to Scotland. This would include a joint report by HM Treasury and the Finance Directorate to the UK and Scottish Parliaments following every OBR forecast on the fiscal risks of volatility and how they will be managed.
Certainty: giving certainty on the main tax rates and allowances over a Parliament and build in incentives for firms so that they can invest for the long-term, particularly in hard-to-reach fields where profitable extraction is very challenging at low oil prices.
Flexibility: ensuring that the roadmap includes the flexibility for the tax regime to respond to developments, such as in technology and practice in the industry.
Speaking in Aberdeen, Shadow Chancellor Ed Balls said: “For decades the North Sea Oil industry has sustained thousands of jobs, generated billions in tax revenue and acted as a platform for exporting the talent and expertise of this great nation around the world.
“Hundreds of jobs have already been lost, with thousands more at risk. This is a worrying time for oil workers and their families. 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.
“This is all about what’s best for maximising the potential of one of the country’s key industries. But postponing this until the Budget in two months’ time is too late. The time for action is now.”
Jim Murphy, Scottish Labour leader, added: “Today Ed Balls announced what we need to do to support the industry in the long term, but the Scottish Government should also be supporting workers now. I want to see the Scottish Government commit to an emergency action within their remit as soon as possible – and before the emergency oil summit in two weeks’ time.
“The oil crisis is the biggest threat to jobs in Scotland since Ravenscraig, it is time Scotland’s governments treated it like one.”
And following last night’s debate in Westminster Hall on North Sea Oil and Gas industry employment, SNP energy spokesperson Mike Weir MP reinforced calls for the UK Treasury to take urgent action to help the offshore oil and gas industry.
He said: “Reform to the oil and gas fiscal regime must not wait until the budget, but must be implemented now and this should include a commitment from the UK Government to a substantial reduction in the Supplementary Charge rate. In addition, faster progress is also required on the establishment of the Oil and Gas Authority.
“Further delays from the UK government on these areas are not acceptable. The North Sea has suffered from an unstable and unpredictable fiscal regime for decades and companies now need urgent action in order to avoid the premature decommissioning of assets and the loss of highly skilled workers.
“The Scottish Government is playing its part in supporting the oil and gas sector, with initiatives such as the Energy Jobs Taskforce and the apprenticeship guarantees announced last week, and its funding for the Oil and Gas Innovation Centre.
“Successive Westminster governments have been quick to squeeze the industry at any opportunity, but when support is needed they are far slower off the mark.”