Governments must step in to save North Sea
Union call as Treasury signals tax cuts
The crisis facing the North sea oil industry has sparked demands for a rescue package – as treasury chief Danny alexander yesterday signalled there could be further tax cuts.
Plunging oil prices are threatening thousands of jobs and investment plans.
the rail maritime and transport Union (rmt) last night called for a ‘crisis management’ plan by governments in Edinburgh and London to rescue British jobs.
mr alexander, the Lib-Dem Chief secretary to the treasury, said the situation is ‘very concerning’.
But a leading figure in oil, sir ian Wood, insisted that warnings of near- collapse in the industry – which provides more than 300,000 jobs – are ‘well over the top and f ar too dramatic’.
Oil prices have halved since summer and currently stand at around $60-a-barrel, after a slump in economic growth in China and a glut in fuel supplies because of fracking.
robin allan, chairman of independent explorers’ association Brindex, this week said the sector is in ‘crisis’ and ‘in terms of new investments – there will be none’.
the rmt yesterday said it had ‘major concerns’ about cost-cutting with workers from total, apache, shell and others complaining that terms and conditions are to be cut and shift patterns altered.
major redevelopment and refurbishment projects will be ‘delayed indefinitely as investment dries up’, sustainability of production is ‘at risk’, and the UK taxpayer faces a bill of up to £30billion for decommissioning, it said.
General secretary mick Cash added: ‘rmt is demanding that Westminster and the scottish parliament adopt a crisis management approach to ensure sustained production, maintenance of infrastructure, retention of skills, and a robustly regulated regime in the future.
‘ if immediate action isn’t taken then we risk turning today’s crisis into longer term damage.’
mr alexander told BBC radio scotland’s Good morning scotland programme: ‘Clearly this is very concerning. We have to accept that there is going to be significantly less tax from North sea oil and gas because that is necessary to get the investment, to continue to create the jobs, and support what is one of the most important employers.’
First minister Nicola sturgeon said yesterday: ‘We need more from the UK Government around tax incentives, we need more detail about the implementation of the proposed new investment allowance, we need to be supporting exploration.
‘the scottish Government will continue to do what we can around skills and innovation, but we need serious and very definite measures from the UK Government to help.’
however, sir ian said conditions in the industry would begin to recover next year.
industry forecaster Oxford Economics said i t expects prices to average $111-a-barrel by 2020 – $10 lower than its previous projections.
‘Major concerns’