News story

UK Government will stand with North Sea oil industry

Scottish Secretary signals continued support for oil and gas sector during a visit to Aberdeen as oil prices plummet.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

oil rig

Government support to mitigate the challenges facing the North Sea oil and gas sector will be the focus of discussions between the Scottish Secretary and the oil industry in Aberdeen today.

Alistair Carmichael will discuss the package of allowances and tax reliefs the UK Government unveiled as part of last month’s Autumn Statement and the action it is already taking now to help ensure the industry continues to thrive and contribute to our economy.

The Minister will also discuss the impact of Brent prices falling below $50 a barrel and explain the ways in which the UK Government could continue to support the industry over the short and longer term.

He also said the industry can face the challenges of the drastic fall in oil prices as well as other issues facing the sector far more effectively as part of a wider UK economy. Carmichael also confirmed that UK Energy Secretary Ed Davey would visit Aberdeen next week to discuss the issue.

To put the issue in context, he revealed that the drop in prices would have seen an £18.6 billion “black hole” in the Scottish Government’s assumptions on oil prices – meaning that the tax revenues on alcohol and tobacco in Scotland would put more into an independent Scotland’s budget than oil.

Mr Carmichael said:

I am in Aberdeen today and the Energy Secretary is here next week, which shows our commitment to the industry and the serious nature of the challenges facing the North East. The UK Government is making every effort to help and the Scottish Government must move more quickly than it has to support the sector. The First Minister’s plan to come to Aberdeen next month is not good enough.

I and my colleagues will be listening closely to what the industry has to say and having a full exploration of the additional options available to us to help secure jobs and the future of this key sector. The package of allowances and tax reliefs the UK Government unveiled as part of last month’s Autumn Statement reflects our close working relationship with the industry and the action we are already taking now to help ensure it continues to thrive and contribute to our economy.

These events have thrown the stakes involved in fluctuating oil prices into stark relief.

The broad shoulders of the UK economy means we can manage the fiscal impact of the oil price far more effectively than an independent Scotland. An independent Scottish Government would have faced a huge hole in its budget which it would have had to fill with borrowing or cutting public services. The fact the gap between their assumptions and reality would see alcohol and tobacco duties outstrip oil revenues as a source of public spending should give everyone in Scotland pause for thought.

The First Minister said at First Minister’s Questions today that the Scottish Government Cabinet would meet in Aberdeen next month.

Read more about how the UK Government is growing the economy.

Published 8 January 2015