Oil and Gas Industry

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Mr. Frank Doran (Aberdeen, Central): My right hon. Friend is right that the hon. Member for Banff and Buchan made a positive contribution, but some of the things that he said were not accurate. I do not want to alter the tone of the debate, but he waxed eloquent about all the things that the fund could have done had we contributed to it, without mentioning that most of the debate on the fund, as the hon. Member for Gordon pointed out, took place in the 1970s. That debate came to an end on 28 March 1979 when the SNP voted with the Tories and destroyed all these things. It is exactly 22 years ago today.

Mr. Foulkes: My hon. Friend is absolutely right. I could not have put it better myself. Although I said it yesterday in Westminster Hall, it bears repetition.

The hon. Member for Banff and Buchan was right to congratulate the Government. My right hon. Friend the Secretary of State was the first chairman of Pilot and was instrumental in this. It is an important development in our commitment to improve the competitiveness of the UK oil and gas industry. Above all, it will encourage and provoke continued exploration and development.

The hon. Member for Gordon asked about targets. My right hon. Friend covered that in her introduction. Specifically in relation to 2010, investment will be sustained at £3 billion per annum, with a 50 per cent. increase in exports in oil and gas supplies by 2005. There are key targets: it is not just a general expression. I must tell the hon. Member for Banff and Buchan that on this occasion the Norwegians are following our example. I am sure that he will welcome that.

Mr. Andrew Welsh (Angus): Does the Minister accept that there are major skills shortages? Can the Pilot targets be met?

Mr. Foulkes: I was going to come to that in a moment. First, I shall deal with another point made by the hon. Member for Banff and Buchan about progress in Pilot.

An announcement on 18 January invited applications for two blocks in the eastern Irish sea containing gas discoveries, which have been championed by the work group. One of the clusters, which lies in unlicensed acreage in the eastern Irish sea, has recently been offered for licence. We look forward to seeing development plans for some or parts of the clusters before the end of the year.

The hon. Member for West Aberdeenshire and Kincardine raised the spectre of a windfall tax. He said that it would discourage development. I agree with him. As my right hon. Friend the Chancellor made clear, decisions on oil taxation must be made on a long-term basis, not in response to short-term economic factors. We have all agreed that. Fiscal stability is an essential part of our attractiveness in the UK as an oil province.

My hon. Friend the Member for Aberdeen, South also spoke about taxation. When my right hon. Friend the Secretary of State for Trade and Industry visited Aberdeen on 9 March, he announced that the Government have agreed a royalty remission with Talisman that will help the Beatrice redevelopment project to proceed. That is another way in which we are encouraging developments. Talisman said that it could not have progressed with its development without it. That is a specific example of the way forward. Royalty remission is negotiated case by case by the DTI, and it is open to further discussion with any operator who has a strong case. I hope that my hon. Friends and others will encourage operators to come forward.

My hon. Friend the Member for Aberdeen, South also made an important point, reinforced by my hon. Friend the Member for Inverness, East, Nairn and Lochaber, about fallow fields. The Government showed our determination to see new work carried out on the UK continental shelf when we launched the fallow blocks initiative last year when my right hon. Friend the Secretary of State was the Minister for Energy and Competitiveness in Europe. She accepted a Pilot recommendation that we should repeat the process every year from now on. During the fallow initiative the DTI invited the operators of every fallow block and every fallow discovery to review their plans and either to work the acreage or relinquish it so that someone else can have a chance to explore. Again, that will be widely welcomed.

My hon. Friend the Member for Inverness, East, Nairn and Lochaber also referred to fabrication. I believe that no one has done more than he has to protect his constituents' interests. Periods of change are painful for employees caught up in their midst, and the impact on employment around Inverness has been especially great, but we are seeing signs that there is hope for the future. Barmac's dry dock at Nigg is being used by smaller companies for work on drilling rigs. Barmac and other major yards are determined to be able to bid for contracts relating to the development of BP's Clair project, west of Shetland.

As my hon. Friend said, there has been further good news this week: a licence has been awarded to Tulloch, a company based in Inverness, to provide labour for projects to develop Kazakhstan's major oil reserves. I visited Kazakhstan before I joined my current Department and put my passport in a cupboard.

Mr. Malcolm Bruce: Now you visit Inverness.

Mr. Foulkes: Indeed.

The project in Kazakhstan—which has huge oilfields, as I saw—will result in 500 skilled workers, including welders and pipe fitters, going there later this spring and up to a further 500 being required at a later date.

The hon. Member for West Aberdeenshire and Kincardine rightly said that people are an important resource of the oil industry, as they are of other industries. Training continues to be vital to develop skills in that high-knowledge industry.

A number of hon. Members, including the hon. Member for Argyll and Bute (Mrs. Michie), referred to renewables. I shall visit Islay on Friday to see a wave generator, because we want to encourage the development of renewables. A few weeks ago, I visited the Western Isles council—it is the only way for me to get overseas nowadays—which has major plans for a comprehensive and coherent renewables strategy. The Government attach great importance to renewables: we have allocated £250 million over the next three years to support them throughout the UK.

My hon. Friend the Member for Falkirk, East (Mr. Connarty) raised a somewhat different point. I agree with his comments on media reports. The Scottish Executive's Health Department continuously monitors the distribution of many diseases across the various Scottish health board areas. The figures from Dr. van Steenis provide no evidence of a credible link between exposure to emissions from the installations mentioned and increased incidence of cancers, heart attacks or strokes. We are not aware of the basis on which Dr. van Steenis makes the various claims. Indeed, reviews have shown that air quality in Scotland generally is, as we would expect, very good.

The hon. Member for West Aberdeenshire and Kincardine referred to safety, and I agree with him. BP with Jigsaw and all other operators are now committed to working with their work forces and the Health and Safety Executive on all offshore projects. Change has taken place, as several hon. Members have said.

I did not agree with everything that the hon. Member for Banff and Buchan said. As my hon. Friend the Member for Aberdeen, South rightly said, when the hon. Gentleman talks about using oil revenues in the way suggested by the SNP, he is living in cloud cuckoo land. The Scottish people should beware of the SNP's back-of-the-envelope—

Mr. Salmond: It says here.

Mr. Foulkes: It says it because I wrote it.

The Scottish people should beware of the SNP's back-of-the-envelope calculations claiming a surplus for an independent Scotland, particularly when they are predicated on assumptions about revenue from oil, which is finite, however long it lasts, and a primary commodity with an extremely volatile world market price.

Mr. Salmond: Will the Minister give way?

Mr. Foulkes: No, as I have already given way on a number of occasions.

That volatility ranges from £10 billion down to £1 billion, at which point we would be at the mercy of OPEC. The message is clear: the oil and gas industry is changing in shape and direction, but it is not disappearing. We have all the necessary experience in Scotland to contribute our great skills and expertise not only to the rest of the UK but overseas. Now is the time to show that we are flexible enough to meet future challenges. With the support and co-operation of all those involved, the Government are confident that the oil and gas industry will continue to be a vital part of Scottish life for a long time to come.

The Chairman: Before we proceed, may I briefly breach the usual conventions? I thank all hon. Members for the way in which they have co-operated in today's debate and all the other Scottish Grand Committee debates that I have chaired over the years. It has not always been as friendly as this, but I have rarely had trouble from any hon. Members—except once. I also thank the other hon. Members who have acted as Chairman during this Parliament, in particular the hon. Member for Argyll and Bute, who, like me, is retiring from the House. I thank her for the work that she has done, and I thank all hon. Members again.

It being One o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.


Motion made and Question proposed, That the Committee do now adjourn.—[Mrs. McGuire.]

1 pm

Mrs. Rosemary McKenna (Cumbernauld and Kilsyth): I hope that Hansard staff will have become more familiar with the Scottish accent over the past few weeks, with so many of us securing Adjournment debates. We should not be surprised by that, because the impact on our communities of a Government who are committed to social justice has been substantial. So many hon. Members represent communities that were abandoned to poverty and decline over 18 years of Conservative rule, and it is with great pride that we want to celebrate what has happened since 1997, almost four years ago today.

I hope that you will forgive me, Mr. Maxton, if I reminisce about something that you will remember clearly. We must not forget that, 22 years ago today, Scottish National party Members voted to remove a Labour Government and usher in the Thatcher era. I remember that so clearly, not just because it was the birth of nationalism, but because my constituency decided to return to Labour from the SNP. The hon. Member for Moray (Mrs. Ewing) lost her seat to Norman Hogg, now Lord Hogg. He was not the only one to be elected in that historic year: also elected in 1979 were my hon. Friends the Members for Glasgow, Shettleston (Mr. Marshall), for Dundee, West (Mr. Ross) and for Ochil (Mr. O'Neill)—who also said goodbye to the SNP—as well as the Minister. They were joined by the present Speaker and you, Mr. Maxton. Just as we said goodbye to the nationalists then, we will be saying goodbye to them whenever my right hon. Friend the Prime Minister decides to call the general election.

I requested a debate on the Budget because, although it is only a few weeks since the Chancellor delivered his fourth Budget, I am aware of how quickly that can be forgotten. It bears repeating. Every household in Scotland has gained something from the Budget, which has been warmly welcomed by all groups and organisations throughout the country. It was a Budget for families, pensioners, and low-paid and disadvantaged communities across Scotland.

Scotland is reaping the benefits of the Government's sound management of the economy. Every extra penny spent in Scotland is a direct result of our policy of stability and prudence. Have we not been proven correct during the past four years? Those groups that wanted instant cash in 1997 are now reaping even greater rewards. By October, every household in the United Kingdom will be better off by an average of £590 a year, and they will receive £240 of that this year. By October 2001, United Kingdom families with children will be better off by an average of £1,000 a year, receiving £420 of that this year.

Personal taxation and benefit changes mean that over the Parliament a single-earner family will be £520 a year better off, but a single-earner family on average earnings with two young children will be £3,000 a year better off in real terms. We cannot say that too often. Those hard facts are making significant changes in people's lives and it is important to repeat that. The impact on families is substantial and we want to ensure that people get the message and understand it.

What does the Budget mean for Scotland? It delivered £200 million of extra spending on public services in Scotland over the next three years. Whatever anyone says, that is hard cash. It also delivered huge increases for families, with maternity benefit increased from £60 to £100 a week. Those of us with an interest in women balancing work and family life welcome the huge changes to paternity benefit and to paternity and maternity leave. That impacts greatly on families and we want to support families. People need help when their children are very small and they want help to get back into work when their children are ready to go to school.

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