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North Sea Drilling
3. Miss Anne Begg (Aberdeen, South) (Lab): If she will make a statement on her Department's initiatives to stimulate levels of North sea exploration drilling. [163435]
The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): We have taken a number of important steps to help, including introducing new types of licence to increase exploration levels, and increasing the data available to the industry. Through PILOT, the Government/industry oil and gas forum, we have been working to ensure activity in previously fallow areas, and we are making good progress on that. In addition, my right hon. Friend the Chancellor of the Exchequer is introducing an exploration expenditure supplement to stimulate exploration by new entrants to the North sea.
Miss Begg : I welcome the announcement in last week's Budget on encouraging exploration, but I am sure that my hon. Friend is well aware that there is nervousness in the North sea area that there is not enough exploration. If exploration does not happen, either on known reserves or to find new reserves, the future of the oil and gas industry in the North sea will not be as rosy as we all hope. Will my hon. Friend make sure that the Government, either through the Treasury or through his Department, do everything that they can to ensure that extra exploration is encouraged, whether through the exchanging of licences or changing the nature of licences, to make sure that new entrants and existing operators have the chance to explore as much as they can?
Mr. Timms: I certainly agree with my hon. Friend, and as she knows, there could easily still be as much oil and gas in the North sea as we have extracted in the past few decades. It is essential that we fully exploit those resources not only to benefit her constituents, but to benefit the economy as a whole. We are working very hard in that regard and there are some very encouraging signs. However, I am aware of the concerns that exist in the industry, and I met the United Kingdom Offshore Operators Association recently to discuss them.
My hon. Friend may have seen this morning's report by 3i, which shows sharply increased asset disposals from the big oil companies that create major new opportunities for drilling. That is expected to make a very important contribution over the next few years. Moreover, my Department's latest survey of drilling intentions, which was also published today, shows that drilling expectations for the coming year are 30 per cent. higher than a year ago. So there are encouraging signs, but I agree with my hon. Friend that we need to work very hard with the industry to make sure that those positive signs become full grown.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Do the figures for drilling intentions relate to development drilling—the expanding of
existing reserves—or to the new frontier exploration that will unlock the other half of the oil reserves that the Minister says we have yet to extract? There is real nervousness in the north-east of Scotland because, despite a long and sustained run of high oil prices, we are still not seeing the activity that we would expect. We urge the Government to look again at how to incentivise the exploration that would unlock the key to those reserves.
Mr. Timms: Again, I agree that this issue is important, and the figures that I gave cover drilling of all kinds. The hon. Gentleman will doubtless have heard the announcement concerning the frontier licence in the current 22nd offshore round, which will encourage drilling in areas west of Shetland in particular. It is a long time since there has been much exploration in those areas, and we certainly want to see more.
On fiscal incentives, I should point out to the hon. Gentleman that the Treasury works very closely with us through PILOT, the oil and gas industry taskforce, and that there have been big improvements, such as the abolition of royalties and the ending of petroleum revenue tax on new third-party tariff business relating to pipelines and other infrastructure. However, all these matters will be kept closely under review.
Spin-out Companies
4. Mrs. Anne Campbell (Cambridge) (Lab): How many jobs have been created by spin-out companies from universities in the last five years. [163436]
The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The Government have overseen a huge cultural change in the attitude of our universities towards business in the past five years. In 2001–02 alone, 213 spin-out companies from universities created a total of more than 12,000 jobs, compared with an average of 70 a year in the first half of the 1990s. The steps that we have taken to encourage universities to commercialise good ideas have contributed directly to this record.
Mrs. Campbell : There are many successful spin-out companies in Cambridge, such as Astex Technology, which is involved in discovering novel cancer drugs, so it is not just jobs that are being created but real opportunities. But how does my right hon. Friend intend to ensure that Government investment in the UK's science and research base will be maintained in the long term and not fall prey to short-termism?
Ms Hewitt: I certainly congratulate Astex Technology and all the other companies in my hon. Friend's constituency that are doing such extraordinary work, particularly in the field of new medicines and bioscience. Through the 10-year framework for science and innovation that my right hon. Friend the Chancellor and I announced before last week's Budget, we will ensure that there is a stable and strong funding foundation for the basic science in which our country is a world leader, but which was so appallingly neglected—if I may say so—during the years in which the Conservatives were in power. We will couple that investment with a continuing increase in investment in
innovation, to ensure that businesses exploit the wealth of ideas and technology coming from our wonderful universities.
Mr. George Osborne (Tatton) (Con): How many jobs and spin-out companies have been created by the Cambridge-MIT Institute, the joint venture of Cambridge university and the Massachusetts Institute of Technology which is costing the taxpayer £65 million? Will the right hon. Lady confirm the National Audit Office's finding that the money was allocated in breach of the Treasury's own rules? And will she further confirm that up to half that money—British taxpayers' money—is being given to MIT, which is an extremely well endowed American institution?
Ms Hewitt: The Cambridge-MIT partnership is a wonderful partnership between two world-class institutions, which we secured against a great deal of competition from universities all over the world that wanted the partnership for their countries. We won it not just for Cambridge, but for Britain, and that partnership is delivering benefits to universities and businesses throughout our country. The NAO report was generally favourable and positive about the partnership, and on the 29th there will be a hearing of the Public Accounts Committee on the subject. I do not have the figures to hand, but I will write to the hon. Gentleman about them.
Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Does my right hon. Friend agree that we have made some steady progress, but that we cannot afford to rest on our laurels? We need an evaluation of how well each of our 123 universities is doing annually, to establish where the strengths and weaknesses lie and how we can spread best practice. Will the Secretary of State talk to people such as Professor Boucher, the vice-chancellor of the university of Sheffield, who is very concerned about what the Treasury did in last year's Finance Act, which is inhibiting spin-out companies and interesting innovative partnerships?
Ms Hewitt: My hon. Friend makes an important point about the need to maintain progress and ensure that all universities, whether research intensive or not, are contributing to improving the economic performance of the regions and the country as a whole. I am aware of concerns about schedule 22 of the Finance Act 2003, and I am happy to be able to tell my hon. Friend that the universities and the Inland Revenue have discussed the problem; and that the Inland Revenue has been able to agree on a model for a standard spin-out company that will provide the certainty about the tax position that the universities are quite properly looking for.
Mr. Julian Brazier (Canterbury) (Con): Will the right hon. Lady join me in commending the remarkable work carried out at the university of Kent in the bio-sciences and medicine—in respect of both spin-out companies and established majors such as Pfizer's? Indeed, two young scientists were at the display exhibited in the House a fortnight ago. Does the Secretary of State agree that her Cabinet colleagues should reflect carefully on
that before they decide on whether to grant Canterbury university's application for a medical school, currently under consideration?
Ms Hewitt: I am sure that the university and the companies to which the hon. Gentleman refers are doing wonderful work, and I shall certainly draw his point to the attention of my right hon. Friend the Secretary of State for Health. I hope that the hon. Gentleman will join me in welcoming the recent announcement in the Budget that the Department of Health will in future ensure that its significant R and D budget for health developments will be used in a way that not only maximises the benefits to patients of new medicines, but increases the chances of getting new innovative and successful companies here in Britain to produce those new medicines.
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