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21 Mar 2007 : Column 316WH—continued

Does the Minister also recognise that those officers’ rights have been infringed, including, potentially, their rights under article 13 of the European convention on human rights? Does he accept that the officers were never formally interviewed or reported by the police ombudsman for any alleged offence? Does he accept that the ombudsman’s report has potentially compromised the security of police officers and agents, and has
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disclosed secret security force methodology in a reckless manner, thereby damaging national security operations in the UK and abroad?

As the rebuttal report will show, the original ombudsman’s statement is crucially flawed. The RUC collectively and the officers who have been maligned both by the statement and subsequently are entitled to a public apology for the manner in which they have been treated. Instead of simply accepting the ombudsman’s report at face value, as the Government have done hitherto, it is incumbent on the Government to examine all aspects of the report in more detail, to carefully consider the rebuttal document that was published yesterday and to take a more rounded and balanced view of the entire situation.

There must not be a rewriting of the history of the troubles in Northern Ireland, whereby the RUC and the Army are painted as the bad guys and the paramilitaries come up smelling of roses. That is the danger, because the paramilitaries do not keep records and can get away with so much. We know that the police are rightly accountable under the law, but this process must not be a witch hunt. It must not be about the Government releasing prisoners early and trying to draw a veil over the paramilitaries’ past, while police officers who did their best to defend the people of Northern Ireland and the United Kingdom from terrorism end up in the dock being accused of things that they have not done by the broad use of terms such as “collusion”, which no one can really define. I hope that the Government will see the need to recognise that if we are to unpick the past like this—in a one-sided and unbalanced way—we would be storing up trouble for the future. None of us wants that; we want to move on.

4.18 pm

The Parliamentary Under-Secretary of State for Northern Ireland (Paul Goggins): I congratulate the hon. Member for Lagan Valley (Mr. Donaldson) on securing the debate and on raising this issue. Although it is controversial, it is important for his constituents and others, so it is good that he has had the opportunity to raise it. I also congratulate him on the constructive way in which he posed his questions. He raised issues about the role of the ombudsman, and asked specific questions about the recent report into the murder of Raymond McCord Jr.

I shall deal with some of the specific points shortly, but it is important to understand at the outset the important role that the police ombudsman plays in Northern Ireland. The ombudsman adds to a range of scrutiny that is perhaps as great as any that exists in the world, and it is important for community confidence in the PSNI that the ombudsman does the job well and with the full support of the whole community.

The ombudsman is empowered under part VII of the Police (Northern Ireland) Act 1998. Her job is to create an efficient, effective and independent complaints system. We are talking about complaints about the conduct of specific police officers, but she must also deal with issues that may be referred to her by the Secretary of State, the Northern Ireland Policing Board or the Chief Constable. Her officers must, of course, operate within the law. Many of them have the
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same powers as police officers, and must operate under the relevant police and criminal evidence legislation. She must deliver a fully independent system. While people may have a range of opinions about her report, she must have the independence to carry out her investigations and deliver her conclusions. An important assurance is that she must operate within the strict guidance and rule of law that applies to the police.

Some of the ombudsman’s investigations, including the one that we are discussing, deal with difficult issues from the past, and they arouse controversy and emotion. I understand that. She is the only investigatory authority in Northern Ireland with the power to investigate, for example, events that led to a death involving a police officer, so the territory that she covers is bound to be controversial. In fact, it is worth noting that, since the ombudsman’s office was opened for business a few years ago, it has dealt with 18,000 complaints from a wide variety of sources from all communities, including military personnel and the families of police officers. It is important to understand that many of the reports and investigations have reaffirmed the fact that the police acted entirely appropriately.

I regularly receive reports, for example, about police use of CS spray. The Chief Constable automatically refers any incident in which that happens to the ombudsman. Every report that I have seen exonerates the police and supports their action. Even today, the ombudsman has released information about a report into an incident, and the headline on the press release is “Officers justified in shooting man who left bomb in city centre.” That report was about a specific case in which a firearm was discharged by the police. It was automatically referred by the Chief Constable, and hon. Members can read the press release for themselves, but it absolutely exonerates and supports the police officer’s action. Before dealing with the detail of the report into Raymond McCord Jnr., it is important to get the balance right. The police ombudsman has often reported affirmatively on the police’s conduct.

Mark Durkan: Is the Minister aware that the figures show that 85 per cent. of police officers investigated by the ombudsman believe that they were treated fairly during the investigations, and that 91 per cent. believe that her investigations are impartial? That confidence is reflected in the figures for public confidence, both Catholic and Protestant, thereby rebutting the picture painted by the hon. Member for Lagan Valley (Mr. Donaldson).

Paul Goggins: I have seen the evidence from the polls, and the figures given by my hon. Friend are accurate, but we must face the fact that, because the report that we are discussing is controversial and takes people back into difficult territory, some of them may have less confidence than the majority. We must deal with the report, and I want to speak about the detail now. I shall not comment specifically on every question that the hon. Member for Lagan Valley asked, but I shall examine his questions carefully and write to him with a considered response, so that I give him the best information.

The hon. Gentleman is entirely right in saying that there should not be a witch hunt against former RUC
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officers or serving members of the PSNI. We must put the report into perspective. It details the unacceptable conduct of a small number of officers, which means that thousands of officers who served with the RUC or are serving the PSNI do so with honour, distinction and great dedication. Many of them undertake dangerous duties and save lives, day in, day out. It is important to paint a balanced picture.

However, as the hon. Gentleman acknowledged, when there is wrongdoing it should be investigated and dealt with. If police officers have committed criminal acts, and there is evidence of it, of course they should be brought to justice, which is why the Chief Constable has accepted recommendations for further investigations to be carried out. If there is evidence of wrongdoing, it should be referred to the Director of Public Prosecutions.

Dr. William McCrea (South Antrim) (DUP): Will the Minister put on record today the debt of gratitude that the people of the United Kingdom, and especially of Northern Ireland, owe the RUC, GC and the RUC Reserve, which protected people against one of the most bloodthirsty groups of people that terrorised any part of the United Kingdom?

Paul Goggins: I happily pay tribute to the many thousands of officers—former RUC officers and current PSNI officers—who served their communities with great dedication and skill. The fact that a small number may have been found wanting should not detract from that. It is important that I put that on record this afternoon, and I am happy to do so. Indeed, it is also important to acknowledge that the gathering of human intelligence is a vital part of the policing process. It is essential. I have met some of the officers who do that work, which is dangerous, but the end product is that they save lives. I am happy to acknowledge their contribution. At the same time, I make the point that if people have done wrong, they should be investigated, and if there is evidence of that, they should be brought to justice. That is entirely right.

It is also important to acknowledge that what the ombudsman found could not happen now, because of the advances in the Regulation of Investigatory Powers Act 2000, for example, and the accompanying guidelines on how informants and human intelligence are handled now, which is very different from some time ago. That gives us a better, more accountable system in which people can have confidence.

The hon. Member for Lagan Valley asked me to comment on the use of the word “collusion”, which
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has been the source of enormous debate and difference of opinion. The Northern Ireland Office does not have its own definition, but the ombudsman has her definition and we are familiar with it. I understand that that has become a debating point, but the ombudsman selected a particular use of the word and deploys that in her report.

My remarks in response to the intervention of the hon. Member for South Antrim (Dr. McCrea) a couple of minutes ago were not my words. They were very much those of my right hon. Friend the Secretary of State, who spoke recently at the international policing conference in Belfast and said what I said, particularly about those who gather human intelligence: they do an important job.

The debate takes us into the past and it is worth saying in passing that we need to find a way in Northern Ireland of dealing with past issues, without relying simply on individual litigation, court cases and public inquiries. They have their place, and it is important that that work continues, but somehow we must find a way of promoting dialogue and conversations across communities that can help to draw a line under the past and help us move forward. That work will need to be carefully thought through, and discussed with all political parties and all the communities involved. It is important that that takes place.

In conclusion, I welcome the report that has been published by the retired police officers. I will consider it carefully, and ensure that there is an appropriate way—[Interruption.] My hon. Friend the Member for Foyle (Mark Durkan) wants to intervene in the short time that I have left. I will happily ensure that arrangements are made to listen to the concerns of retired police officers and to respond to them.

My hon. Friend mentioned the ombudsman’s report. My right hon. Friend the Secretary of State has accepted all its recommendations, as has the Chief Constable. Further investigations will be carried out and, where justice needs to be done, it will be done. It is important to put on the record that there is full support for the ombudsman’s recommendations, but we will also consider carefully the report that the retired police officers drew to our attention. I shall ensure that there is a proper way for Ministers to engage with and feed back into that.

The ombudsman must deal with high-profile, sensitive issues, and she has a record of doing so in an exemplary and fine way. She must deal with difficult territory, but she acts with integrity, investigates thoroughly, and makes her reports accordingly.

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North Sea Oil and Gas (Taxation)

4.30 pm

Mr. Bob Blizzard (Waveney) (Lab): I am pleased to have obtained the debate, especially having been granted it two weeks ago, but having had to withdraw, as I had committed myself to accompanying the Holocaust Educational Trust and some young constituents to the Auschwitz extermination camp. I am therefore grateful to have a second chance today.

When I saw the new date for the debate, I thought that it presented a problem. Should I prepare a speech in advance or wait to see what the Budget turned up on Budget day? I wondered whether there would be anything in the Budget on North sea oil and gas taxation. I am glad that I prepared something, because as far as I can see, there have not been any changes to the North sea fiscal regime—not even the corporation tax and capital allowances changes that will apply to all other industries in the country. I shall return to the question whether that is good or bad for the oil and gas industry, but today, we have a rare opportunity to debate oil and gas taxation in detail on Budget day. Now that we have that opportunity, and the Treasury has not made its mind up, I hope that my hon. Friend the Financial Secretary will take on board what I have to say and return with some good proposals in the pre-Budget report later this year.

To some people, the debate is simple: oil companies make a great deal of money, and the majors make enormous profits, so we should tax them as highly as we can, and if the oil price goes up, we should tax them more. I do not have any problem with taxing people who can afford to pay, because I want the public services that taxes provide, but we must remember that those companies’ profits are worldwide, based on each company’s global operation and their substantial investments throughout the world. The issue for the UK is the proportion of that worldwide investment that we attract, and the Treasury should monitor it carefully for several reasons.

The investment that we receive is huge, and it has been for many years. Last year, the oil and gas industry spent £11.1 billion in the UK, which was an enormous injection in our economy. That investment boosts growth, and it dwarfs spending by most other sectors. It probably makes the industry the largest industry in the country, because it amounts to about 11 per cent. of all industrial investment in the UK. It finds its way down the supply chain, it sustains many other businesses and it leads to the employment of some 480,000 people, so it is hugely valuable to our economy and we cannot afford to lose any of it.

What else do we get from the investment? We are self-sufficient in oil and still receive enough gas to meet 92 per cent. of our demand, and we obtain all that from an indigenous source which is surely our most secure energy supply. The investment also makes a substantial contribution to the balance of payments. Indigenous production of oil and gas last year saved £30 billion in oil and gas imports, and the industry supply chain exported goods and services worth £4 billion. Overall, therefore, the industry contributed £34 billion to the balance of payments, which is not to be sneezed at. The industry paid £10.3 billion in tax last
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year, and its corporation tax payment alone amounted to 20 per cent. of all corporation tax paid by UK companies.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I congratulate the hon. Member for Waveney (Mr. Blizzard) on putting forward a strong case for the importance of the industry. In his opening remarks, he mentioned that there had not been anything for the industry in the Budget. The Chancellor rarely mentions the industry, but he has mentioned the falling revenues that he now receives from it. Does that not highlight again the importance of ensuring the best possible investment climate, so that future generations secure the best tax revenue from the industry?

Mr. Blizzard: The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) is absolutely right. If we do not secure continued investment, we will not secure continued tax revenue. Considering the huge benefits that this country acquires from the industry, we must talk about it and take care of it. The Government need to value the industry, and, as the hon. Gentleman has said, we must try to maintain that investment.

All the figures that I have used so far come from the United Kingdom Offshore Operators Association and the Department of Trade and Industry’s joint activity survey, which was published in February. If my hon. Friend the Financial Secretary has not read it, I urge him to do so, because it contains some important observations that I shall focus on shortly.

Oil and gas investment decisions are by their nature long-term, because it takes many years of big spending on initial exploration through sanction to eventual production before a penny of return materialises, and one cannot forecast the future oil price when one decides to invest. The industry’s thinking is, none the less, short-term, and it responds to oil prices. No one invested when the price was $10 a barrel, but in the past few years, with the price at $50, $60 and even $70 a barrel, there has been a mini boom in North sea investment. The boom occurred despite the Treasury imposing two supplementary corporation tax charges, and the industry leaving itself terribly exposed in the market for drilling rigs and paying ridiculous prices to drilling rig operators. I do not understand why the industry gets itself in such a mess by shooting itself in the foot because it does not have a proper supply of the services that it needs. However, the result is that unit costs per barrel have gone up by 45 per cent. since 2005.

That frantic period of activity masked the long-term trend in the UK continental shelf, because the real picture is that, although we are just over halfway through the production of all our oil and gas reserves, the remainder will be different from the first half. The big reservoirs have all been discovered, and the rest amounts to small fields. A typical discovery amounts to about 10 million barrels, and the activity survey forecast that 88 per cent. of future exploration prospects would be less than 20 million barrels. The small reservoirs will be more costly to discover and develop than the previously larger fields, and new developments are possible only because of technical innovation and by tying them to existing infrastructure, which is mostly old.

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I have made it clear for a long time that for the second half of the North sea oil and gas province’s life, the so-called mature stage, it needs a different fiscal regime from that which it had for the first half. We can argue with the Treasury about the level of overall taxation, and oil price makes a difference, but we cannot and must not ignore the underlying structural situation: in a mature province, the industry has to spend more, to discover and produce less, if we want to extract as much of our reserves as possible, especially when we have to compete with other parts of the world for investment. Notwithstanding oil price, the North sea oil and gas tax must be set at such a level that we can continue to attract and maintain investment.

The key messages from the activity survey are that even after 40 years, there is plenty of activity in the North sea. There was capital investment last year of £5.6 billion—the highest since 1998—and exploration and appraisal drilling activity was strong. We will also be self-sufficient in oil this year, 2007-08, although we will probably become a net importer in 2010, at which time, incidentally, the North sea would still be able to supply 60 per cent. of our gas. But—and this is the big but—production fell by 9 per cent. last year and is expected to continue falling. Most worrying of all is the forecast of a reduction of investment in 2007 of between £1 billion and £1.5 billion, down to just £4 billion to £4.5 billion. That would represent the first slowdown in capital investment since 2003. That is worrying evidence that the UK is becoming less able to attract investment in a competitive world market, which is a more challenging perspective than we have seen for some time. If we value the benefits of the oil and gas industry that I have outlined, we need to carefully factor those findings into the kind of work that the Treasury is doing in its consultation, which started with the pre-Budget report of 2005 and has resulted in a further discussion paper today.

Before coming to that, however, I should like to raise some points that my hon. Friend the Financial Secretary needs to address. Oil prices may be high, but gas prices are not. The two supplementary charges have sought to match that oil price rise to secure for the nation a fair share of the higher value that the markets now place on our national assets. However, companies that are involved in gas exploration and production have to pay the same taxes as the oil companies, but the economics of gas are not the same. In fact, the overall price of oil and gas in the North sea is the equivalent of about $40 a barrel, which is not quite the windfall price of $60 a barrel for Brent crude with which we are familiar. With the high costs that it now faces, the industry is worried about what would happen if oil prices fell.

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