UK-Wide Action Urged On Oil

The First Minister has called on the UK Government to get its act together'' and support the North Sea oil sector in the wake of falling prices.

Nicola Sturgeon revealed her Cabinet will meet in Aberdeen, where the industry is based, next month as part of its efforts to help the sector.

But both she and Energy Minister Fergus Ewing demanded action from the UK Government, with Mr Ewing setting out a number of tax changes ministers hope to see included in the March Budget.

Ms Sturgeon told MSPs at Holyrood: I will do everything on the part of the Scottish Government to support the industry, the Scottish Government Cabinet will meet in Aberdeen next month, but the UK Government has to get its act together, stop talking about supporting the industry and actually start to do it.''

She made the plea as a think-tank warned low oil prices could have a direct impact on the Scottish public purse when income tax is devolved.

Fiscal Affairs Scotland said the effect of falling oil prices is likely to be negative, at least in the short term''.

It said that as taxes related to the North Sea are not included in the Smith Commission proposals on further devolution, then the fall in the oil price will not impact directly on Scottish funding levels''.

But with new income tax powers coming to Holyrood, the think-tank said: Falls in indirect oil related activity could impact on Scottish funding.

This could happen as a result of lower income tax due to lower employment and/or lower wages of those workers involved in the oil industry who are Scottish residents.''

The Scottish Government is looking to Westminster for action to support the sector, demanding urgent reform of the tax regime for the North Sea.

The Energy Minister argued that the introduction of an investment allowance could boost investment by up to #37 billion and support as many as 26,000 jobs.

A phased reversal of the increases in the supplementary charge the industry must pay could also encourage £7 billion of investment and support 5,600 jobs, Mr Ewing added.

SNP ministers are also calling for the introduction of a new exploration tax credit scheme, to drive up exploration from an historically low level''.

Mr Ewing said: ''Speedy action from the UK Government onthese areas is vital.

''Put simply, these measures must be delivered in the Budget this March.

''There is a long-term sustainable future for the North Sea and we are committed to using every lever at our disposal. It is time for the UK Government to follow suit.''

Opposition MSPs, however, called on the Scottish Government to act.

Labour economy spokeswoman Jackie Baillie said: The oil price is under half the price predicted in the SNP's White Paper (on independence), having dropped beneath 50 dollars a barrel yesterday.''

As many as one in 12 jobs in the sector - some 15,750 posts - could be at risk as a result of the falling oil price, Labour claims, with Ms Baillie stating:

These are not only people who directly work in the industry but the local economies in the north east, and people across Scotland who work in the supply chain. We need action, and we need action now.''

She demanded: We need action now. Not finger pointing.

This crisis is the biggest threat to Scottish jobs since Ravenscraig (steelworks closure) and the Scottish Government have been nowhere to be seen.''

Tory Murdo Fraser accused the Scottish Government of trying to pass the buck entirely to Westminster'', claiming that wasnot good enough''.

Conservative leader Ruth Davidson said if Scotland had voted Yes in the referendum, the drop in oil prices could have left the country facing an £18.6 billion black hole in public spending in the first three years of independence.

''That means that the £18.6 billion black hole currently borne on UK-wide shoulders would fall solely on Scotland, meaning cuts to every school, every hospital and every service that we rely upon in this land,'' she said.

Does the First Minister not agree that this was a bullet dodged and that the best approach for both the industry and the country is for us all to work together on a UK-wide basis?''

But Ms Sturgeon hit back, saying: It is quite admirable in some respects that Ruth Davidson, a supporter of a Government that has been one of successive UK governments that have squandered our oil resources, that has failed to invest in an oil fund, can stand up here and talk about oil and gas without the hint of a brass neck or a blushing face.''

Scottish Secretary Alistair Carmichael said: 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.''

Mr Carmichael met oil industry figures in Aberdeen today, and said Westminster Energy Secretary Ed Davey would be in the city for talks next week.

He argued this shows our commitment to the industry and the serious nature of the challenges facing the north east''.

Mr Carmichael added: 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 FM'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.''