Chief Secretary on the benefits of the union to the UK oil and gas industry
Chief Secretary to the Treasury, Danny Alexander speaks at Oil and Gas UK's Annual Conference
Good morning.
Thank you Malcolm for that very kind introduction.
You and your colleagues at Oil & Gas UK are doing a first rate job.
And I want to commend you 바카라 사이트 for the hard work that you do 바카라 사이트 representing the oil and gas industry.
Whilst we might not always agree on everything바카라 사이트¦
바카라 사이트¦ you are an influential voice speaking for the interests of the sector.
So for me it is a great honour to address your first annual conference.
And it바카라 사이트s a great pleasure to be invited to do so in Aberdeen.
This is one of the UK바카라 사이트s greatest cities.
As well as being a beautiful and welcoming city with a long history바카라 사이트¦
바카라 사이트¦ Aberdeen also feels exciting.
It바카라 사이트s the excitement of being somewhere that is a real global hub of expertise.
It바카라 사이트s a bit like being in Silicon Valley in California or at the Science Park in Cambridge바카라 사이트¦
바카라 사이트¦ a feeling that you are somewhere where the combination of ingenuity, endeavour, expertise, and entrepreneurship can achieve things previously thought impossible.
Because that is what you do 바카라 사이트 day in and day out.
Whether you are geologists, chemists or civil engineers.
Working on transportation, retail or professional services.
Upstream, midstream or downstream.
You are all doing something extraordinary.
Working against the elements 바카라 사이트 in one of the most adverse natural environments in the world.
To extract and deliver energy to millions of people across this planet.
To me that is a victory of human enterprise over natural adversity.
As a schoolboy in Lochaber in the 1980s 바카라 사이트 I know it is what attracted so many of my classmates to work in your sector.
And it바카라 사이트s why today, I know I speak on behalf of the whole UK government when I say바카라 사이트¦
바카라 사이트¦ that I have 바카라 사이트 and we have 바카라 사이트 deep admiration for what your industry does.
You provide almost half a million jobs.
You supply enough energy to meet almost 40% of our country바카라 사이트s primary needs.
You have a world-class supply chain 바카라 사이트 renown internationally for its expertise and technical capability 바카라 사이트 particularly in key sectors like subsea, for example.
Your success is a critical part of the long-term economic plan that is bringing growth and jobs to every part of the UK.
This is precisely why the oil and gas industry is one of the UK바카라 사이트s global success stories바카라 사이트¦
바카라 사이트¦ and why the coalition government has pulled out all the stops바카라 사이트¦
바카라 사이트¦ and done everything we can바카라 사이트¦
바카라 사이트¦ to support you.
The North Sea is a hugely important asset to our country.
Our goal is simple to articulate 바카라 사이트 but hard to achieve 바카라 사이트 to maximise the benefits that the North Sea can bring to our economy.
That means getting out every last drop of oil and gas that we can.
And in doing that, two key principles have underpinned our approach towards your industry.
The first has been to help you cope with the rising costs of extraction.
Because we know that in smaller, more remote fields it will cost more.
We have done that by introducing and extending field allowances.
That has included a whole range of initiatives:
- doubling the value of the small field allowance
- introducing a Β£500 million allowance for large shallow-water gas fields
- Β£3 billion allowance to support investment in large and deep fields, in particular at West of Shetland
- introducing an allowance for incremental investment in older fields
- a new allowance for onshore oil and gas projects
- creating a new cluster allowance for ultra high-pressure, high-temperature projects 바카라 사이트 something Oil & Gas UK themselves described as a 바카라 사이트game changer바카라 사이트 for the North Sea
And the impact of all of that has been significant.
Oil & Gas UK calculate that 바카라 사이트 last year alone 바카라 사이트 our field allowances directly supported around Β£7 billion worth of investment in the North Sea.
They have also supported over 100,000 jobs across the industry바카라 사이트¦
바카라 사이트¦. around half of them in Scotland.
And our allowances continue to have a positive impact.
Only today, a substantial new project by Premier Oil has received final approval.
The Catcher Project will see Β£1.5 billion of new investment and over 1,000 new jobs.
The CEO of Premier, Simon Lockett, is clear that the project 바카라 사이트has been facilitated by the government바카라 사이트s small field allowances바카라 사이트.
I am very proud 바카라 사이트 that it is the policies of the UK government that are allowing and enabling this to happen.
The second principle underpinning our approach has been to provide your industry with greater certainty about the future.
That certainty is crucial to your continued success over the coming decades.
That is why, in 2012, we introduced a new approach바카라 사이트¦
바카라 사이트¦ we were the first government in history to fully commit to future decommissioning tax relief.
With new contracts to give you certainty about the future costs you will face.
So far 61 deeds have been signed바카라 사이트¦
바카라 사이트¦ a process we expect to help unlock billions of pounds worth of new investment.
Again, by thinking for the long-term, providing therefore jobs and growth today.
But the future does also holds other risks.
As the basin matures바카라 사이트¦
바카라 사이트¦ production efficiency has been declining바카라 사이트¦
바카라 사이트¦ fewer wells are being drilled.. . 바카라 사이트¦ and over future years other challenges will arise too.
And yet the opportunities are huge as well.
We are determined to work together with you to help make the UK a hugely attractive and exciting place to invest.
That is why the Secretary of State for Energy and Climate Change, Ed Davey, asked Sir Ian Wood to conduct his review into how to increase oil and gas production.
Sir Ian is a titan of your industry, and we should all be enormously grateful for the vision he has set out.
He recommended that a new independent agency should be set up to maximise economic recovery by increasing collaboration across the industry.
And between government and industry.
Today I can announce that the new agency will be called the 바카라 사이트Oil and Gas Authority바카라 사이트.
We have been thinking about where it should be based.
It is my view that it should be headquartered at the heart of the UK바카라 사이트s oil and gas industry.
So I can tell you today that it will be based right here 바카라 사이트 in Aberdeen.
This city and your industry deserve that commitment 바카라 사이트 and I am very proud to make it.
And next week we will start the recruitment process to appoint their new CEO.
The new Oil and Gas Authority will work with the government on a wholesale review of the ring-fenced tax regime for the oil and gas industry바카라 사이트¦
바카라 사이트¦ looking at everything from tax rates to tax allowances.
Because the North Sea is an extraordinary economic asset바카라 사이트¦
It generated almost Β£5bn worth of corporation tax revenues last year alone.
Impressive as that is, it is considerably lower than in the past.
Tax revenues have been declining for several years바카라 사이트¦
바카라 사이트¦ and independent forecasters expect them to continue declining.
But just because the North Sea is becoming less of a tax asset바카라 사이트¦
바카라 사이트¦ it doesn바카라 사이트t mean it can바카라 사이트t remain a top economic asset.
The review will look at how we achieve that transition.
In my mind, it is clear that, in the future, the North Sea will need to face a lighter tax burden than it does now.
Because that is the only way we can continue to attract investment, to extract full economic value, in the face of increasing costs, is to do it that way.
And next month we will launch a call for evidence to make sure you can all have your say as part of that review.
Field allowances.
Decommissioning relief.
A new agency based in Aberdeen.
A review of taxation.
All of that shows 바카라 사이트 I believe 바카라 사이트 the strength of the UK government바카라 사이트s commitment to the future of your industry.
The reason we바카라 사이트ve been able to do all of that바카라 사이트¦
바카라 사이트¦ and the reason why we바카라 사이트ll be able to do more in future바카라 사이트¦
바카라 사이트¦ is that we have stuck to our long-term economic plan.
It has meant taking some tough decisions to live within our means as a country.
When plenty of people said we should change course바카라 사이트¦
바카라 사이트¦. we stood our ground바카라 사이트¦
And the plan is now working.
In the past year we 바카라 사이트 the UK 바카라 사이트 have grown faster than any other major industrialised economy.
Thanks to your efforts, growth is balanced across sectors.
Almost one and a half million jobs have been created across in the private sector.
And our economy is set to continue recovering faster than any other G7 nation this year.
Britain is bouncing back.
We are able to look forward to the future of your industry because we are part of the United Kingdom.
I know how important stability and predictability is to the oil and gas community.
It is clear to me that the way to ensure stability is to be part of a larger and more diverse economy.
Because the UK as a whole can much more easily afford to sustain production and investment in the North Sea.
Let바카라 사이트s look at the numbers.
For the UK, oil and gas is 2% of our total tax receipts바카라 사이트¦
And decommissioning relief represents around 1% of our GDP.
As a separate country, oil and gas taxes would make up nearly 14% of Scottish tax receipts바카라 사이트¦
And the cost of decommissioning relief would be about 12% of Scottish GDP.
You don바카라 사이트t have to take my word for it.
The Institute for Fiscal Studies바카라 사이트¦
바카라 사이트¦ a truly impartial and independent institution바카라 사이트¦
바카라 사이트¦ set it out in crystal clear detail only last week.
The IFS say 바카라 사이트 and I quote 바카라 사이트 바카라 사이트Scotland is likely to face greater fiscal challenges than the UK바카라 사이트.
In other words, by staying in the UK, we would borrow proportionally less than a separate Scotland 바카라 사이트 from day one.
Scotland바카라 사이트s deficit 바카라 사이트 as a share of GDP 바카라 사이트 would be double that of the UK.
And that gap between the two gets bigger and bigger over time.
One of the main drivers of that is 바카라 사이트 I quote 바카라 사이트 바카라 사이트the likely long-run decline in revenues from oil and gas production바카라 사이트.
So what is the Nationalists solution to that question?
To make up hugely over-optimistic forecasts for future North Sea tax revenues.
Take, for example, the latest figures the Scottish government published, last month.
They are more optimistic than just about every other projection out there.
More optimistic than the views of most independent experts.
It바카라 사이트s yet another unrealistic prediction in a long list.
Like Β£1.5 trillion wholesale value figure yesterday 바카라 사이트 which assumes that gas prices match oil prices 바카라 사이트 when you all know that gas has sold for little more than half the price of oil.
Or ignoring the fact that this figure doesn바카라 사이트t include the costs of extraction 바카라 사이트 whether to pay for infrastructure, staff or drilling costs.
That바카라 사이트s not a very cautious approach to take the uncertainty your industry faces.
In this debate, I say, the nationalists바카라 사이트 numbers simply don바카라 사이트t add up.
By staying in the UK, our bigger and more diverse economy can help smooth the volatility in North Sea tax receipts.
This is my view 바카라 사이트 but it happens to have the backing of the independent IFS 바카라 사이트 I quote:
The eventual decline of oil revenues would likely prove a much more acute problem for an independent Scotland than it would for the UK.
This means that Scotland would likely need to implement further tax increases and/or spending cut.
For that reason, you should take guarantees of stability under independence with a big pinch of salt.
And be clear also바카라 사이트¦
As an economy.
As an industry.
There is a UK dividend from staying together.
As a United Kingdom we can ensure a brighter future for you and your sector.
You are the jewel in the crown of British industry.
So if you agree with me바카라 사이트¦
바카라 사이트¦ I hope you will join me in making the case바카라 사이트¦
바카라 사이트¦ that the people of Scotland should say 바카라 사이트no, thanks바카라 사이트 to independence.
We should all be proud of being Scots.
And feel proud about everything that your industry has achieved in Scotland.
But we can have the best of both worlds.
We have already increased powers with the Scotland Act in 2012.
That includes giving Holyrood greater control over a range of taxes 바카라 사이트 including the power to set a Scottish rate of income tax.
It바카라 사이트s the biggest act of financial devolution in Scotland바카라 사이트s history.
It means that we can find Scottish solutions to Scottish issues바카라 사이트¦
바카라 사이트¦ while remaining part of a stronger and more stable United Kingdom.
There바카라 사이트s just under 100 days left until the referendum.
It바카라 사이트s the most important vote in the history of the United Kingdom.
Let us not forget that history when we head to the polls.
A history which has seen British ingenuity emerge triumphant time after time.
Over the centuries, our four nations have worked together to change the world.
The UK led the charge exploring oceans and continents across the globe.
We were the centre of the industrial revolution.
During the twentieth century we led innovations in science, culture and finance 바카라 사이트 to name a few바카라 사이트¦
바카라 사이트¦ while twice fighting and beating tyranny when it threatened to take over the world.
All of that thanks to the hard work of the British people.
Whether Scottish, English, Welsh or Northern Irish.
We all have separate identities.
But our history leaves no doubt that바카라 사이트¦
바카라 사이트¦ whatever our differences바카라 사이트¦
바카라 사이트¦ there바카라 사이트s far more keeping us together than forcing us apart.
And the conquest of the North Sea symbolises the interconnectedness of our identities on these islands.
Scottish engineers, English drillers, Welsh divers and Northern Irish geologists.
All working together.
Showing how the United Kingdom is much greater than the sum of its parts.
I am a Highlander, a Scot, a British citizen and a European.
And one thing I know바카라 사이트¦
바카라 사이트¦deep inside me바카라 사이트¦
바카라 사이트¦is that together we achieve so much more than on our own.
So let바카라 사이트s stay as one United Kingdom.
Where the oil and gas industry can face the future with confidence and optimism.
Thank you very much.