Meeting of the Parliament 20 January 2016
Scotland faces an oil jobs crisis that demands an urgent and concerted response. Getting that response right should be the focus of our debate.
As we have heard, there are those who would abandon future production and rush to decommissioning in the North Sea. That would indeed increase the risk to the livelihoods of thousands of people in oil and gas and far beyond, and it would undermine the Scottish economy as a whole.
There are also those who have claimed that there is no crisis—only a downturn in the economic cycle—and that a modest increase in production means that all is well and that the industry can be sure of a bright future. That is equally misguided.
Neither collapse nor recovery is certain. What is certain is that those who understate the significance of the industry or the severity of the challenge are in danger of making the crisis worse.
The production of oil and gas from the North Sea has rightly been described as one of the most important episodes in our economic history since 1945, and the oil and gas sector is one of the pillars of the modern Scottish economy.
Before the current crisis, oil and gas accounted for 13 per cent of Scottish gross domestic product, business that was won by Scottish oil service companies around the world generated billions of pounds of income to the Scottish economy, and the industry supported, directly or indirectly, well over 200,000 Scottish jobs. Whatever the prospects of North Sea oil, it is not a bonus or an optional extra. It is of critical importance to us all.
Today, the industry is under threat. Thousands of jobs have already gone. In September, the industry’s estimate was that 65,000 jobs had been lost across the UK economy. I am sad to say that the tally of jobs lost continues to rise. In the few days since BP announced 600 job losses in the North Sea, another 500 redundancies have been announced or confirmed by Sparrows Offshore Group, ConocoPhillips, EnerMech and Petrofac. Wood Group has said that it is moving office jobs from Aberdeen to India, and Amec has announced that it will cut the pay of offshore and onshore contractors by 7.5 per cent.
Every job cut or pay cut in the oil and gas sector in and around Aberdeen has a knock-on effect. Every part of the local economy takes a hit, from the travel agents who announced redundancies in the city yesterday to the fast-food vans that sell to workers at the factory gate. The people who are still in jobs are affected, too. It is bad enough for workers onshore when fewer people have to do more work; workers offshore worry about fatigue and stress when they are asked to go from two weeks on the platform to three, and they wonder whether the cost pressures on employers will affect the safe operation of the platform.
The impact on the wider economy reaches far beyond the north-east, from island communities where earnings from working offshore are combined with part-time agriculture to steel plants and engineering firms in west central Scotland that face the threat of closure. This week, the Federation of Small Businesses reported:
“Scottish small business confidence has fallen to its lowest level”
in three years, and the gap between Scotland and the rest of the UK is “widening”.
We therefore cannot discuss the oil jobs crisis or a transition to a low-carbon economy as if they were abstract issues. This is about working people who have lost their jobs, communities that are under pressure and businesses that are facing closure. The oil jobs crisis is a reality right now for thousands of people throughout Scotland. Claudia Beamish and others will say more from the Labour benches about how to achieve a just transition to a low-carbon future, but members must recognise that a transition that was driven by crisis and dislocation would be anything but just.
That is all the more reason why the Scottish Government must carry out an urgent and detailed assessment of the impact of the current low oil price on the strength and stability of the Scottish economy, as we call for it to do in our amendment. The setting up of a task force to help workers who are made redundant is welcome, of course, but on its own it is not enough. When one of the pillars of the Scottish economy is trembling, the first thing that Scotland’s devolved Government should do is assess the nature and scale of the risk that we face. Either ministers have not yet done that or they have carried out such an assessment but chosen not to publish the results. Ministers surely have a duty to measure and report on the scale of the challenge, so that their enterprise agencies, local councils and other partners have information on which to act.