North Sea Oil and Gas (Employment)

Frank Doran Excerpts

Tuesday 20th January 2015 Westminster Hall

[Mr Frank Doran]

(Aberdeen North) (Lab): It is a pleasure to operate under your chairmanship, Mr Streeter. We are here to discuss United Kingdom oil and gas, which is in severe difficulties, partly because of a substantial drop in the world oil price. In these debates, it is always important to get the facts right. One key thing about the industry is just how important a part it plays in the UK economy. According to Oil & Gas UK, the industry body, the industry supplies 73% of the UK’s primary energy: oil for transport and gas for heating. The UK balance of payments benefited from oil and gas to the tune of £30 billion last year. The oil and gas supply chain achieved sales of £20 billion outside the UK. The total expenditure in services and infrastructure investment from oil and gas companies in 2013 was £20 billion. Since 1970, the industry has invested £500 billion.

In recent years, the expenditure has been particularly high. In 2014, the industry invested around £14 billion of capital investment in UK oil infrastructure, following on from investment of £11.4 billion in 2012 and £13.5 billion in 2013. Across the industry there is a total committed expenditure—that is, projected future expenditure—on projects in production or under development totalling £44 billion. Figures like these have not been seen since the 1980s. They are massive figures: there is no question about that.

The industry claims to support 450,000 jobs in the UK. These break down as follows: 36,000 employed directly by offshore operators; 200,000 in the supply chain, providing goods and services to the industry; 112,000 jobs in services such as hospitality, taxis, and so on; and 100,000 jobs in the export of goods and services. It is difficult to visit any foreign oil base or complex without hearing a Scottish or English accent. We are operating throughout the world.

Many of these jobs are now under threat because of the collapse of the oil price. Major companies—Shell, Chevron and, last week, BP—have announced redundancies. Some of these have been expected for some time and were part of company restructuring as well as the downturn in the oil price. More announcements are inevitable.

I can find no reliable figures showing the numbers so far made unemployed, but I know from union sources, for example, that roughly 600 people have been made redundant in companies where there are recognition agreements. However, most cuts are likely to be made to the self-employed, who comprise a large number of offshore and onshore employees; they are the easiest and cheapest to remove. At the moment it is estimated that there will be around 2,000 job losses in total. I think that is a fairly realistic projection.

How things will proceed from here on is difficult to judge at the moment. Many jobs lost so far have been lost onshore and it may take time before large numbers of offshore jobs are put at risk. Everyone will be mindful of the need to retain skills for when the upturn arrives, whenever that might be.

In the history of the North sea oil and gas industry there have been at least three serious downturns. The worst and most damaging was the downturn in the mid-1980s, when 20,000 jobs were lost in Scotland, most of them in Aberdeen and the north-east. Some 50,000 jobs were lost in the whole country. The fact that the job losses were higher in the rest of the UK than in Scotland reflects the fact that, although the industry is centred in Aberdeen, the supply chain and the work force is spread throughout the UK.

There is a risk that this year’s downturn could be as serious as the one in the 1980s, but I think it is possible to take steps to mitigate that. In the first place, the industry has changed substantially from the industry we had in the 1980s. For example, it is much more widely spread with fewer of the majors involved. I believe that with the right sort of focused support from Government and the industry, this very difficult time will not develop into the tragedy that we saw in the 1980s. Of course, there is very little we can do about the global price of oil, but we can look at the other issues that have faced the industry for some time now and consider how we can soften the blow and minimise damage.

Exploitable oil and gas are proving harder to find, and discoveries that are made are often in places that are difficult and expensive to exploit, particularly if there are issues around access to infrastructure. Some of these problems will be addressed when the recommendations of the Wood report are fully implemented, but that is likely to be some time away, although there are moves to accelerate the process.

Then there is the skills shortage. Until relatively recently, few companies offered apprenticeships in technical skills. In the 1970s and ‘80s, the industry attracted engineers, welders, boilermakers and others from the collapsing smokestack industries: mining and shipbuilding, and so on. That supply has been exhausted and the work force are ageing. Trainee and apprenticeship programmes have been introduced in recent years, but those take time to make an impact. In the meantime, labour costs have risen enormously and companies have poached skilled staff from each other, driving wages to high levels. With my trade union background, I am the last person to complain about that, but it has a serious impact on costs offshore.

Oil & Gas UK says that contracting prices have doubled since 2010. One executive from a major company told me recently that the cost of scaffolding alone—there are 6,500 workers working on scaffolding in the North sea—has tripled in the last two years. It is obvious that a slice of the money that previously would have been spent on research and development, exploration and appraisal, which are all things to take the industry forward into the future, has been diverted into meeting these wage costs.

[Sir Malcolm Bruce (Gordon) (LD)]

I congratulate the hon. Gentleman on securing this timely debate. He is making some important points. Does he agree that if we—the industry and the Government—get this right, and indeed make the industry more efficient, as and when the recovery happens we will be much more competitive than we have been? The point he is making is that we have been in danger of pricing ourselves out of the business.

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[Mr Doran]

That is the sole point that I planned to make in this speech. [Interruption.] No, the right hon. Gentleman is right to raise the issue. It is important that Government and industry work together to try to tackle the problems that we have all identified.

In addition to labour costs, there are real issues about the way in which equipment is purchased by companies operating in the North sea. In Norway, for example, there is standardisation of equipment. The state is a more engaged regulator and Statoil, the state-owned company, has by far the largest stake in the industry, with a share of around 60% of production. Its purchasing powers are enormous and most companies will buy the standardised equipment developed or ordered by Statoil at much cheaper prices than bespoke equipment. Our largest operator in the UK has only 10% of production. There is no company that can lead standardisation in the way that Statoil can in Norway, so everyone purchases to their own requirements.

One example I heard about recently was the purchase of light switches. That may be an odd place to start, but it is relevant. In Norway, the norm is standardised plain light switches. In the UK, company insignia or another unique requirement is demanded by many operators, usually at double or more of the cost. Scale that up through the requirements of offshore operators, from light switches to drilling rigs, and you have very expensive processes that I think are holding the industry back. Of course, this has an impact on Government, too. Every bespoke item has a higher cost than a standardised one, which reduces profits, which reduces taxes paid.

The sooner the Wood review recommendations are fully implemented, the better. I do not think that that will affect the price of light switches, but I hope it sends a clear message. I know that the industry is developing a strategy at the moment, but it will take time to put that in place. Cutting costs that are incurred at present is a must if any progress is to be made.

Probably the major issue for the industry is the tax system. Every Government since oil was first discovered in the North sea have treated the industry as a cash cow. Tax increases, occasionally unannounced, are the norm. The tax system is complex and expensive. The Government are anxious to protect their income from the industry, but that will become more and more difficult if current problems persist. Profits have to be made for taxes to be paid. I understand that in the last financial year the overall performance of the industry was negative—this year might be even worse.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I congratulate the hon. Gentleman on securing today’s debate, which is on an issue of deep concern to all of us from the north-east of Scotland, where so many jobs are dependent on the oil and gas sector. I want to add to his point about taxation. Does he agree that we need those tax changes now? I have no doubt that we will see more announcements of job losses in the coming weeks. We need changes to the fiscal regime now, not a couple of months down the line.

[Mr Doran]

I think there is a case for what the hon. Lady says, but I disagree with her. We will have a Budget in two months’ time, and announcements will be made then. In the meantime, we know that the Treasury is working on the position. As she will see from the rest of my contribution, I am more concerned about how the tax cuts are made, rather than that tax cuts are made. I want focused and targeted tax cuts, not just a chop off the supplementary charge that was introduced in 2011.

It is important to look at the responses that should be made to the current situation. In the 1980s, there was virtually no Government response. There may have been one behind the scenes, but it was not visible to those of us who were involved at that time and were concerned about what was happening in the industry. We have the opportunity to mitigate substantially the impact of the collapse in the oil price. Members would expect me to say this, but I was pleased when Councillor Jenny Laing, the leader of Aberdeen city council, announced in December her plan to host a summit in Aberdeen to consider the challenges facing the industry. That summit will be held on 2 February. It is supported by Oil & Gas UK and will be attended by the UK and Scottish Governments, as well as by industry experts. That announcement caused the various other bodies with an interest to consider their reaction. Since then, Government Ministers and MPs have been queuing up to visit Aberdeen. My hon. Friend the Member for Glasgow East (Margaret Curran) has made her trip there. The Secretary of State for Energy and Climate Change was there last week. The issue is being taken much more seriously than it was in the 1980s.

To go back to the question from the hon. Member for Banff and Buchan (Dr Whiteford), tax reliefs are back on the table. The Chancellor has made it clear that they are being considered, which suits the oil industry, because it has been asking for them. Since the collapse in the oil price, industry representatives and others have insisted that there needs to be a tax cut. Oil companies are still angry about the increase in the supplementary charge made in the 2011 Budget, and they would like to see it removed completely. The Chancellor has met them a small part of the way by introducing tax reliefs for brownfield sites and for high-temperature and high-pressure fields, and after his much hailed tax review last year the mouse of a 2% reduction in supplementary charge was announced.

Regardless of the 2011 increases, both field reliefs are important and have resulted in extra activity from the industry, even in these difficult times. The lesson from that is that it is in the interest of the industry and the taxpayer that any tax reliefs that are given should be focused and not random. There are many areas where more targeted and focused tax reliefs would create a win-win situation for all sides. For example, an investment allowance would encourage more activity and create more income and thus more tax revenues. Investment in research and development has slowed significantly in the industry, yet that is crucial in the search to find and produce oil and gas, whether by enhanced recovery techniques, better infrastructure to improve recovery or whatever other area that could improve the industry. The Government should also consider targeted reliefs to protect jobs and skills. Health and safety is a major issue for me. For many years, I have been heavily involved in that issue offshore. It must remain a priority. The Government should consider a specific targeted relief to support the continuing maintenance of infrastructure and the improvement of health and safety systems and equipment.

The consequences of the 1980s downturn were not only job losses. All projects that were in progress were stopped. The platforms that were producing oil and gas carried on producing, but many costs were cut to the bone. In particular, areas vital to safety, such as fire safety equipment, deluge systems and others, received little or no maintenance. The consequences of that approach were not immediately apparent, but on the night of 6 July 1988 they were there for the whole world to see. The Piper Alpha platform exploded with 167 deaths. It is still the most serious loss of life from any incident anywhere in the offshore oil and gas industry. If there is slippage in maintenance through the downturn, the dangers for offshore workers will increase significantly.

[Mr Iain McKenzie (Inverclyde) (Lab)]

I congratulate my hon. Friend on securing this important debate. On safety, is he as alarmed as I was to hear from a constituent who runs a business in my area and who came to my surgery on Friday—he offers safety courses to oil firms operating in the North sea—that he has seen a significant reduction in the number of people that firms are placing on those courses and on refresher courses for safety?

[Mr Doran]

I think my hon. Friend is talking about the sort of work on offshore that I mentioned at the beginning of my speech. Those who are self-employed—probably with their own companies where they are often the sole employee—are the first to be removed. I am concerned to hear that people operating in safety are part of that process, and we should all be concerned by that.

For offshore oil workers, working on offshore platforms is dangerous, but the dangers do not stop on the platform. The only realistic form of transport offshore, because of the distances involved, the difficulty of access to platforms and the hostile weather conditions, is by helicopter. In the UK sector of the North sea, there have been 13 helicopter-related incidents, in which 118 people have died. The most recent one, just 17 months ago, saw four deaths. For most of the history of the North sea oil and gas industry, helicopter transport companies have been treated in exactly the same way as other contractors and subjected to often severe cuts in contract costs. That might suit the oil industry accountants, but it makes no sense to companies that have to keep helicopters flying safely. I hope that the oil industry is taking a much more cautious and sensible approach this time round, and that the Government and the regulators will strictly monitor how health and safety standards are maintained on both sides of the industry.

There are difficult times ahead, but they need not be as damaging as the downturn in the 1980s. The industry has allowed costs to spiral out of control and needs to address the problems it has created. Everyone—the industry and the UK and Scottish Governments—should be focused on maintaining employment, jobs and skills. The economic climate will change, and it is important that the oil and gas industry is capable of getting into gear as quickly and safely as possible when that happens. A key player will be the Chancellor, and I urge him to consider seriously further tax reliefs, which, in the interests of the taxpayer and the industry, should be focused on maintaining employment, training in skills, research and development and investment that will ensure the future success of the industry.

[Mr Gary Streeter (in the Chair)]

Colleagues, the winding-up speeches will begin at 3.40 pm. Six colleagues are seeking to catch my eye, and we have 50 minutes. By my calculations, about eight and a half minutes each should do the trick.

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[Mr Doran]

The Minister is apologising for the absence of his right hon. Friend; I should have noted the absence of my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who is with my right hon. Friend the Member for East Renfrewshire (Mr Murphy) in Aberdeen, but would otherwise have been here.

[David Mundell]

I echo the comments of all contributors, who pointed out the importance and timeliness of the debate, given the challenges faced by companies operating in the North sea and all those who work in the sector in the United Kingdom; that was emphasised by my hon. Friend the Member for Waveney (Peter Aldous) and the hon. Member for North Tyneside (Mrs Glindon).

The Government are committed to the long-term future of the sector in the North sea. We recognise that the sustained fall in oil prices presents real challenges for the sector. Announcements of job losses, such as those we have heard about this afternoon, are a real concern and particularly affect Aberdeen and the north-east. The effects will be felt not only in the north-east of Scotland and by big international companies, but by the hundreds of small and medium-sized businesses that are an integral part of the supply chain. Those businesses work across the UK to service the sector, and they play a role in the whole of the UK economy.

We are committed—I hope that the hon. Member for Glasgow North West (John Robertson) accepts this—to working in partnership with others. I welcome the tone of the contribution of the shadow Scottish Secretary, the hon. Member for Glasgow East (Margaret Curran). We are committed to working with the Scottish Government, local authorities and the industry to provide all we can for those affected by job losses. I will pursue the issue that the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) raised about the Department for Work and Pensions. My colleague, the Secretary of State for Scotland, has committed to participate in the First Minister’s jobs taskforce, which was announced last week, and the Aberdeen city council’s oil and gas summit in February.

Piper Alpha Disaster

Frank Doran Excerpts

Thursday 11th July 2013 Commons Chamber

[Mr Frank Doran (Aberdeen North) (Lab)]

I beg to move,

That this House has considered the 25th anniversary of the Piper Alpha disaster.

On the night of 6 July 1988, an incident occurred on the Piper Alpha platform that led to the deaths of 167 men. It was the worst tragedy in the offshore oil and gas industry anywhere in the world. It was the direct consequence of negligence, bad management at every level, poor maintenance, extremely weak regulation and failure to have proper work systems in place or a proper safety strategy for major incidents. The regulation management and safety systems failed at every level. Those 167 men died, survivors suffered the most traumatic experience that any of us could imagine, many of them being seriously injured, and of course the families and relatives of those involved have been irrevocably damaged.

I am very pleased and proud to have the opportunity to open this debate to commemorate the 25th anniversary of the Piper Alpha tragedy and to remember those who died and their families, and, of course, the rescue services involved and those who supported the survivors and families after the incident. As well as the Piper Alpha victims, it is important to remember all those who have died during the lifetime of the UK oil and gas industry, whether at sea, on land, on a platform, or on transport.

Last Saturday, along with several hundred others, I attended a memorial service in the Piper Alpha memorial rose garden in Aberdeen. I met many of the survivors and the families of victims. I was delighted to see the Secretary of State for Scotland and the shadow Secretary of State, my hon. Friend the Member for Glasgow East (Margaret Curran), at that event representing the Government and the Opposition. Four hundred of those who attended were survivors or families of victims. Most of the individuals and families have moved on, but the mood on Saturday was as sombre as the mood in 1988. It was quite clear that for most of the people involved the memory of the horror of that day in 1988 remains just as vivid and distressing as it was then. The pain does not go away. Many things stand out about that service, but the most poignant and difficult was the roll call of victims—as graphic and emotional a way of underlining the sheer scale of the tragedy as any.

The 25th anniversary of the tragedy has had a good deal of media coverage, and it does not serve any real purpose to go through again all the detail of what happened on that night. However, I would like to focus on just a couple of issues relevant to the present and possibly also to the future.

As colleagues are well aware, following the disaster Lord Cullen was appointed to lead an inquiry into the disaster. He made 106 recommendations. The Cullen report was welcomed on all sides. It has changed the safety culture in the North sea and throughout the global oil and gas industry. Aside from the practical workplace and management issues, the most important recommendation was on the question of who should be the regulator. From the beginning of the North sea industry, the Piper and all other North sea installations were regulated by the then Department of Energy. The Department had two fundamental problems. The first was the conflict between its responsibility to maximise oil production and its duty as a regulator. More importantly, the Cullen report made the Department’s inadequacies abundantly clear. Cullen recommended that responsibility for offshore safety should be handed over to the Health and Safety Executive, where it resides today.

In the main, the HSE, through its offshore division, has been a good regulator, and there has been substantial improvement in the industry’s safety record. Recently, however, concerns were raised when the HSE announced that the offshore division was being merged into a new energy division. The announcement was made without any apparent consultation with the industry, unions or Members of Parliament. That raised concern on all sides, particularly as to whether the decision was driven by cuts in funding. However, we eventually received from the chair the rationale for the move. Ministers also came in with a promise of some extra inspectors.

The most recent information I have on staffing in the offshore division is that it has 109 full-time equivalent staff—14 more than 2010, so that is significant progress. However, across the HSE the total number of inspectors has fallen by 75 from 1,316 to 1,241. In future, with a merged division, it might be much more difficult for us to identify the precise numbers of dedicated offshore inspectors. Broadly speaking, there has been a steady improvement in the safety regime and in accident rates, but the industry remains dangerous compared with other UK industries. In 2011-12 the fatality rate was 6.9 per 100,000 workers compared with 0.6 for all UK workers. The major injury and fatality rate per 100,000 workers for offshore oil and gas is 130.8, compared with 90.4 for all UK workers. However, at a major event last week, a representative of one of the major oil companies cited a statistic suggesting that, on the basis of last year’s figures, the industry was the third safest, behind banking and education, but I have not seen that information.

Beyond safety, the other major issue facing the industry is the continuing problem of gas escapes on offshore platforms. We should remember that a gas leak led to the Piper Alpha tragedy. In 2011-12, there were 94 hydrocarbon releases, 44 of which were classified as significant. Nine of those were identified as a major incident, which is a leak that, if ignited, would cause an explosion capable of causing multiple casualties. Those nine cases were therefore very serious incidents. Last year, the Elgin-Franklin complex, which is operated by Total, was closed down because of a major gas leak. It was restarted, but then shut down again, and it was not fully operational until March this year. Gas leak statistics, like those for injury rates, are showing a steady improvement, but the volume of escapes and the scale of the Elgin-Franklin problem show that there is still a lot of work to do.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that one life lost is one life too many, and that that is why all the authorities and companies must work together to achieve maximum safety and security for all those working in such dangerous places to ensure that no life is lost in the future?

[Mr Doran]

I entirely agree with my hon. Friend. A successful process is in operation, but there is no room for complacency.

[Ann McKechin (Glasgow North) (Lab)]

I congratulate my hon. Friend on securing this valuable debate. Does he share my concern about reports that the number of planned inspections throughout the HSE’s entire operation in Scotland is likely to be significantly reduced this year? Given that last year, unfortunately, the number of casualties in Scotland increased overall, there is utterly no room for complacency on health and safety at work.

[Mr Doran]

I will come to that point later in my speech, as I am dealing with the offshore oil and gas industry at the moment, but I recognise the point that my hon. Friend makes.

The HSE has been increasingly proactive. It has embarked on several projects, one of the most important of which is the key programme project, which involves an assessment of the integrity of offshore installations. The KP3 report, which was published a few years ago, followed an assessment of 100 platforms. It told us that, in a number of cases, the industry was slipping back on areas such as the maintenance of platforms. In the run-up to the 20th anniversary of the Piper Alpha disaster, the then Secretary of State for Work and Pensions ordered a review of KP3, which showed that the industry had responded to its findings and that improvements were being made.

We have now reached the KP4 stage, and the interim report identifies several issues relating to ageing plant. Oil and Gas UK, the industry body, has established working groups to produce guidance and promote improvements. I understand that, as at the end of March, HSE had undertaken KP4 inspections of more than 75% of operators. The Department of Energy and Climate Change has also set up a senior oversight group, which includes the HSE, to supervise the implementation of the review’s recommendations. Such an integrated approach is necessary and appropriate.

While the industry is making progress on safety, the KP3 report shows that the regulator needs to be ever vigilant. A good job has been done, but several points still need to be considered. The trade union side recognises that progress has been made in the industry, but its officials are aware that there are several installations on which workers are afraid to bring up safety issues with their employers. Some employers tell union officials that they are put under pressure by the staff of the operator—the client—to cut corners.

The regulator also identifies problems. At the Piper 25 conference, Steve Walker, the retiring head of the offshore safety division, made several points, including about the control of work. The inadequacy—and failure—of the permit-to-work system led directly to the Piper Alpha disaster, and it is still a key weakness for the industry. Poor isolation and inadequate adherence to permit systems remain a common thread during incident investigation.

Another key Cullen recommendation is not being fully adhered to by some companies. The regulator is regularly taking enforcement action for maintenance and testing temporary safe refuges. A Health and Safety Executive inspection in 2011 found that there was still variation in the implementation of safety representative legislation. In other words, it is not being applied properly.

That last point is important, because one of the major steps that has been taken by the industry, with the full support of the HSE, is to recognise that safety offshore can only improve with the full engagement of the work force. That process is being led by Step Change in Safety.

[Helen Goodman (Bishop Auckland) (Lab)]

I congratulate my hon. Friend on securing this very important debate. I was on the energy desk at the Treasury when the Piper Alpha accident happened and it was truly terrible. One of the things I remember is that there were communication difficulties, because at that time quite a lot of foreign workers working offshore on British and American-managed platforms simply did not understand what was going on. Does my hon. Friend know whether that situation has improved in the past 25 years?

[Mr Doran]

That certainly was not an issue for Lord Cullen. I think that the communication difficulty was the failure to have a proper management structure in place with a process to deal with such an incident. The only message that was put out was a mayday message. From recollection, I think that two foreigners—a Frenchman and, I think, a Spaniard—were killed in the Piper Alpha incident, so there was no issue there.

Under Step Change in Safety, materials have been produced and conferences held to encourage employers to accept that top-down management does not work. Full engagement and involvement of the work force at every stage of the work process is crucial. There is no doubt that there is a great deal of traction in the principles being set out by Step Change in Safety and most operations offshore are embracing the changes, some more enthusiastically than others.

At the Piper 25 conference, I attended a session where employees of Maersk Oil, which is fairly new to the North sea, spoke about its approach. It has gone for full engagement and has introduced a system that involves new rules about handling safety issues, encouraging workers to come forward with ideas to improve safety and to report safety concerns without fear of sanction and so on. Maersk Oil has produced statistics which show that since the inception of the new ideas, accidents have declined significantly and profits have increased. They present a win-win scenario—safer workplace, increased profit.

Others, while accepting the basic principle and making some progress, have been less enthusiastic. Old habits die hard and trade union officials and regulators tell me that as soon as they step off the helicopter and on to an offshore platform they can read the mood of the work force and what sort of approach the employer is taking to work-force engagement.

Despite that, there is no doubt that serious progress is being made. I have been involved with the oil and gas industry in one way or another for nearly 40 years. For most of that time, management was top down, harsh and very anti union, with a few exceptions on the contracting side. I would be a fantasist to suggest that the industry fully embraces trade unions. However, significant progress is being made. The industry recognises that the unions can make a valuable contribution to the workplace and safety. Trade unions are represented on the board of the industry training body OPITO—the Offshore Petroleum Industry Training Organisation—and one of the representatives chaired it for a number of years. Two full-time union officers were appointed to the separate taskforces set up to look into the Super Puma helicopter disaster a few years ago and the consequences of the Macondo incident in the gulf of Mexico. At this year’s industry safety awards the keynote speaker was the general secretary of the Scottish Trades Union Congress.

One of the major issues for the industry this year has been the threat from the European Union to take control of offshore safety. A number of very senior figures in the industry have assured me that the turning point in a meeting with the Commission was the presentation made by John Taylor, a full-time official of Unite who would put to shame the Prime Minister’s cartoon image of Unite members—I guarantee it—and who is totally dedicated to the interests of his members.

I raise these issues because my biggest fear about the integrity of the steadily improving safety environment in the offshore industry is that the process is running in direct contradiction to Government policy. If we leave the union relationship aside, the industry is putting huge effort into its worker engagement and involvement strategy. It recognises the value of the worker on the shop floor, seeing him or her as a vital part of the business, contributing to the safety of the enterprise and—if we follow the Maersk line—its profitability.

Meanwhile, at the national level, we have various reports, including the Beecroft report, whose objective seems to be to take us back to Victorian times, chipping away at rights at work and job security, and changes to health and safety legislation. At a time when the oil and gas industry is still operating in one of the most dangerous work environments in the country, placing responsibility for safety on its work force and valuing each individual as a key part of the enterprise, I do not want to see these gains whittled away by Government action. Out of the Piper Alpha tragedy, there is clear evidence of serious progress on safety brought about by the close working together of industry workers and trade unions, but the North sea is a dangerous place and we cannot be complacent. The memory of the fate of the workers on that night in July 1988 should spur us on to achieve and maintain a safe working environment for all workers.

[Several hon. Members]

rose—

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[Mr Doran]

First, I thank all colleagues who have contributed to the debate. It is an important debate not only, as has been said, for those of us in the north-east who are in direct contact with the industry, but for those whose constituents work in the industry. Those workers come from all over the country and from many other countries. As everyone has recognised, it is a significant industry that makes a huge contribution to the Exchequer.

Two thoughts occur to me. First, it is always helpful to have a debate about the reality of health and safety and the consequences for those who work in any industry of poor safety systems, a lack of safety systems, or poor management of safety systems. We have been talking about the awful reality in, yes, an admittedly extreme case. Away from the cauldron of party and ideological differences, we have made the important point that health and safety is fundamental, as Bob Keiller said and as many others involved in the North sea are recognising, as are, I hope, people throughout the country.

Secondly, my right hon. Friend the Member for Stirling (Mrs McGuire) reminded me of Gavin Cleland, whose son tragically died in the incident. I first met Gavin in the Shadow Cabinet Room after it happened. He was part of a group I had brought down to London because they wanted to meet the various politicians involved, including the then Secretary of State for Energy. One of Gavin’s ambitions was to campaign for a prosecution, because that is one of the key things that is missing from the case. Despite all the evidence in the Cullen report and everywhere else, there was no prosecution. I am not calling for a prosecution at this stage, but at a time when many historical cases are being looked at in retrospect, such as Hillsborough and events in Northern Ireland, re-examining the Piper Alpha case is worth considering. What holds me back, however, is the fact that that might be difficult for a lot of those who were involved, especially the survivors and the families—

Scotland and the Union

Frank Doran Excerpts

Thursday 29th November 2012 Commons Chamber

[Mr Frank Doran (Aberdeen North) (Lab)]

Our debates on Scottish issues are often tribal, so I was not surprised by the comments of the hon. Member for Perth and North Perthshire (Pete Wishart) or the degree of fundamentalism he showed in his speech, although I was surprised at his arrogance and his assumption that after an independence referendum the Scottish people would enter some sort of nirvana. That is not quite consistent with our history at any time I can recall.

The way the hon. Gentleman approached the whole issue underlines one of the major problems with this debate: the lack of fact. If we look ahead at what sort of country an independent Scotland might be—and we need to, because that is one of the things that anyone taking the referendum seriously would want to know—we can see what the various sides of the argument are presenting us with. What the Scottish Government are presenting us with at the moment is: “We’ll keep the monarch”, “We’ll keep the pound sterling”—perhaps—“and the Bank of England as our central bank”, and “We’ll remain part of the EU,” although that is still an open question. I was quite taken by what Mr Barroso—in effect, the chief executive of the European Union, who should know a thing or two about these things—said about an independent Scotland having to reapply. Mr Salmond leapt to his feet and said, “No we won’t. I know better.” That is basically the way all this has proceeded.

We are not being presented with facts; as my hon. Friend the Member for Glasgow Central (Anas Sarwar) said, they are assertions. I would be a wee bit kinder than that: they might be aspirations, but they are more likely the product of politicians who want to remove difficult issues from the agenda before the referendum. We would see a very different Scotland afterwards if it were outside the EU, forced to create its own central bank and introduce a new currency. I mention the currency because the only other similar experience that I am aware of is when the Czech Republic and Slovakia split. I think it was the Czech Prime Minister who said that they had agreed to keep the same currency, but within a matter of weeks that decision was changed and a new currency had to be created. I cannot see a Scotland in the same situation being any different, even if I believed that that was the intention. However, what we know so far—about the monarch, the pound sterling, the Bank of England as the reserve bank and being part of the EU—does not sound very much like independence to me.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Mr Doran]

The hon. Gentleman has intervened many times and thereby had more than 10 minutes already. I would rather make my own contribution to the debate.

It is important that we have facts. One area where that is most important is the economy of an independent Scotland. It is quite clear from all their forecasts that the current Scottish Government would rely heavily on North sea oil revenues. My hon. Friend the Member for Glasgow North East (Mr Bain) has already made the point from the Front Bench, but I want to give a bit more detail, because it is extremely important that accurate facts are readily available. The first point to consider about the oil and gas industry is just how volatile these commodities are. Prices can rise or fall very quickly. I am old enough to remember in the 1980s when the oil price went from $32 a barrel to $8 a barrel virtually overnight. We lost more than 50,000 jobs in the north-east of Scotland when that happened. An independent country would have found it difficult to survive that event. Unless we are talking about a prosperous middle eastern country with no resources other than oil, it is very dangerous to rely on oil and gas for the economy.

We have to look at the research. The most accurate and trusted UK commentator on the oil and gas industry is Professor Alec Kemp of Aberdeen university. For decades, he and his colleague Linda Stephen have studied the UK oil and gas industry, and their regular reports are respected and accepted throughout the industry. The most recent report looks at the prospects for activity on the UK continental shelf following the recent oil tax changes. The report is very detailed and considers the prospects for oil and gas production in the next 30 years in the UK sector. In the last two years production has declined, partly because of the tax changes in the 2010 Budget, but also as a result of the large increase in unplanned shutdowns. That has had an almost immediate effect on the amount of revenue coming into the Exchequer. Also, the North sea infrastructure is very old, and there has been a large number of unplanned shutdowns.

The report details scenarios in which the oil price is $70 a barrel, and the gas price 40p a therm. The potential number of fields in production in 2042— 30 years from now—will fall from 300 to about 60. In that same scenario, oil and gas equivalent production would fall from today’s level of about 1.8 million to 584,000 barrels a day. That is at a price of $70 dollars a barrel and 40p a therm. At a price of $90 dollars and 55p, production would fall from 1.8 million barrels of oil equivalent a day to 520,000. Most of the money and energy would go into decommissioning the North sea platforms that were being rendered redundant, and I do not think it appropriate for a new country to build its economy around the destruction of its most productive industry. We need to see many more such facts on the table before anyone can make a serious decision about what is best for our country.

Oral Answers to Questions

Frank Doran Excerpts

Wednesday 9th November 2011 Commons Chamber

[Mr Speaker]

Order. I appeal to the House to come to order and listen to Mr Frank Doran.

[Mr Frank Doran (Aberdeen North) (Lab)]

8. What recent discussions he has had on the deployment of carbon capture and storage technology in Scotland.

[The Secretary of State for Scotland (Michael Moore)]

My most recent meeting with the Secretary of State for Energy and Climate Change to discuss this issue was on 10 October. Although it was not possible to reach a deal on Longannet, the Government remain firmly committed to carbon capture and storage and I welcome the confirmation given by the Treasury that the £1 billion of funding will be made available for future CCS projects.

[Mr Doran]

The Government in the 1980s refused to invest in wind power and threw away our world lead in renewables. Are this Government making the same mistake by refusing to invest in the most advanced industrial-scale carbon capture and storage project in the world at Longannet?

[Michael Moore]

I do not agree with the hon. Gentleman on that, but I do agree that we are determined to see Britain take a leading role in this important technology. That is why the £1 billion of investment is still available and why Peterhead and other parts of the UK will be able to bid for it.

Scotland Bill

Frank Doran Excerpts

Tuesday 15th March 2011 Commons Chamber

[Mr MacNeil]

I am sure that the hon. Gentleman knows that there is more than one way to skin a cat. I am also sure that he would like to see a busier port in Grangemouth and a Government able to incentivise greater activity in Grangemouth. I therefore expect him to support my new clauses.

These measures will mean that the Scottish Parliament and Government can get on with the job of making Scotland better and allow the rest of the UK to focus on what it considers to be important. This is a litmus test that will show Scotland which of its MPs stand for Scotland and which of them focus on party advantage. I intend to press new clauses 3 and 12 to Divisions.

[Mr Frank Doran (Aberdeen North) (Lab)]

I shall speak mainly on new clause 3. I am rather bemused by the contribution that we have just heard on new clause 12. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) has presented a dangerous argument, and I am not sure whether I totally understand it.

I have always understood that the current boundary was agreed by international negotiation in 1707. The Scottish border used to go down as far as Newcastle and in some respects almost as far as Bolton, I think, but things have changed. I know that the SNP has a hang-up about the oil industry and the fact that what it sees as its rightful share has been stolen from it. However, there are much more serious issues to be discussed today.

The hon. Gentleman appropriately raised the issue of the coastguard. I know that his coastguard station in Stornoway is one of the stations under threat. It is right for him to fight for it, but it is not right to extend the argument to where nationalists tend to end up—that the only way to solve a problem is to move it to Scotland. There is a serious issue around the reorganisation of the coastguard. He knows as well as I do that in Scotland there will be just two stations—the maritime operating centre, which it is proposed will be in Aberdeen in my constituency, and either Shetland or Stornoway.

My understanding is that Shetland did not figure in the original Government proposal, but a certain amount of influence within Government has seen Shetland on the list. I hope the hon. Gentleman wins his battle to save the Stornoway station. That battle is entirely appropriate. Apart from anything else, the fact that in the Western Isles there is a preponderance of Gaelic speaking and Gaelic place names means that, if there is any risk in that area, it is essential that the geography is properly understood. It is important to make that point.

[Mr MacNeil]

Given what the hon. Gentleman has said, surely he understands my argument that it would be better for control to lie in the Scottish Parliament and with the Scottish Government. Since 1999, the Scottish Government have been either SNP or Labour-led. My new clause would remove the Maritime and Coastguard Agency from the clutches of the Conservatives, whose tendency seems to be to cut. Would the hon. Gentleman prefer to leave the agency with the Conservatives?

[Mr Doran]

My argument is that a problem is not solved just by moving it to Scotland. There are fundamental problems with the coastguard—for example, most of the equipment that it uses is 40 years out of date. There is new technology available which is necessary for proper safety on our seas. The money needs to be invested. Given the present financial situation, one of the few ways that money can be invested, sadly, involves the closure of a number of coastguards. I have been told by workers at my own coastguard that with the new technology, Aberdeen could cover the whole of Scotland, but the point that I made earlier about the Western Isles is recognised. The issue will not be resolved simply by asking for it to be devolved to the Scottish Parliament.

I am by no means in favour of everything proposed in the consultation paper published by the Government, but what is needed is a properly co-ordinated national system, which we do not have at present. We have groups or pairs of coastguard stations which can communicate with one another, but in the event of a major disaster or a major incident, it is difficult to see how we could get the full benefit of a national system and the investment that we need to make by separating the Scottish service from the rest of the UK and allowing that to operate on its own.

I was heavily involved in the aftermath of the Piper Alpha disaster, when the coastguard played a pivotal role—I do not know which other stations were involved. The service then was very similar to what it is now, and there was not the capacity to involve the whole of the coastguard operation throughout the UK. Given what we have seen in other countries in recent years, it is possible that that facility may be necessary in the future. As I have said, the way to resolve a major infrastructure problem is not to cut it off and devolve it to Scotland, which is a blinded and fundamentalist view of how we should function.

We need a co-ordinated system throughout the UK. One of the key weaknesses of breaking up the system is what the Scottish Government would or could do with it. Like many people, I am suspicious about the fact that the SNP Government in Edinburgh have made no attempt to give us a proper Budget for the next three years, as we have seen the current Government and the previous Labour Government produce for the UK. Of course, there is an election on the way, so that will be the main consideration.

If the coastguard system is to be upgraded to modern standards, where will the necessary money come from? If the hon. Gentleman was successful with his new clause, there would clearly have to be some transfer of money from the UK to pay for the existing system, but not for upgrading it. The system that I hope will be based in my constituency at Aberdeen, once the consultation exercise is over and the investment has been made, will serve not just Scottish waters, but almost half the UK—it will be capable of serving the whole UK. Would that be on offer in a system run under the narrow nationalist view that the hon. Gentleman is taking? I do not know.

I need to know, and the Committee needs to know, where the money will come from to upgrade and modernise the system. It is not clear that that money exists in the Scottish Budget. If the SNP Government cannot afford to build any new schools and are not able to fund local services properly, how will they modernise the coastguard system, which is essential for the safety of our maritime fleet, our sailors and our fishing industry? The hon. Gentleman is well aware of the dangers inherent in that industry. There are more industrial accidents and deaths in the fishing industry than in virtually all the rest of industry in Britain put together. The most dangerous industry in Britain depends on the coastguard, and many operators in the fishing industry are based in his constituency.

If the new clause is part of a campaign to save the hon. Gentleman’s own coastguard station, fine. I can accept it on those terms, but if it is a serious attempt to change the system, it must be rejected.

[David Mundell]

This is a debate on an important issue, and in many respects I share the sentiments expressed by the hon. Member for Aberdeen North (Mr Doran). If the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) is raising the issue to ensure that it is debated and his concerns are heard, then I accept his right to do so. However, if he is seriously suggesting that the coastguard service should be devolved, then obviously the Government cannot accept his proposal. The point to be made is that this matter was not brought before the Calman commission; nor was it brought before the Scottish Parliament’s Bill Committee or the Select Committee on Scottish Affairs as something that he had considered, along with the other changes that he proposed. Indeed, I am not even aware of the matter being raised as part of the so-called national conversation—something that you will have heard about in these exchanges, Ms Primarolo—which was promoted by the SNP Government in Edinburgh with the primary purpose, it would appear, of furthering the cause of independence at public expense.

Scotland Bill

Frank Doran Excerpts

Monday 7th March 2011 Commons Chamber

[David Mundell]

I thank my hon. Friend for his valuable insight based on his personal experience.

In addition, if the intention of new clause 7 is to avoid the poll at a scheduled Scottish Parliament election from falling on or close to the date of the poll for an early parliamentary general election held under clause 2 of the Fixed-term Parliaments Bill, it does not work.

[Mr Frank Doran (Aberdeen North) (Lab)]

I appreciate that the clause will not apply to the next Scottish election, but there are difficulties in Aberdeen where we have the forthcoming vote on AV and a vote on the Scottish parliamentary elections, which require two ballot papers. Sadly, one of the Liberal Democrat councillors died recently, as a result of which a by-election is also likely to be held on 5 May. The electorate in Aberdeen are thus looking at four separate polling formulae under different systems. The Minister used the word “streamline” earlier, so will he help me by explaining how we are going to streamline the elections in those sorts of circumstances?

[David Mundell]

The arrangements for the conduct of the Scottish Parliament election and the AV referendum allow for a council by-election to be held on the same day. As I understand it, that by-election will take place on the basis of one form of the alternative vote system.

[Mr Doran]

But there is a worry that we should use separate arrangements when there are that number of elections all taking place on different bases on the same day.

[David Mundell]

On the specific case that the hon. Gentleman mentions, representations can be made to the returning officer, because the polls are not required to take place on the same day. The by-election poll does not have to take place on 5 May; it is a decision for the returning officer. That by-election poll should also take place in a separate polling station, although possibly within the same building.

[Mr Doran]

As I understand the current law on local government by-elections, the election must be held within three months of the death or resignation of the councillor—except when there is also a UK parliamentary or Scottish parliamentary election. In this particular case, except at extraordinary expense, the returning officer does not have much option.

[David Mundell]

I think the returning officer has some option, but the hon. Gentleman raises an important and relevant point about the multiple electoral systems operated in Scotland. I had just mentioned that Scottish council by-elections, which are another example of polls that could be held on the same day as the AV referendum, take place under a form of the alternative vote rather than the single transferable vote.

Scotland Bill

Frank Doran Excerpts

Thursday 27th January 2011 Commons Chamber

[Michael Moore]

I do not know whether the hon. Gentleman is asking what the costs of running the system will be, but if he is, the draft regulatory impact assessment—I do not know whether he has had a chance to look at it yet—sets out our provisional estimates of the marginal costs of creating this functionality in the system. They are £45 million, with annually recurring costs of around £4 million. However, I should say to him—I am grateful for the chance to emphasise this—that a lot of that will depend on the detail that the Scottish Government and other stakeholders wish to see on documentation such as P60s. That will influence where those costs fall.

[Mr Frank Doran (Aberdeen North) (Lab)]

Following the point that my hon. Friend the Member for Central Ayrshire (Mr Donohoe) made, I can see that there will be formulae for different categories of employees. As a Member of Parliament who is based here in the House of Commons and whose main home is in London, I want to be taxed in Scotland, but will the Bill allow that?

[Michael Moore]

Unfortunately for the hon. Gentleman, he will have to pay the Scottish rate of income tax. Parliamentarians are obliged to pay it regardless of where their main home might be.

As I was saying, the new powers will give Scottish Ministers and the Scottish Parliament a much more significant stake in the performance of the Scottish economy. The level of the Scottish rate will be Scotland’s to decide, and those who set the rates will answer directly to those affected by them. Power will rest with the Scottish people. In addition to income tax, the Scotland Bill will devolve to the Scottish Parliament responsibility for stamp duty land tax and landfill tax. That will complement its policy responsibilities for housing, planning and the environment. The Bill will also allow the Scottish Parliament to propose new devolved taxes, to sit alongside the other powers. However, the fiscal powers are not limited just to tax; they extend to borrowing powers, too. The Bill will allow Scottish Ministers to borrow up to £500 million for current spending when tax receipts fall short of those forecast.

Oral Answers to Questions

Frank Doran Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Speaker]

Order. There is still far too much noise in the Chamber. I want to hear Mr Frank Doran.

[Mr Frank Doran (Aberdeen North) (Lab)]

Thank you very much, Mr Speaker. The Secretary of State will be aware that—

[Mr Speaker]

First, we must take Question 12.

[Mr Frank Doran (Aberdeen North) (Lab)]

12. When he last had discussions with representatives of the oil and gas industries on the future of that industry in Aberdeen.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

Both my right hon. Friend the Secretary of State and I meet frequently representatives of the oil and gas industry. The UK Government recognise the ongoing needs of the industry and its commitment to the future of the UK continental shelf.

[Mr Doran]

I am sorry for that, Mr Speaker, but it is what happens when we do not expect to be called.

The Secretary of State will be well aware that the oil and gas industry is a global one and that its European headquarters is in my constituency. He will also be aware of the serious problem of skills shortages, and of the fact that the industry depends on the skilled people it can bring in from other countries and on exporting our knowledge. What is he doing to assist with the removal of the cap, which is seriously damaging the oil and gas industry and other industries in this country?

[David Mundell]

Oil & Gas UK has submitted replies to both consultations run by the Home Office and the Migration Advisory Committee. The consultation responses are now being considered and early outcomes are expected before the end of December. Lin Homer, the UK Border Agency chief executive, met representatives of the oil and gas sector on 9 September.