Chamber and committees

I have discussed the content and direction of the review with Andy Samuel, Chief Executive of the Oil and Gas Authority, and have offered Scottish Government support to its work. The Scottish Government is using all the levers under its control to support the oil and gas sector during these challenging times. The Energy Jobs Taskforce was launched by the First Minister to deliver a co-ordinated response to the issues being faced by the industry, with partners working across the sector both to maintain jobs and to mitigate the potential impact of any losses.

The Scottish Government is committed to working with the UK Government to address the challenges that the oil and gas industry currently faces, and we will fully engage with the Oil and Gas Authority review. However, the key levers that can support the sector in the short-term are reserved to the UK Government via the fiscal regime. We have called on the UK Government repeatedly to commit to urgent fiscal changes to support investment, encourage exploration and ensure that the North Sea is a competitive investment location.

Damage to investor confidence in the UK sector has been caused by repeated tax increases under successive Westminster regimes and in particular through the supplementary charge introduced in 2002 and increased again in 2005 by the Labour government and then again by the Conservative/Liberal Democrat government in 2011.

The confirmed members of the taskforce include senior representatives from:

Scottish Enterprise (also representing Scottish Development International and Highlands and Islands Enterprise)

Scottish Government

Skills Development Scotland (also representing PACE)

Scottish Funding Council

Aberdeen City Council

Aberdeenshire Council

Schlumberger

STUC

Oil and Gas UK

BP

Taqa

Aker

Wood Group

AMEC

Petrofac

ACE Winches

Global Energy

Spex Offshore

Scottish Engineering

Oil and Gas Authority

DECC

Aberdeen Chamber of Commerce

OPITO

I have had discussions on health and safety with industry and workforce representatives in many of the meetings I’ve had with them, particularly during the 60 days’ worth of visits I have made to Aberdeen since my appointment as minister.

I have made it clear that safety of the workforce is the paramount consideration.

I am due to meet with the Health and Safety Executive (HSE) in February 2015 and will discuss issues relating to the safety of offshore workers. I have also engaged closely with the Unions to ensure that I am appraised of all issues affecting the offshore workforce.

Health and safety legislation is reserved to the UK Parliament. HSE is a non-departmental public body sponsored by the UK Department for Work and Pensions.

I have had discussions on health and safety with industry and workforce representatives in many of the meetings I’ve had with them, particularly during the 60 days’ worth of visits I have made to Aberdeen since my appointment as minister.

I have made it clear that safety of the workforce is the paramount consideration.

I am due to meet with the Health and Safety Executive (HSE) in February 2015 and will discuss issues relating to the safety of offshore workers. I have also engaged closely with the unions to ensure that I am appraised of all issues affecting the offshore workforce.

Health and safety legislation is reserved to the UK Parliament. The HSE is a non-departmental public body sponsored by the UK Department for Work and Pensions.

The recent drop in the price of a barrel of crude oil, combined with the long term mismanagement of oil and gas fiscal policy by the UK Government, and other challenges facing the industry, poses a serious threat to a number of jobs. The First Minister established the Energy Jobs Taskforce, to make sure that partners are working across the sector both to maintain all jobs within the industry, and to mitigate the potential impact of any losses and do all we can within devolved powers.

We have called on the UK Government repeatedly to commit to urgent fiscal changes to support investment, encourage exploration and ensure that the North Sea is a competitive investment location.

The Energy Jobs Taskforce had its first meeting on 28 January 2015 in Aberdeen. The first meeting identified a range of actions to be taken forward to mitigate the impact of job losses within the sector. Public sector partners and agencies will support activity from within their existing budgets. The taskforce remit is available on the Energy Jobs Taskforce webpage and can be accessed at:

http://www.gov.scot/Topics/Business-Industry/Energy/resources/working-groups/energy-advisory-board/Energy-Jobs-Taskforce.

The Energy Jobs Taskforce held its first meeting on the 28 January 2015, and included senior representatives from industry, Department of Energy and Climate Change, unions, public bodies and the UK Government. The meeting saw some useful ideas shared which shall be considered carefully. A helpline is available for those facing redundancy, the taskforce will be launching an online presence and will be delivering a large employability event Aberdeen in the near future.

However, prime consideration is that the UK Government must act now and respond to the requests to provide the tax changes that will help support the industry through this period.

Adopt an Apprentice is demand-led. As such, the level of demand will determine Skills Development Scotland (SDS) expenditure on this initiative. As explained in my answer to S4W-24012, should additional resources be required to meet the First Minister’s commitment this will be managed through existing SDS Sponsorship arrangements.

To date there has not been significant numbers of modern apprentices being released by employers in the oil and gas industry. SDS will continue to engage with oil and gas companies which have employees at risk of redundancy.

The Scottish Government is aware that a number of oil and gas companies have recently announced job losses.

In January 2015 we have seen Schlumberger announce that it expects to cut more than 100 jobs in the North East and offshore; Apache has announced it has started make redundancies from its operations across the globe – estimating that it would be less than five per cent of its 5,000 employee workforce; ConocoPhillips announced it would be cutting 230 jobs in Britain, with its UK workforce expected to drop to just over 1,400 by March; BP has announced 300 jobs losses, 200 staff and 100 contractors, out of 3,500 North Sea employees; and KCA Deutag Drilling limited has announced 132 redundancies out of staff 232.

The Scottish Government has made a number of proposals to reform the fiscal regime. Despite the need for urgent action, the UK Government has yet to set out when key reforms will be implemented. The Scottish Government has called for a general Investment Allowance to provide additional support for such fields and help to sustain future investment. Analysis by Professor Alex Kemp suggests that such an allowance could increase investment by £20-£36 billion over the period to 2050 and in turn boost production by 1.2-2.2 billion barrels of oil equivalent. Scottish Government estimates, based on industry data, suggest that it could support between 14,000 and 26,000 jobs per year across the UK.

The First Minister launched the Energy Jobs Taskforce on the 14 January 2015 to deliver a co-ordinated response to the issues being faced by the industry, with partners working across the sector both to maintain jobs and to mitigate the potential impact of any losses. The First Minister also announced a guarantee for Modern Apprentices (MAs) in Scotland’s oil and gas sector to ensure that any faced with redundancy will be offered alternative employment or continued off the job training pending alternative employment. Additional support will be made available specifically to the oil and gas sector to enhance the offer available through the Adopt an Apprentice programme, which offers firms incentives to re-employ MAs who have been made redundant.