Offshore Energy Industry

I see the Minister nodding. He has been in that situation and will understand. The two local authorities that serve the north-east of Scotland are struggling to deliver essential services on funding levels well below those of other Scottish authorities, but the latter do not face the same pressures. Both authorities receive grant aid at well below 90% of the Scottish average, despite having the fastest population growth in Scotland—indeed, compared with some parts of Scotland, the only population growth. Aberdeen city businesses pay around £150 million in business rates and receive back only half of that. Although Aberdeenshire is a net beneficiary, the overall grant allocation is a significant net loss. It is important for the Minister to be aware that in the 1970s, when the scramble to develop the North sea was under way, local authorities in the north-east of Scotland received extra rate support for five years to enable them to meet the infrastructure needs of the growing industry. It was a special one-off recognition of the pressure that they were under. I suggest that something similar may be required now if we are to deliver people's hopes and expectations for the next 40 years. The population of the region has grown by around 50,000 over the past 40 years and it is projected to grow by a further 50,000 in the next 15 years. Unemployment is low and incomes are high. People may say, "You've got low unemployment and high incomes. What's your problem?" The problem is that that income does not stay in the area. Taxes go to the Exchequer and business rates go to the Scottish Parliament, and we are dependent on grant support coming back to the area. Unfortunately, that does not happen enough—we do not have sufficient resources. Because of those pressures, housing costs are high, as are the costs of recruiting and retaining key people. A substantial section of the British economy, for which the Minister and the Treasury are responsible, could be the biggest losers if we do not get it right. I shall give some statistics. If we lose only 1% of the forecast potential average development over the next few years, it would cost us £74 million a year in tax revenue, £270 million a year on the balance of payments, £50 million in exports, £60 million in investment, £60 million in operational spending and 4,400 jobs. If we lost 5%, it would cost us £480 million each year in tax revenue, £1,350 million on the balance of payments, £250 million in exports every year, £300 million in investment and £300 million in operating costs, and 22,000 jobs. I hope that those figures reinforce the fact that a small shortfall could result in us losing a substantial amount of revenue. I therefore ask three things of the Minister. First, will he engage with the Treasury over the fossil fuel levy attributable to Scotland? The Economic Secretary has confirmed that the Government are committed to reviewing the""control and use of accumulated and future revenues from the levy"." I suggest that it would be appropriate for a substantial proportion of that to be allocated to infrastructure support in the north-east of Scotland, specifically to support the offshore renewable industry. I make no bones about it. It would help both oil and gas and renewables. That would be an appropriate use of the money, both now and in future. Secondly, I remind the Minister that, through an Act of Parliament, Shetland and Orkney secured a share of the continuing revenues based on the flow through their respective oil terminals. No such provision was made, or sought, for the north-east of Scotland, probably because it did not expect to be so badly squeezed by the funding arrangements as they are. That is despite the area being a major landfall for oil and gas. I do not know how many pipelines cross my constituency, but it is probably into double figures. It is also the most important land base for offshore operations. I therefore suggest that some consideration be given to the tiniest share of revenue from the oil and gas industry being earmarked for infrastructure. That would pay dividends by ensuring maximum long-term revenue. That may sound like a bid for new money, although there is a way of presenting it that would not. However, I return to the debate within the industry about the possibility of PRT buy-outs, which could create a cash-flow windfall for the Treasury. If the Government were minded to consider it, that bonus could support a small infrastructure fund. Thirdly, given representations made during the debate by other hon. Members, I hope that the Minister will engage constructively with Ministers in the Scottish Administration. If they fail to support essential infrastructure in the north-east, it will prejudice not only the Scottish economy but the entire UK economy. In order to deliver that investment, it is therefore legitimate for the Government to have a partnership with the Scottish Government. So far, they have failed to so. I am trying hard not to be too political about it, but the facts are as the hon. Member for Aberdeen South made clear. Although promises have been made, delivery has not been achieved, and that is a real anxiety for the industry and its confidence in future investment. The north-east of Scotland is a key economic region for the UK. It delivers far above its weight for its small population, but for it to continue to be a driver of growth for such a large chunk of the UK economy, it needs recognition and support. It suffers from relative remoteness. I meet too many people in Scotland, let alone in England, who tell me that they have never been to Aberdeen, and they have a very warped idea of what it is about. In some ways, the dynamism of the north-east of Scotland is perhaps Britain's best kept secret. There are not 500,000 people anywhere in the United Kingdom who contribute so much economically. Indeed we have statistics to show that the contribution per capita of the north-east of Scotland is the highest of any region in Europe, and I am not sure whether that is fully recognised or acknowledged in the way in which it is treated by Government at all levels. I know the Minister, and I believe that he understands much of what I am saying. He certainly knows Aberdeen, and Aberdeen knows and respects him. I look to him to ensure that the whole Government recognise the importance of the issue and act accordingly. I have tried to identify not just the problems but some possible solutions. I have tried to emphasise that if we do not get this right, it is the UK Government and the UK economy that stand to lose the most. We in the north-east of Scotland can proudly say that we have made an enormous contribution to the whole of the UK over the past 40 years, and the right decisions taken now can ensure that we will do that for the next 40 years. I hope that the Minister will understand that this is not just an opportunity for a local press release, but a serious debate where there is real and genuine concern within the industry that, if these issues are not addressed, a substantial amount of investment in the UK economy could be lost.