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.