I accept that. This is going on throughout the industry—in direct employment and among subcontractors.
Within their limited powers in this area, the Scottish Government have taken action. The First Minister has announced a new taskforce to focus on supporting jobs across the energy sector, with an initial emphasis on the oil and gas sector, and to secure an employer apprentice guarantee, under which firms would commit to taking on apprentices facing redundancy to ensure that they completed their training. That commitment would be supported by the Adopt an Apprentice recruitment incentive—currently, there is a one-off grant of £2,000, which is to be increased to £5,000—and by Skills Development Scotland staff.
If we are to protect Scotland’s vital oil and gas sector, however, the UK Government, specifically the Treasury, need to step up to the plate and to make immediate tax changes. We have already called on them to take urgent action to support investment and exploration. The Scottish Government have consistently called for measures to be implemented without delay, including an investment allowance to provide support for the development of fields that incur higher costs. That would support technically challenging, high-cost fields and sustain future investment. Professor Alex Kemp, a respected oil economist at Aberdeen university, estimates that an investment allowance could increase investment by £20 billion to £36 billion to 2050 and boost production by 1.2 billion to 2.2 billion barrels. Scottish Government estimates suggest that it could support between 14,000 and 26,000 jobs per year across the UK.
The Scottish Government have also called for a reversal of the increase in the supplementary charge implemented by the UK Government in 2011. The high overall tax burden faced by the sector is damaging its international competitiveness. The supplementary charge was increased by 12% in 2011, and the 2% cut announced so far does not go far enough in the current context of falling prices. Professor Kemp estimates that a reversal would increase production to 2050 by 500 million barrels and boost investment by £7 billion. Scottish Government analysis suggests that such a move could support up to 5,600 jobs per year across the UK.
In addition, the Scottish Government have called for the introduction of an exploration tax credit to help increase levels of exploration and sustain future production. As most of us are aware, levels of exploration in the North sea are low, which will inevitably reduce future discoveries. An exploration tax credit would help to increase exploration and, in turn, sustain future production. A similar approach was adopted in Norway in 2005. In the three years following its introduction, the number of exploration and appraisal wells drilled in the Norwegian North sea increased fourfold.
We have previously highlighted and backed industry concerns about the speed with which the new Oil and Gas Authority is being established, and we have called for appropriate resourcing of the new OGA to be put in place swiftly. The industry is concerned that the investment allowance the Chancellor is expected to announce in the March Budget will not be nearly enough at current oil prices, and we share that concern.
It has also become evident that an early commitment to reduce the supplementary charge rate would have the benefit of instilling confidence in operators and the sector, while discouraging premature decommissioning, which is obviously important for future work in the North sea. To significantly enhance the industry’s long-term competitiveness, we have recommended that, at the very least, the industry requires a reversal of the supplementary charge increase implemented by the Government in 2011.
That substantial package of measures should be announced without delay to safeguard investment, jobs and the long-term sustainability of the North sea. If it is not forthcoming, UK Government policy on the industry will be found seriously wanting once again. Despite what other Members say, reform of the fiscal regime must not wait until the Budget, but must be implemented now, and that should include a commitment from the UK Government to a substantial reduction in the supplementary charge rate.