My Lords, I give an unreserved welcome to these new provisions. When Sir Ian Wood’s report was published last February, and the industry had had time to absorb its messages, there was almost universal support for his recommendations. I think my noble friend said that the Government have worked at a furious pace, and I recognise that. However, I wish to make two points. First, I am surprised to be told by the industry’s representative body that it was not consulted on the terms of these government amendments. It states that the industry,
“has not been consulted about the nature and format of these MER UK amendments”.
I stress as strongly as I can that in the next stages of carrying this forward—working out the strategy, dealing with the details and all the other matters which will flow from this—the Government simply must regularly consult the industry; otherwise, the good will that has been attracted by the evident swiftness in accepting a very complex and detailed report will evaporate if there is a feeling that somehow the Government are charging ahead and not taking account of what the industry wishes to say. I am sure that my noble friend will give me a very firm commitment that the Government will consult the industry on any further steps.
My other point is based to some extent on my experience as a long-standing member of various voluntary bodies and other organisations. Some years ago, I chaired an Anglo-Norwegian seminar for the Foundation for Science and Technology. The seminar was held at what was then the Institution of Electrical Engineers and was attended by the King of Norway, the Duke of Edinburgh, the managing director of BP—my noble friend Lord Browne of Madingley—and the chief executive of Statoil. A very high-level discussion took place between the British and the Norwegians on not just the North Sea but, of course, the Barents Sea. It was a fascinating morning and I certainly learnt a great deal. I chaired much of the meeting and the noble Lord, Lord Broers, chaired another part. At one point, one of my honourable friends from the other House asked the two chief executives—my noble friend Lord Browne and the Statoil CEO—what their highest priority was. The answer was, “fiscal and regulatory stability”. They make long-term investments
and changes in the tax system or the regulatory system do enormous damage in undermining willingness to invest.
That event was followed, a week later, by the then Chancellor of the Exchequer, the right honourable Gordon Brown, imposing a substantial additional tax on the industry in the North Sea, which caused huge dismay. Other Governments have done the same in the past, so it was not unique, but it was a remarkable example. Having been told that the highest priority was stability, the Government made a significant change on that sort of thing, with no notice. It really was a very astonishing response.
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In my discussions with representatives of the industry—here I should say that I am a long-time member of the All-Party Parliamentary Group on the British Offshore Oil and Gas Industry, which is chaired by the very distinguished Dame Anne Begg—I have heard them express many times that they must be consulted and that they must have stability. I believe that the target which has been set by Sir Ian Wood as to what could be the additional production—my noble friend quoted the figures—is entirely realisable. One of the interesting recommendations made in the Wood report was that all firms are to be required to co-operate, as far as they can, for the maximum overall benefit for the United Kingdom and that individual company priorities should not be allowed to override that. That is a considerable change of attitude and of culture which will have to take place. The industry has indicated its willingness to do that, which I am sure the Government very much welcome. However, it will be a major change.
We were told in the long Statement made on 16 July by the Secretary of State, which was repeated by my noble friend, that the effort to recruit a head for the new authority, the OGA, has already started. Again, there is an enormous expectation that whoever is ultimately chosen will be someone of really proven expertise in this field, who can work with a large number of different stakeholders. The role of the OGA is going to be very important. As the Secretary of State says, it has got to be set up so that, if necessary, it can work in shadow form before it is finally constituted as a government company. There is a lot to go for in this and I very much welcome the government amendments which have been tabled to the Bill. I also welcome the speed and sense of urgency that Ministers have adopted. This is enormously important.
Looking back on my days as Energy Secretary in 1974, right at the beginning of the North Sea oil revolution, as it became, I have always remembered one of the aphorisms used by the then chief financial officer of BP: “If you are investing offshore, the more you invest, the more there seems to be still to invest before you can actually turn your project into a productive enterprise”. That could certainly have been said of the Brent oilfield, which of course has been one of the biggest generators of oil revenue for this country. So there is quite a long history in this area. I think that the appointment of Sir Ian Wood was inspired and has proved enormously successful. The Government must now work very closely with the industry in order to make this a reality. I cannot stress that too strongly.