Westminster Mismanagement

BfS responds to Herald columnist Chris Deerin’s polemic, unsubstantiated rant

On Sunday, Business for Scotland published a major piece of research work into the comparative resource governance track records with regards to oil and gas of the UK and Norwegian Governments.  The research, which made the front page of the Sunday Herald, points to a devastating level of incompetence on behalf of the UK Government which has led to Norway receiving £381bn more in oil and gas related revenues since oil was discovered, despite having produced nearly 5% less oil.

Unable to deny any of the facts, unionist commentators decided to either post outdated information on production costs to prove we were wrong (we will deal with that in my Friday column in The National newspaper) or they entered into polemic, unsubstantiated and often childish rants about BfS and our research capabilities, without once even challenging any of our conclusions in a meaningful way.  We have become used to this sort of treatment from amateur bloggers (whom we ignore) but Herald columnist Chris Deerin’s ridiculous outburst on Monday was an embarrassment to his paper and his own reputation.

Given the nature of the column BfS requested a right to reply and today, to the credit of the Herald Editor, the newspaper published my  letter of response in full which I have included below.

Dear Editor

I write in response to Chris Deerin’s column, which I feel was unbalanced, unfounded and inaccurate.

In raising the research briefing by Business for Scotland (BfS) into the UK Government’s track record on oil and gas resource governance, which made the front page of the Sunday Herald (August 20) and was also reported in Energy Voice, he didn’t dispute a single fact because he couldn’t; instead he chose to attack BfS and attempt to cast aspersions on our findings and staff to distract from facts that clearly don’t fit his world view.

He said BfS’s suggestion that Westminster had let the oil industry off paying billions of pounds in taxes is “cheap and incoherent political puffery”, yet the facts are clear – BP and Shell paid millions of pounds in taxes to every other country in which they do business, yet they receive millions of pounds from the UK; statistics sourced from the oil companies’ own financial reporting.

He claimed BfS’s research was “feeble, nonsensical and methodologically unsound”, but our briefing is a detailed, major piece of work with multiple credible sources ranging from company and financial reports from BP and Shell, UK Oil and Gas, revenue figures sourced from UK and Norwegian governments, a letter from Ingrid Rasmussen, deputy director general of the Norwegian Royal Ministry of Finance and comment from leading economist Professor Michael Danson. The methodology is completely sound, intelligent and ultimately highly credible; we accept newspaper columnists promote their own opinions but Mr Deerin is inventing his own facts.

He said BfS is a “two bit organisation”, clearly not true considering the size of membership and support, and the fact The Herald itself gave comment from BfS in the front page lead three weeks ago (“SNP business backers warn over swing to left”, The Herald, July 31). I don’t see a newspaper of The Herald’s stature giving that sort of coverage to an organisation that is not credible.

BfS’s research team investigated previously unasked, yet vitally important questions on oil and gas revenues and how that affects Scotland’s fiscal position as part of the UK. The findings are clear and substantiated:

• Norway generated £381 billion more than the UK Government in tax revenue from North Sea oil and gas – 1964 to 2016 – whilst producing 4.7 per cent less.

• In the two years since the oil price dropped, Norway generated more than £29bn in oil and gas revenues, whilst the UK Government is predicted to lose £23 million in the same period.

• Over the last two years the UK’s taxpayers gave Shell £179m in tax rebates, whilst Shell paid Norway £4.589bn.

• UK taxpayers gave BP £342m in tax rebates in the same period, making the UK the only country out of 23 where BP operates where they received money rather than paid taxes.

• The UK tax rebates were not specifically linked to any commitment to save jobs and the UK sector seems to have shed significantly more jobs (120,000 since 2014) than the Norwegian sector (47,000 since 2013).

For all the sneers and personal slight in Mr Deerin’s ramblings, these facts remain unchallenged.

Gordon MacIntyre-Kemp Chief Executive Business for Scotland.

 

About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

4 Comments

  • Gordon,

    Good work, good letter.

    Is this of interest to you? It is an estimate by PWC of the total tax take from the O&G industry in the UK in 2010/11. This was the year when the Treasury, instead of easing taxes and providing incentives for exploration, increased taxes on the industry. The methodology seems sound enough though the caveat is that the total has been extrapolated. The taxes borne by companies in the year were around £9.1 billion and the taxes collected, including the supply chain, were a little over £21 billion.

    The taxes borne element today is down to millions though it clearly could be more. The workforce .is down from 465,000 to 345,000/330,000. Not all the workforce is employed in areas that would be in an independent Scotland but the great majority (around 90% of producing oil and around 60% of producing gas) is.

    Pay freezes have come with the oil price downturn but the wages of all in the O&G sector including the supply chain have steadily increased between 2008 and 2014 from around £42,000 to around £53,000 per annum. It is difficult for me to say how much is being currently contributed to taxes by all the employees in and around the O&G sector including those in the hotel industry but it must be around £10 billion or more. (Is that amount included in GERS?)

    Of course, an independent Scotland would have an oil fund to smooth out the highs and lows of oil prices. (The £30 billions tax take in 2010/11 is just about the amount of the Scottish government’s budget that year.) Scotland would follow the example of Statoil and invest in research. The result of that is that Statoil will typically recover around 50% of the oil in a field while other UK companies typically recover around 35%. Statoil targets a recovery rate of 60%.

Leave a Comment