Ailment or Oil Mint?

Fate has not been kind to Scottish Labour over the last few years. Under first Iain Gray and then Johann Lamont, they seemed to get stuck in a dreich cycle of politics-as-moanfest. That led to a drubbing in 2011 that exceeded even their worst performace-to-date in 2007, losing seats by the boatload, including several ministers and (almost) their leader. Iain had not had a good time of it, getting confused at FMQ who created Norway’s massive oil fund and being publicly slapped down by Dundee’s Joe Fitzpatrick:

“The money for Norway’s oil fund doesn’t come from Statoil – it comes from tax revenues from all the oil companies that work in the Norwegian oil sector. Norway’s oil fund is now worth around £300 billion, and simply underlines why – in the face of savage London cuts – it is essential that Scotland similarly benefits from its own resources, with a Scottish oil fund to secure the nation’s wealth for future generations.

As former Finance Minister, he should have been up on such basics. His successor did little better, appearing to avoid the subject altogether. Johann managed to get through her last speech to a Labour Conference as Scottish Leader without mentioning oil once. She had managed it the previous year but only by saying “Let others speak of an oil boom“.

Perhaps this is because when she did once try at FMQs to decry the SNP proposal to set up an oil fund as ‘dishonest’ she had to back down. The Presiding Officer stepped in after Ms Lamont claimed the First Minister was “simply dishonest“. The Labour leader went on to state that “honesty is not something this government deals in“.

So far, Jim Murphy has steered clear of such banana skins but his troops at Holyrood have not learned their lesson. Jackie Baillie in particular has been lambasting the SNP Government for not cutting taxes on North Sea oil, now that the price has halved to below $50 a barrel. Her recent demand for a ‘Scottish OBR’ begs the question of whether she has been paying attention for the last two years. John Swinney’s riposte was withering:

“Ms Baillie seems completely unaware that Labour supported our establishment of the Scottish Fiscal Commission, and indeed, our Programme for Government makes clear our intention to put the commission on a statutory footing.

“But frankly, it takes some brass neck for a Labour politician to accuse others of making over-optimistic fiscal forecasts. In just six years, Gordon Brown managed to get his borrowing predictions wrong by over £400 billion. During Labour’s time in office, national debt almost trebled. In contrast the SNP Government has balanced the budget every year.”

Bottom line: recent Labour leaders have shown little interest and no leadership on the most important business in Scotland. Worse, when they have opened their mouths, it has be embarrassing. It;s the epitome of the old adage “Rather keep your mouth closed and be thought a fool than open it and remove all doubt.”

When Energy Minister Fergus Ewing argued in Parliament that the UK Government makes the changes in the Budget in March, saying “it is crystal clear that it is the fiscal regime that needs to change“, Ms Baillie was quick to denounce this, saying his statement had not included “one action that has changed or appeared since the dramatic fall in oil prices in the last few months“.

Lost among this ‘debate’ is the fact that oil tax revenue from North Sea oil has been jacked up by successive UK governments—mostly Labour. Petroleum revenue tax (PRT) was introduced under the Oil Taxation Act of 1975, soon after Wilson’s Labour government returned to power. It was intended to ensure “fairer share of profits for the nation” from the exploitation of UK  (mostly Scottish) waters.

In theory PRT was abolished in 1993…but only for all fields given development consent on or after then. It continues for (many large) fields established before then. And, although the rate was reduced from 75% to 50%, various reliefs were withdrawn. All this is separate from Corporation Tax (CT), normally paid at 30%. Gordon Brown tapped oil producers for an extra 10% in 2002, upped to 20% in 2006. And, as if that weren’t greed enough, Osborne made it 32% in 2011.

Net result: oil producers pay at least 62% tax and often as much (with PRT) as 82%.

So for anyone in Holyrood associated with UK governments of the last 40 years have a rare cheek to pillory the present Scottish Government for threatening jobs in the oil industry when: a) SG have no control of either PRT or CT and b) Labour under Irn Broon was especially adept at wheezes funded by squeezing easy targets most voters thought were rolling in it anyway, such as pension funds and oil producers.

SO, if I were on the Labour payroll and looking down the barrel of this election 15 weeks away, I would haud ma wheesht—and try not to look too sheepish in the process.

About davidsberry

Local councillor, tour guide and database designer. Keen on wildlife, history, boats and music. Stood for the Scottish Parliament 2011; lost by 151 votes.
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