Saturday, April 02, 2011

The “Danny Tax” - Energy issues and local employment

Any regular user of trains in or out of Nairn station will see off shore workers coming or going from Dyce airport. One wonders just how many offshore workers live in Nairn, a couple of hundred maybe? Most folk will know one or two or perhaps have family members offshore. There seems to be genuine concern that a ‘tax raid’ devised by Danny Alexander will have a negative impact on North Sea activities. Obviously, with the Holyrood election underway the politicians and journalists are making a meal of everything but as we say there is real concern manifesting itself. Here’s how the Scotsman played it earlier in the week:

“LIBERAL Democrat Chief Treasury Secretary Danny Alexander has bragged to a group of businessmen that the controversial £10 billion tax raid on North Sea oil revenue was his idea, The Scotsman can reveal.” More here.

It can be fair to say that Danny’s tax measure will not go down with those off-shore workers who are his constituents. When making their choice at the ballot box they might not be so inclined to put a tick against the yellow ConDem birdie box and may be in the process of influencing others not to do the same. The Liberals are in free fall, could the "Danny Tax" be the very thing that pushes them to the bottom of the poll in this constituency?

We’ll have to wait and see if the predictions of job losses come true but this will be a worrying time for many. Alex Salmond thinks the ConDem government is taking quite a risk. He is quoted in the press and journal:

“They’re playing roulette with the livelihoods of workers in the north-east of Scotland.

“It is to Danny Alexander’s eternal shame because there are workers in his constituency and he’s gambling with their livelihoods as well.” More here.

No doubt this row will rumble on through the election period but this uncertainty over this sector of local employment isn’t needed at a time when other economic blows are starting to hit home in the Inner Moray Firth area.

I believe it was last year that Norbord workers along with colleagues at other factories in Europe staged a one-day ‘strike’ to draw attention to the plight of their industry. It was a strange work stoppage really because it was backed by the management. They were attempting to draw attention to the price they have to pay for their raw material. There is now tough competition for wood supplies from the energy industry and Norbord are suffering. The Press and Journal states:

“An Inverness-shire company which manufactures wood panels claims it could be put out of business because they do not receive the same subsidies as the biomass industry.

Norbord employs about 130 people at its factory at Dalcross, near Inverness Airport.

But it claims to have been put at a disadvantage because of subsidies for the renewable energy industry.” More here.

Going green is no simple business in our complicated economic world. Subsidies to encourage heating from burning biomass would seem on the face of it to be a good thing but not perhaps if it were to mean Norbord closing and 130 people losing their jobs. It if Norbord were no longer making their products then perhaps the material would have to come from further afield, raising costs for the construction industry and others? There are no easy answers. Perhaps Green Dad, Donny and Eleanor (the two leading green candidates and Gurn readers) might have something to say about how local employment is affected by energy issues and whether they would support the Danny Tax on the North Sea oil and gas industry.


Anonymous said...

I am the partner of one of nairn's offshore workers and used to vote lib dem. Not this time. The government just cant think that when they need money they can just impose another tax on the oil companies. The oil companies already pay tax 10% above their counterparts in the EU. George Osbourne said the country is open for business, what business in their right mind will come here when they see that he will use them to gain more funds by raising their taxes when he is short of a bob or two!!!

Anonymous said...

The ******** took Scotlands oil so why not finish us off and take the jobs as well. No one in their right minds will re-elect this government after the cuts they've made. Do you think we should get rid of them now ... but how.
OOOh it Saturday morning and I,ve got a headache.

Anonymous said...

As the post shows its not just the oil industry, its Kinloss, constuction workers in all trades, teachers, bin men, a lot of local authority workers it is non stop. I am sure readers of the Gurn will know of more. Every restaurant and shop will know about it when the cuts bite!!

Anonymous said...

I would be inclined to agree with some of these comments. However, a deeper look at the issues paints a different picture.

Take Statoil shelving capital investment in new fields, for instance. As Norway's state owned energy company, principally operating in Norway/Norway's EEZ, it is accustomed to paying considerably higher levels of tax than those imposed by the UK government.

Secondly, when many of these capital projects were being planned, oil was going for 65 a barrel. Now prices now at 110+ and the oil/gas companies can expect even higher returns.

The fact remains that many energy companies will simply use this new hydrocarbon tax as cover to shift their business priorities...

Graisg said...

I suppose it is a bit hard for lay observers to work it all out. Maybe one could be reminded here of the Supermarkets complaining about the Scottish Government's proposed 'out of toon' tax. But the like of the following looks a bittie more worrying than that:

"The Government is facing a humiliating snub from Britain's biggest energy company.

British Gas owner Centrica is working on plans to sidestep George Osborne's windfall tax on the North Sea by moving giant gas exploration rigs into neighbouring Norwegian and Dutch waters.

Other companies are understood to be planning similar moves as a way of avoiding the Chancellor's £2bn tax raid."

More here:

Just another layer of uncertainty in troubled times, and uncertainty those offshore workers based in the Highlands could do without.

Anonymous said...

Mr Alexander better watch himself. He may be lining his pockets with MP's pay etc, now, but in 4 years time he will get booted out in no uncertain fashion. Picking on Scottish Oil to get more money to waste on Libyan battles and lost Afghany causes is causing the voters to realise just how bad this government really is. Labour are no alternative mind, so I guess that the SNP will come from behind in the elections and pip labour. I hear plenty people saying they are fed up with them all and not going to vote.

Ealan Donan Macrath said...

Let Hercules himself do what he may. The Cat will mew and The Dog will have its day.

Anonymous said...

Three years ago my business partner and I started up our own offshore oil consultancy.
Shortly afterwards, the oil price collapsed and oil companies budgets were reigned in.
It has taken us the best part of these last three years to pay off the loans that we made to our company and to actually start taking a small salary.
Now, thanks to this huge rise in Production Tax, we are facing uncertainty again.
We consider ourselves the type of business that the government should be encouraging. An SME with designs on employing staff as soon as sustainable but that seems an increasingly long way off.
Cheers Danny, you better not show your face in Nairn anytime soon.

Brian Turner said...

A better idea might be to add a 10% tax on politicians and any managers in the public sector earning over £100k a year. That might bring in more. :)