The North Sea oil and gas industry has played a defining role in the country’s economic development.
The sector has brought in billions of pounds of investment and created tens of thousands of jobs, however as the world grapples with factors like climate change and political instability, the industry is now facing its biggest challenge yet – adaptability.
In 2022, the UK Government introduced an Energy Profits Levy on the profits of oil and gas companies in response to soaring prices – or “windfall tax” as its more commonly referred to.
The idea behind the tax was to help fund a scheme to restrict household gas and electricity bills, which has now ended.
However, Labour have mapped out plans to increase the tax from 35 per cent to 38 per cent from the start of November. Whie that may not appear to have a direct impact on people like you and me, industry bodies are warning it could cause catastrophic damage to the sector as a whole.
One of the country’s biggest trade associations for the oil and gas sector, Offshore Energies UK, has said the planned hike will cause investment in the industry to plummet at an estimated cost of around £13bn to the economy before the end of 2029.
And that’s not all. The group also predicts around 35,000 jobs could be at risk as a direct result of a lack of investment and projects not going ahead.
I agree – a tax increase will no doubt discourage investment in the North Sea, which would of course lead to a decline in production and ultimately, a reduction in tax revenue for the Scottish Government.
And then there’s the potential ripple effect of job losses on the wider economy, with businesses reliant on the disposable income of industry employees set for direct impact.
On the surface, it could be perceived as a slightly self-defeating move for the Government, as it risks putting a crucial source of income for the country in jeopardy.
But this is where that key word – ‘adaptability’ – comes into play. The astronomical profits that oil and gas companies are reaping due to the surge in global energy prices are no secret.
The increase to the windfall tax serves as a fair way of securing a portion of these gains and redirecting them towards addressing social and economic needs, such as the aforementioned scheme to restrict household bills.
And what’s more, the tax increase could help incentivise the shift towards renewable energy sources. By making fossil fuels less profitable, companies will be more likely to invest in cleaner alternatives like wind and solar power.
Not only would that align with Scotland’s ambitious climate goals, but it also supports the UK Government’s planned Great British Energy – a new, publicly owned, clean energy company that’s estimated to bring a “huge number” of jobs to Scotland.
There are valid arguments on either side, which is why it’s crucial that the Scottish Government continues to stay in open discussion with the industry to arrive at the best outcome for everyone.
For Scotland’s business sector, the challenge lies in finding a balanced approach that safeguards jobs and investment while aligning with the country’s ambitious environmental goals.
A measured approach which balances the need to capture a share of profits with the need to sustain a vital industry is crucial.
There are several solutions that could be considered – a tiered tax system, for one, would increase the tax rate for companies only when their profits exceed a certain threshold.
Tax breaks or other incentives for companies which choose to invest in renewable energy projects instead could be another way of generating that additional income to ensure the economy doesn’t suffer the billions in losses the industry is warning of.
A nuanced, collaborative approach will be vital to ensuring not only Scotland, but the UK as a whole, remains an attractive place for energy investment, while also fulfilling its environmental commitments.
And the key to that will be adaptability – I’m looking forward to seeing how the government and industry will work together to find a joint solution.
Another blow to Sauchiehall Street
Another blow to Sauchiehall Street has been confirmed as work started last week on the demolition of the iconic ABC building.
A dangerous buildings notice was issued to the building’s owners last month, so I wasn’t surprised to see work getting underway.
Despite campaigners’ protests, and although the deadline for the demolition wasn’t until December, it’s now underway.
Who knows how much of this once-popular music venue and cinema will even still be standing by the time this paper goes to print. Sad times indeed.
The Category C-listed building was famous for its art deco façade which many had hoped would be saved or partially retained, but apparently that wasn’t viable.
It’s a shame that Glasgow is losing such an iconic building, however after both fires at the Glasgow School of Art, some feel the area has become an eyesore and it’s time things got moving.
Not long ago, Glasgow City Council confirmed that the works to the city’s once most popular street would be complete before Christmas.
Yet on Sauchiehall Street you’ll still find areas dug up, temporary fences, trees chopped down and tight pedestrian spaces. It’s no wonder some folk are fed up really.
Hopefully some of the biggest works on this once-thriving street will be wrapped up for Christmas, or I suspect there will be some angry business owners and residents.
It Made Me Laugh
A sight for sore eyes
I love to see businesses supporting Scottish sport, and no other partnership has made me laugh more than Specsavers’ famous referees sponsorship.
We’ve all yelled ‘come on ref, get your eyes tested!’ from time to time, right? So sponsoring the Scottish FA’s match officials showed a spark of genius.
More than two decades on, you still can’t go on social media without people quoting the brand’s slogan or mentioning the witty sponsorship.
And it just got bigger and better because Specsavers has signed a new sponsorship deal making it the official eye and ear care partner for the Scottish FA, Men’s and Women’s National Teams, and Scottish Football Match Officials.
The whopping seven-figure agreement is great news and a cracking example of a sports-business link-up that’s a match well made.
It Made Me Weep
Ticket to dismay
The hot topic on music fans’ lips has been the mission to secure those Supersonic Oasis tickets.
The reunion was announced, and madness ensued as fans scrambled to get tickets.
As expected, a lot of hopefuls were unlucky due to Ticketmaster’s use of dynamic pricing, which meant that despite being in the queue to purchase tickets, the prices shot up by hundreds of pounds, sending the costs sky high.
Despite this tactic becoming more popular with businesses, customers are not happy, and the UK Government is now set to hold a consultation on ticket resales websites.
My advice to those who weren’t lucky enough? Don’t Look Back in Anger…
