HC Deb 26 February 1987 vol 111 cc404-5
4. Mr. Hunter

asked the Chancellor of the Exchequer what percentage of total revenue has been derived each year since 1979–80 from North sea oil.

The Economic Secretary to the Treasury (Mr. Ian Stewart)

I shall arrange for the full figures to be printed in the Official Report. The figure for 1985–86 was 11 per cent. and that for the current year is expected to be about 4 per cent.

Mr. Hunter

I believe that the figures will reveal that North sea oil has declined in relative importance in revenue terms, and also, by impliction, that there is a buoyancy in other areas of economic activity. Will my hon. Friend comment on that proposition?

Mr. Stewart

It is undoubtedly the case that the decline in the oil industry following the reduction in the oil price has been substantially offset by the strength of the rest of the economy. One of the great achievements of the Government is that such a major reduction in the oil price has been taken in our stride and we have the strength of the economy that we see today.

Mr. Donald Stewart

Is the Minister aware that there will be no achievements from the Government, apart from the lifeline of the revenue from Scottish oil, and that the spin-off for Scotland has been minimal, bearing out the forecast that Scotland has been the only country which has had oil discovered in its territory and has ended up worse than it was before the oil was discovered? Will the Minister take into account the fact that unemployment is rising in Scotland when it is falling in England and that we have had nothing out of Scottish oil?

Mr. Stewart

There will be a short-term effect on oil and oil-related industries in Scotland immediately after a change in the oil price of the scale that we have seen, but Scotland is a part of the United Kingdom which benefits from the reduction in overseas debt, from increased net assets overseas—now £80 billion plus—from the annual yield of more than £5 billion that that brings to the United Kingdom, and from the reduction of the public sector borrowing requirement, which has been one of the important facts in the strength of the British economy as a whole.

Mr. Tim Smith

Does my hon. Friend recall that only a year or two ago people were asking what would happen when the oil ran out? Oil revenue has run right down, but Government revenues are more buoyant than ever. Is that not the clearest possible evidence of the strength of the non-oil economy?

Mr. Stewart

My hon. Friend is absolutely right. He may recall a phrase in the last Budget speech of my right hon. Friend the Chancellor about having lost half the oil revenues in 25 weeks, not 25 years, as some people had been suggesting. In fact, since my right hon. Friend's Budget speech last year, the strength of the non-oil economy has exceeded expectations and bears out very strongly what my hon. Friend has said.

Mr. MacKenzie

Does the Minister accept that, although there has been a reduction in oil revenue, it is still very substantial, and that most Labour Members would much rather that that revenue was spent on building up our infrastructure and on creating more manufacturing jobs than on paying out unemployment benefit?

Mr. Stewart

The right hon. Gentleman overlooks the fact that the benefits of the oil revenues to the balance of payments and to the Exchequer over the past few years have enabled a major restructuring of the British economy and that that is one of the things that has contributed so much to the present strength of the economy.

Following are the figures:

Annual figures for North sea revenues
£ billion as percentage of total Consolidated Fund revenue
1979–80 2.3 4
1980–81 3.7 6
1981–82 6.5 8
1982–83 7.8 9
1983–84 8.8 10
1984–85 12.0 12
1985–86 11.4 11
1986–87 (Autumn Statement Forecast) 4.4 4
1979–80 to 1986–87 57.0 8