HL Deb 12 April 1984 vol 450 cc1271-3
Lord Gainford

My Lords, by arrangement I beg leave to ask the Question standing on the Order Paper in the name of my noble friend Lord Sandys.

The Question was as follows: To ask Her Majesty's Government what is the approximate number of jobs which have been created in the United Kingdom as a result of the development of the nation's offshore oil reserves during the past decade.

The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon)

My Lords, the Department of Employment estimated in December 1983 that some 32,200 people were directly employed offshore and onshore in the extraction of mineral oil and natural gas in the United Kingdom. Indirect employment arising from North Sea orders and expenditure is considerably greater, but figures are not available for the United Kingdom as a whole. However the Industry Department for Scotland has estimated that a total of around 100,000 jobs in Scotland both offshore and onshore have arisen from North Sea oil activity; the figure for the country as a whole will obviously be considerably in excess of that.

Lord Gainford

My Lords, I thank my noble friend the Minister for those encouraging figures. Has he any information arising out of them as to the possible prosperity brought to the areas concerned, particularly the north east of Scotland?

The Earl of Avon

Yes, my Lords; as my original reply bears out, this is the case. I am pleased to be able to say that I believe that offshore employment is likely to continue rising up to the mid-1990s as new fields come on stream.

Lord Dean of Beswick

My Lords, I am grateful to the noble Earl the Minister for his Answer to the noble Lord's Question and the information he has given. Is the noble Earl aware of the broadcast this morning on Radio 4 in which a senior employee on the staff of Shell stated that there are further considerable reserves of oil that can be developed in the North Sea and in the Shell zone of the North Sea, but that of course the costs of exploration and of getting the oil will be a dearer and more expensive exercise than in the past? May I ask the Minister whether he will impress on the Government to bear this in mind and to give this industry further assistance, if it is needed, in order to keep the employment levels at what they are and, if possible, increase them through the downstream effects on engineering and other related industries?

The Earl of Avon

My Lords, I did not hear the broadcast to which the noble Lord refers but I could well understand its taking place. As the noble Lord is aware, we recently made a fiscal adjustment to encourage such exploration, and we are also encouraging the development of United Kingdom controlled technology to ensure the optimum development of our own market resources in this area.

Lord Grimond

My Lords, is the noble Earl aware that some of the extra employment that has arisen as a result of oil is in places such as Shetland and Orkney which have very little else to offer in the way of employment, and that as oil production runs down it will be important to support the local authorities in finding alternative work and in training some of the people who will lose their current employment, and indeed in encouraging investment in other labour-producing industries and services in the islands?

The Earl of Avon

My Lords, I fully understand the points made by the noble Lord and I hope that he will be encouraged by my earlier remarks when I said that I hoped that it would be increasing until at least the mid-1990s. We are also of course encouraging the industry to expand abroad and to try to get overseas markets at the same time.

Lord Harmar-Nicholls

My Lords, is my noble friend aware that most people would expect the extraction of oil to be brought about on merit, to be efficient, necessary, and at the right price, and not merely to provide employment? Employment should not be the main factor. It is a very good factor which flows from successful exploration, but that should not be the one that causes the amount of money to be spent which would be needed to exploit these new areas.

The Earl of Avon

My Lords, I think the House is taking pleasure in the fact that this does produce more employment. I quite take the point that my noble friend makes and I am sure that the oil companies concerned will not be employing more people than they have to.

Viscount St. Davids

My Lords, does the noble Earl not agree that even when the oil runs out, as it must at a fairly early date, the sums which it has enabled us to invest abroad will continue to bring an income to this country which will give us a great deal of power to employ people, and thus, when the oil runs out, providing that we have continued this process, we shall continue to be a very well off country?

The Earl of Avon

My Lords, I like the noble Viscount's synopsis of the future economy of this country and I think I broadly agree with him. The present benefit from North Sea oil taxation runs at some £9 billion and that is obviously of great benefit to the country as a whole.

Lord Taylor of Gryfe

My Lords, is the Minister aware that the figure of 100,000 new jobs created in direct and indirect employment from North Sea oil is a welcome figure in Scotland and particularly in areas of high unemployment? Could he tell us now what is the percentage of the requirements of North Sea oil companies which is acquired from United Kingdom sources? What percentage of their purchases is from United Kingdom sources?

The Earl of Avon

My Lords, I am given to understand that at the moment it is on average 71 per cent.

Lord Stoddart of Swindon

My Lords, we are indeed grateful for those figures. However, the noble Earl will be aware that there has been some concern lately about contracts which have been placed not in this country but abroad. Could he comment on the placing of a contract by Sun Oil for an oil rig in Sweden rather than in this country and what effect that will have on jobs? Could he also comment on the cancellation of the oil pipeline by Shell which in fact will cost 400 jobs in Hartlepool and bring about considerable distress in that particular area? Will he finally say whether the 70 per cent. British content is being upheld in every case, and in the 9th Round will the Government be much firmer in enforcing the 70 per cent. British content, because, if not. I rather fear that more work will go abroad?

The Earl of Avon

My Lords, so far as the first part of the noble Lord's question is concerned, about Sun Oil, I think I can best refer him to the Written Answer that my right honourable friend the Minister of State gave in the other place on 26th March. He said that he was, not satisfied that the company has given British yards a full and fair opportunity… My Department will monitor very carefully Sun Oil's performance in carrying out its plans". I cannot at the moment comment on the second part of the noble Lord's question. So far as the 71 per cent. is concerned, this is a figure on which my department is keeping a close eye and will make sure that it will, as we hope, increase rather than in any way decrease.

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