Meeting of the Parliament

Meeting date: Tuesday, February 25, 2014

Official Report 884KB pdf

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Topical Question Time

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Energy Industry

1. To ask the Scottish Government what plans it has to strengthen and support the energy industry. (S4T-00611)

The energy industry remains a matter of huge and continuing importance to Scotland. We have made that clear on a number of fronts and in a number of ways, ranging from our continued attempts to prevent the United Kingdom Government from undermining renewables investment and security of supply as a result of its electricity market reforms, to our support for the oil and gas sector.

At lunch time, Oil & Gas UK launched its “Activity Survey 2014”, which is a very welcome piece of research on the industry as a whole. It demonstrates the range of opportunities and challenges facing the North Sea oil and gas industry at this time. I agree strongly with the activity survey conclusions that while the North Sea holds significant potential, maximising the return from our oil and gas resources will require the appropriate business conditions for investment in exploration appraisal and development. The good news is that we have Sir Ian Wood’s key recommendations on how to take forward the industry’s regulation. Those recommendations should be implemented as soon as possible.

The minister is aware that Norway has built up an oil fund worth £470 billion, which is the equivalent of £100,000 for every man, woman and child. Does the minister agree that the UK Government should apologise to the people of Scotland for squandering the oil and gas assets over the years? Does he also agree that we should get an oil fund for Scotland? If the UK Government does not set up such a fund, the only way of ensuring that we have the assets and the associated rewards is to have independence on September 19.

I agree. Norway is a country of roughly the same size and population as Scotland. It has used the powers of independence to enormous advantage not only for current generations but for future generations of Norwegians for whom its oil fund is an investment that will create opportunities for that country for a long time.

On Dennis Robertson’s question about the need for the UK Government to make an apology, we have been told by successive Westminster Governments since the 1970s that North Sea oil and gas would run out in a matter of a decade. That was simply untrue. However, what is rarely appreciated is the corrosive effect that those false predictions have had on the expectations of young people who might otherwise have chosen to pursue a career in what has proven to be a world-leading industry.

Yesterday, in Aberdeen, the Scottish Government announced the establishment of an oil and gas innovation centre. What does that development mean for the oil and gas industry and our young people?

The First Minister announced the creation of an oil and gas innovation centre yesterday. As the member would expect, I have been working on the matter for some time. The centre will be industry led and industry driven.

We already have a remarkable degree of innovation among the several hundred excellent small and medium-sized enterprises in the oil and gas sector. The innovation centre, and the funding that the First Minister announced, will enable such enterprises, working in partnership with Government and universities and colleges, to achieve our potential and further drive forward success, pursuing the objectives that are set out in Sir Ian Wood’s report, which was published yesterday.

Today’s Oil & Gas UK activity survey shows that although there is significant potential in the North Sea, the costs of production are increasing significantly. Can the minister provide further detail on plans in the white paper for supporting the industry in securing the billions of pounds that are required for decommissioning?

As Mr Baker well knows, the fact is that investment in oil rigs and installations is made by the oil companies—they take the risks.

What Sir Ian Wood’s report has identified is that the treatment of the oil and gas industry in the United Kingdom in the North Sea basin has been characterised by “fiscal instability”, as Sir Ian put it. That has been the problem, allied with a second factor that Sir Ian identified, which is that the body that is entrusted with licensing and regulation has been underpowered—there are around 50 employees in the UK, as opposed to 200 in Norway and 100 in Holland—and simply has not had the people to do the job. It is difficult to see how that has been anything other than mismanagement, over a period of four decades.

I am sure that the energy minister, who is a fair-minded person, will join me in welcoming yesterday’s confirmation that the UK Government will invest £100 million in the carbon capture and storage project at Peterhead, supporting jobs and creating new jobs in the north-east economy—another example of the union dividend.

I agree that I am fair minded.

Members on the Scottish National Party benches, like members in other parties, have been campaigning for carbon capture and storage to be deployed for a long, long time, and we remember previous disappointments at Peterhead and Longannet. The opportunity that is presented by the enablement of CCS deployment technology to achieve our environmental targets has been impeded by a lack of ambition, which is sadly still the case today—

What nonsense!

It is not nonsense, as Mr Fraser said from a sedentary position. Professor Stuart Haszeldine, who is a world expert on CCS, says exactly the same thing as I said, as do all experts.

On the other part of Mr Fraser’s question, of course we welcome the CCS project at Peterhead, but it needs to be coupled with further investment, as is happening with Summit Power. If Mr Fraser’s question was about the affordability of the project, I ask him how affordable is the £35 billion investment in Hinkley Point, guaranteed for 35 years, and how affordable is the—I have seen this figure in the press, which means that it might or might not be true—£70 billion cost of decommissioning in relation to nuclear waste? Does Mr Fraser really think that those are examples of effective government under his union?

The Scottish Government used to tell us that the oil revenue would be used for welfare—then it was not for welfare. Then the Government told us that it was for capital investment—and then it was not for that. Now it appears that it is all to be used for a long-term oil fund. Is not the truth that it will all have to be used for the £15 billion needed for decommissioning in the North Sea, which Richard Baker mentioned? That is what would be expected of an independent Scottish Government; does not the minister realise the environmental consequences of failing to meet that obligation?

I honestly do not think that the Liberal Democrats are in a strong position to complain about other parties not fulfilling their pledges—I will not mention tuition fees, but the memory is still there.

To address the member’s question, of course we accept our responsibility on decommissioning. The question for Mr Rennie and the Westminster Government is whether we will lose the opportunity of the decommissioning industry to Norway. I can tell him that all the investment is being made in Norway. The UK Government does not seem to have woken up to the fact that there is an industry that could generate £35 billion to £40 billion. I have been working with many parties to explore the opportunities and I hope that the UK Government will start to do that.

As for affordability, let us look at the decommissioning cost, which is estimated at between £35 billion and £40 billion. First, that is shared between Government and industry. Secondly, the UK Government has had £300 billion of revenue, so we are entitled to expect it to make a contribution therefrom to the cost of decommissioning the facilities that generated that revenue. Thirdly, the cost amounts to a tiny fraction of the total value of the revenues.

Our predictions have been endorsed by Sir Ian Wood’s report, which says that there are 24 billion barrels. Instead of all the frustrating scaremongering that is still going on even after four decades, the main point is that we should focus on how we go forward with Sir Ian Wood’s recommendations. He says that if we get the right policies and have a new regulator to replace the ineffective UK one, the prize is £200 billion over 20 years. Surely it makes sense to look forward, not back, and to analyse carefully what needs to be done, as the Scottish Government is doing by working closely with industry and trade union colleagues.

One inconsistency in Scottish Government policy is the difference between Mr Ewing as energy minister, who wants to extract every last drop of fossil fuels, and Mr Wheelhouse as climate change minister, who accepts that at least a proportion of our fossil fuel reserves need to be left unexploited if we are serious about climate change. Weary though I am of hearing Mr Ewing avoid the question, I ask him how the Government intends to reconcile those positions. Both ministers cannot be correct.

Not for the first time, we do not accept Mr Harvie’s thesis. As he knows, I strongly disagree with it, for the following reasons. If we discover oil and gas in a field under the North Sea, what sense does it make to do as he asks and leave half of it unrecovered? The half that is unrecovered is locked out for ever because we cannot exploit it. Surely it makes more sense to recover as much as we can from each field before going on to the next one.

The Green Party used to say that we should steward the earth’s resources, whether they be water or oil. Now, it seems to say that we should take out only half, leave the other half and go on to the next field. How on earth does that make sense?

While some of my colleagues were in Aberdeen yesterday, I was in Stornoway to convene a summit to discuss the connections to the Western Isles, Orkney and Shetland that are needed to deliver their potential as the best place in Europe, if not the world, to deliver renewable energy. I am afraid to say that we wait for the necessary policy interventions and other support that will enable that potential to be realised. I fear that, if we do not get them soon, the islands might be disconnected from the UK in a real sense.

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Housing Benefit (Bellgrove Hotel Hostel)

2. To ask the Scottish Government what its position is on the report in the Daily Record about conditions at the hostel, the Bellgrove hotel, and, in light of such institutions being supported by public money, whether it considers that they should meet certain standards. (S4T-00607)

I was shocked to read about the conditions in the Bellgrove hotel and I fully support Glasgow City Council’s decision not to refer homeless applicants there. I make it clear that the Bellgrove hotel is not part of the temporary accommodation that is used to house homeless people in Glasgow.

The hotel is privately owned and operated. It operates under regulations that are the council’s responsibility. I understand that it is licensed by the council as a house in multiple occupation, which means that the council must be satisfied that the landlord is a fit and proper person and that the property is managed properly. It is also the council’s responsibility to ensure that appropriate environmental health standards are met.

Individuals who use the Bellgrove are generally not engaging with statutory services and are using their housing benefit allowance to pay for board-and-lodging accommodation. Housing benefit is, of course, an issue reserved to Westminster.

Due to the serious issues that are raised in the report, I have today written to the leader of Glasgow City Council, requesting a meeting to discuss the issues in further detail.

The minister mentions HMO licences. Does she agree that an HMO licence is not subject to as rigorous scrutiny as the scrutiny that housing associations and care homes, which deal with similar people, are subjected to? Does she accept that the Care Inspectorate might have a role? It wrote to me on 15 October saying that it was still investigating whether there was a care element and whether it could get involved.

We are looking into that at the moment. I understand that the Care Inspectorate does not think that it has a role because the support services are not necessarily provided by the hostel. Nevertheless, we are looking into that and it will be one of the issues to be discussed when I meet Glasgow City Council. I appreciate the interest that the member has shown in the hostel for some time and want to get this resolved as satisfactorily as possible.

I thank the minister for those assurances, but I express my frustration, which I hope that she shares, at the fact that, when I visited the hostel in 2011, 143 vulnerable men were living in pretty gruesome conditions. I find that totally unacceptable. The issue was raised by the BBC in 2000 and I have raised it with the Care Inspectorate and Glasgow City Council. In May 2012, I received a letter from Glasgow City Council, which said:

“The Council is actively looking at how we develop viable alternative accommodation for the service users who use the Bellgrove.”

However, nothing has happened. Does the minister share my frustration?

I well understand the member’s frustration and appreciate that the issues are complex and not only to do with housing—there are issues with support services and a whole range of issues. That is why it is important to sit down and get to the bottom of this. We must identify what all the issues are and how we can work together to resolve them. I share the member’s frustration that nothing has happened. We all saw what was in the Daily Record yesterday, and I am sure that nobody in the chamber thinks that it is in any way satisfactory.

Recently published figures show that there were 9,114 homeless applications between July and September last year and an increase in rough sleeping over the winter months coupled with 32,000 people on social housing waiting lists, all fuelled by a cut of 30 per cent to housing budgets. Does the minister agree that the Government has no vision for housing and will she commit to an action plan to tackle the crisis?

No, I certainly do not agree that the Government has no vision for housing. I remind the member that Scotland is outperforming the rest of the United Kingdom in house building in every tenure. We will continue to do that and will take every possible action to increase our housing supply, as we have even though our budgets from Westminster have reduced. The Scottish Government remains committed to ensuring that all those who are assessed by local authorities as unintentionally homeless are entitled to settled accommodation—and let me be clear: the Bellgrove hotel is not part of that solution in any way.