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What's missing from the oil debate around Scotland's referendum?

The UK collects less tax revenue from its oil than almost any other country on earth. Scotland could do much better.

Mika Minio-Paluello
17 September 2014

Oil has been central to the arguments about Scottish independence. The SNP tell us there are decades of crude left in the North Sea, and that there should be an oil fund. Westminster politicians say there's not much oil left.

But none of the large parties want to talk about the detail of the UK's North Sea tax regime. This is because it's the second-worst in the world - for the state. Only Ireland gets a worse deal. The British system functions as a form of corporate welfare.

Platform released an infographic summarising the hidden data behind North Sea oil. It shows that Britain missed out on £10 billion in oil revenues every year. I've analysed oil contracts in Congo, Uganda and Egypt, and all of these did better out of their oil. UK energy policy has been subjugated to corporate profit for thirty years. Lobbyists and corporate executives in London have captured decision-making, and use the cash-flow from the North Sea to subsidise drilling elsewhere in the world.

If Scotland gains full control over its energy policy, it could change the fiscal regime. It could ask in whose interest oil should be governed, and whether the priority should be to maximise extraction, or to maximise revenues. Despite the media barrage claiming that Scotland is doomed, a future Scottish government could access enormous additional public resources.

Platform's research shows that

  • Britain only receives a fraction of the oil revenues that Norway receives. In 2010, the state revenue per barrel in Norway was $48.50; in Britain it was only $21.50 - less than half.

  • The value of Scotland's proven reserves per UK resident under the current fiscal regime is $1,020. If an independent Scotland mirrored Norway's tax & ownership structure over oil, the value would be $27,479 per Scottish resident.

  • The lax tax regime allows corporations to make enormous profits, at the expense of the public purse. Profitability for UK Continental Shelf companies is generally at least three times that of non-UKCS companies. In 2008 Q2, the net rate of return for North Sea oil companies reached 62.6%, while non-oil companies were at 12.2%.

  • In the six years from 2002 until 2008, Britain missed out on £74 billion in oil revenues, compared to if it had applied the Norwegian model. This could have covered five years of cuts to legal aid, the NHS, pension credit, child benefit, the arts, sports and public transport. Alternatively, £74 billion spent in Scotland could have provide Scotland with 10 new mega-hospitals like the South Glasgow Hospital and 1,000 new GP clinics, with 10,000 new doctors and 20,000 new nurses to staff them. As well as a renewable energy project in every community, a community centre in every village and a solar panel on every home, to enable a decentralised and democratically-owned energy system. And a high-speed rail between Edinburgh and Glasgow, 10 new railway lines in Scotland and free local bus services. And free state childcare for pre-schoolers, a return to grants for higher education students and a citizen's income for all Scottish residents of £5,200 per year.

London will fight tooth and nail to hang onto power over North Sea oil. But if Scotland can gain control - either through independence this week or some future 'devolution-super-max' (that isn't on the table), then it could take a lead from Norway.

  • Norway is a comparable oil province to the UK Continental Shelf. 

  • The UK does not have higher costs; investment in Norwegian offshore drilling has been consistently higher than in the UK.

  • Norway's fiscal regime isn't even a deterrent to investment. According to the Norwegian Ministry of Petroleum, it is "designed to be neutral, so that an investment project that is profitable before tax will also be profitable after tax."

London has singularly failed to harness public resources for public benefit. Of course, there's also the question of whether we should be burning all the crude anyhow. A paper published by the Scottish Greens this weekend examines what proportion of North Sea oil is actually "burnable", if we're to have any chance of keeping the planet below a 2 C temperature increase. There's really not much, if any, leeway. But until we stop extracting the oil, at least tax it properly.

The time has come for energy democracy. Our energy resources - which belong to the ultimately belong to the people - need to be accountable to us. London's politics is thoroughly captured by oil interests. It's hard to see that changing until Parliament Square looks like Tahrir did in 2011.

If Scotland goes independent, everything will be up for grabs. Scotland is energy-rich. The oil corporations will rush in and try to colonise power. It's up to democratic forces to mobilise to stop them, and ensure that energy serves both economy and climate justice.

 

Can there be a green populist project on the Left?

Many on the Left want to return to a politics based on class, not populism. They point to Left populist parties not reaching their goals. But Chantal Mouffe argues that as the COVID-19 pandemic has put the need for protection from harm at the top of the agenda, a Left populist strategy is now more relevant than ever.

Is this an opportunity for a realignment around a green democratic transformation?

Join us for a free live discussion on Thursday 22 October, 5pm UK time/12pm EDT.

Hear from:

Paolo Gerbaudo Sociologist and political theorist, director of the Centre for Digital Culture at King’s College London and author of ‘The Mask and the Flag: Populism and Global Protest’ and ‘The Digital Party: Political Organisation and Online Democracy’, and of the forthcoming ‘The Great Recoil: Politics After Populism and Pandemic’.

Chantal Mouffe Emeritus Professor of Political Theory at the University of Westminster in London. Her most recent books are ‘Agonistics. Thinking the World Politically’, ‘Podemos. In the Name of the People’ and ‘For a Left Populism’.

Spyros A. Sofos Researcher and research coordinator at the Center for Middle Eastern Studies, Lund University and author of ‘Nation and Identity in Contemporary Europe’, ‘Tormented by History’ and ‘Islam in Europe: Public Spaces and Civic Networks'.

Chair: Walid el Houri Researcher, journalist and filmmaker based between Berlin and Beirut. He is partnerships editor at openDemocracy and lead editor of its North Africa, West Asia project.

Who is bankrolling Britain's democracy? Which groups shape the stories we see in the press; which voices are silenced, and why? Sign up here to find out.

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