Aberdeen is destined to be a major player in the global energy sector for years to come, in spite of uncertainty over the future of North Sea oil resources, a conference in Glasgow has heard.
The long-term potential of North Sea oil and gas is a key battleground in the independence debate, with the latest political skirmish surrounding Chancellor George Osborne’s claims there will be a £3 billion drop-off in revenue between now and 2018, according to new forecasts.
Mr Osborne warned this would mean every Scot would be £3000 worse off in an independent Scotland. This was countered by the Yes campaign, which predicted the North Sea could yield a further 24 billion barrels with the implementation of oil veteran Sir Ian Wood’s report.
While the two sides argue over the North Sea’s potential, Robin Shannan, chairman of law firm McClure Naismith, said the technological and engineering expertise built up in Aberdeen will ensure the city remains a global energy hub for year to come.
Speaking at a post-Budget Briefing hosted by The Herald, and sponsored by Skypark, Campbell Dallas and McClure Naismith, Mr Shannan said: “If you look at what the oil industry is doing in Aberdeen… it is creating an absolute global centre of excellence in oil.
“And if you think the market is usually right, then the market is betting on Aberdeen being very influential in the global oil industry for a long time.
“Aberdeen is a bit like our London. It is its own little economy, it is different.
“It is going to be there, it’s going to be valuable. I think any politician on either side can say whatever happens, that oil industry is going to be valuable.”
Oil and gas was one of a host of Budget-related issues which provoked a lively discussion yesterday, with business investment, exports, pension reform, welfare cuts, tax avoidance and the economy also high on the agenda.
Fraser Campbell, partner at accountancy firm Campbell Dallas, gave a broad welcome to the Budget and said it was the first time in several years “the pluses outweighed the minuses” from a business perspective.
But he said he would have liked to have seen more radical steps to help companies sell overseas.
Mr Campbell said: “I do think he [the Chancellor] could have done more to stimulate investment and exporting. One of the biggest barriers businesses face isn’t necessarily getting the funding to export, it is the tariffs they face when they get abroad.
“There was no mention about any international projects or policies to try and improve some of the horrendous tariffs.
“Why couldn’t they think outside the box from an export perspective? We’ve got R&D tax credits, why not an export tax credit?”
There was consensus from the panel that Budget was politically driven in light of the independence referendum and the next general election in May 2015, with the reforms to pensions and the decision to freeze Scotch whisky duty cited as examples.
Angela Higgins, director of Resonance Capital and joint venture partner of Skypark, said the savings and pensions changes in the Budget were “aimed at the wealthier end of the pension aged voters who are the Conservatives traditional bracket.
She added: “We need more investment stimuli and longer term thinking.”
On the economy, it was noted the rate of growth now being experienced in the UK is faster than in the US, Germany and Japan, although concern was expressed at the slow pace of recovery to date.
David Bell, professor of economics of the University of Stirling, predicted there would be more pain to come in the public sector.
He said: “We’re only halfway there with the cuts, so there will continue to be austerity coming through the public sector.
“Looking at the forecast, I suspect that public sector workers will be experiencing declining real-term wages. One percent is the best increase in wages they can expect for a while and inflation will continue at around 2%, according to forecasts.”
Professor Bell emphasised the importance of boosting worker productivity to the recovery. He added: “A large proportion of the poor are now working. It seems to me the answer to all is to get their wages up.
“How do you get their wages up? By making them more productive, which is going back to the issue of investment and making sure businesses are able to put in the investment.”