The UK could “sleepwalk” into “mass redundancies” in the oil and gas industry unless Chancellor Rishi Sunak takes urgent action, MPs have warned.
The sector has been left reeling after facing the twin challenge of a plunge in oil prices and a global pandemic, leading many to fear for the future viability of firms without Treasury support.
The supply chain is at particular risk, as cash flows were already tight following the 2016 downturn.
In a letter to Chancellor Rishi Sunak, SNP MPs representing several north-east constitutions have urged the UK Government to set out a package of measures that will deliver “real, tangible and directed support”.
The measures include investment in the region towards the creation of a just transition fund and in areas such as renewable energy and carbon capture utilisation and storage.
In a joint statement, Aberdeen MPs Stephen Flynn and Kirsty Blackman, along with Gordon MP Richard Thomson and Angus MP Dave Doogan, said: “Scotland’s north-east is vital to the UK’s economy, with the oil and gas industry in the region alone employing an estimated 250,000 people.
“However, the impact of the coronavirus pandemic and the global plunge in oil prices has created the perfect storm for an industry that is already struggling.
“We urge the chancellor to extend support to the north-east and its key sectors in its time of need.”
In their letter, seen by The Press and Journal, the MPs warn: “As things stand, we will continue to hear of drilling plans being halted, exploration being curtailed and employers considering mass redundancies unless your government takes decisive action to support the future of the industry. Chancellor, put simply, the communities we represent cannot afford for the UK Government to sleepwalk into a further crisis.”
Banff and Buchan Tory MP David Duguid was more upbeat about the prospects for the sector, saying ministers were already considering what support to offer.
He said: “I know the oil and gas industry is working on proposals for a resilience package to present to the government in the coming weeks.
“I can confirm that ministers are talking directly to the industry and will consider what support the UK Government can offer.”
A UK Government spokeswoman, responding to the letter, said: “We’re taking unprecedented action at speed to support businesses, jobs and our economy.
“This includes £330 billion in business loans and guarantees, paying 80% of furloughed workers’ wages, tax deferrals and an extra £2.6 billion of additional funding for the Scottish Government.
“We are closely monitoring developments and are in regular contact with the Oil and Gas Authority and the wider sector.”