Oil industry faces jobs crisis "worse than Ravenscraig"

Energy Secretary Fergus Ewing said an investment allowance and an exploration tax credit, as well as a phased reduction in the supplementary tax to pre-2011 levels, must be delivered in the March Budget after the oil price more than halved over the past six months, to around $50 a barrel.

First Minister Nicola Sturgeon also said the Chancellor must introduce a "stable and competitive fiscal regime" to protect thousands of jobs in the sector.

The Scottish Government, which published a discussion paper on the oil and gas industry yesterday, said the measures could potentially support more than 31,000 jobs.

However, the SNP came under pressure from opposition parties, which accused ministers of passing the buck to Westminster and suggesting old policies to address the situation. Labour said Scotland was facing its biggest threat to jobs since the closure of Ravenscraig steel works in Motherwell, which shut its doors 23 years ago yesterday. Closure of the mill, then the largest in Western Europe, led to the loss of more than 10,000 posts.

The party said the situation could become even worse than suggested by research from the Scottish Parliament Information Centre and Oil and Gas UK, which said there could be as many as 15,750 jobs lost in Scotland as a direct or indirect result of the crisis.

Labour economy spokeswoman, Jackie Baillie, said: "The oil price is under half the price predicted in the SNP's White Paper. There is a huge threat to jobs here, the industry and economic experts predict that up to one in 12 oil jobs are at risk. These are not only people who directly work in the industry but the local economies in the North East, and people across Scotland who work in the supply chain. We need action, and we need action now.

"This is too important for the UK and Scottish Governments to score political points by playing pass the parcel. This crisis is the biggest threat to Scottish jobs since Ravenscraig and the Scottish Government have been nowhere to be seen."

Labour has called on the Scottish Government to set up a resilience fund to protect key industries, which it says would be paid for by increases to its budget as a result of the Barnett Formula.

Mr Ewing said he remained confident that the North Sea would recover from the falling oil price. "It's important not to work ourselves up into a panic," he said. "Aberdeen has been here before. It [the oil price] does fluctuate, we have always said that. None of us control the prices any more than any of us dictate the prices.

"There is a long term sustainable future for the North Sea and we are committed to using every lever at our disposal. It is time for the UK Government to follow suit."

Meanwhile, Mr Ewing has written to energy companies, calling on them to ensure savings as a result of the declining oil price should be passed on to consumers.

Industry body Oil and Gas UK said that sharp falls in the oil price was adding to "significant challenges" already facing the industry. The organisation said that the current tax regime was one such challenge, and a "key factor" for companies when deciding whether to invest.

Malcolm Webb, Oil and Gas UK's chief executive, said: "We are encouraged to see a growing political and industry consensus around the now pressing need for yet more fundamental and urgent changes to the tax regime.

"Oil and Gas UK is committed to playing a fully engaged and constructive part in this important process of reform and looks forward to working with both the UK and Scottish governments and all other stakeholders to that end."

A Treasury spokeswoman said: "The government is working with industry leaders as a matter of priority to address the challenges the industry faces as quickly as possible and to maintain Britain's energy security by maximising the economic recovery of our domestic oil and gas resources, offshore and onshore."