Department of Energy

Part of Estimates 1989–90 – in the House of Commons at 6:34 pm on 10th July 1989.

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Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party 6:34 pm, 10th July 1989

I was glad that the hon. Member for Pontefract and Castleford (Mr. Lofthouse), my colleague on the Select Committee, referred to vote 3 and the administrative costs of the Department of Energy. I am also pleased that almost a full ministerial team is now present because I believe that I speak for all members of the Select Committee in saying that we should like specific answers to the questions about the administrative costs and the location of the Department that we have raised in successive years in estimates debates.

We have questions about the expenditure incurred on the refurbishment of the offices of the Department of Energy. We are seriously concerned by the Department's apparent lack of consideration of the unanimous view of the Select Committee—again, expressed in two successive years—that the Department should seriously consider moving its staff from central London to other locations. Indeed, so irritated was the Select Committee by the unspecific and cursory response to last year's report that we described it in this year's report as "Civil-Service-speak for doing nothing". The Department is hardly paying even lip service to the Government's professed aim of decentralising staff from London.

The public will find it remarkable that a Department which is now spending £13 million on refurbishing its offices opposite Buckingham palace—at an actual cost that is about 280 per cent. above the original estimate—is not seriously considering whether it is possible to move most of its staff out of central London. I understand that the report of the Select Committee on the Environment today has expressed parallel concerns about the costs involved in refurbishing the offices of the Department of Energy.

Sir Gordon Menzie, the chief executive of the Property Services Agency, has described the £13 million expenditure—and the 280 per cent. increase over the original estimate—as an extremely good deal. If that cost escalation over a two-year period is an extremely good deal, one is tempted to ask what an extremely bad deal would be. If we take Sir Gordon Menzie at his word—and he is arguing that that expenditure is only half the standard commercial cost of office accommodation in central London— I expect that we are meant to believe that we are lucky that the expenditure on the refurbishment of the offices of the Department of Energy and its move to its new location opposite Buckingham palace has not amounted to £26 million. When is the Department seriously to consider moving its staff outside central London?

The public will be astonished that a Department with running costs that we have detailed in our Select Committee report as being over £30,000 per person this year, compared to the Welsh Office expenditure of just under £20,000 per person per year—just over one third less than the expenditure of the Department of Energy—is not seriously examining relocating its staff outside central London. In view of the fatuous explanations that we received both in oral examinations before the Select Committee and in written answers, the people of Scotland will find it disgraceful that the oil division of the Department of Energy is not located where it belongs—north of the border.

On 26 June 1989, the Minister of State, Department of Energy referred in a written answer to the reason for the location of the oil division's staff in London, stating: Moreover the division is very much involved in providing advice to Ministers and has day-to-day discussions with the headquarters of the companies in the oil and gas industry, most of whom remain located in London. That view was confirmed in oral evidence to the Select Committee by Sir Peter Gregson and others. It demonstrates a total lack of understanding about the causal relationship between the location of the Department of Energy and the location of the headquarters of the oil companies. The Department of Energy is in London because the oil companies are located in London. The simple fact is that the corporate headquarters of the international oil companies are located in London because the Department of Energy is located in London, with its key divisions of petroleum engineering and offshore licensing. The written answer also states: No specific discussions have been held with the companies on this issue."—[Official Report, 26 June 1989; Vol. 155, c. 359.] That is an interesting admission because less than two weeks ago I had discussions with a major international oil company which currently has its operational divisions in Aberdeen and its corporate headquarters in London. I asked its representatives directly and specifically what their response would be to the movement of the Department's petroleum engineering division and licensing staff north of the border to Scotland. The answer was quite specific: they would review the location of their corporate headquarters in London and would follow the Department's movement of staff.

The Select Committee would like a direct answer to our direct question: when will the Department give proper and serious examination to the question of relocation generally, and to the specific question of relocating the oil division north of the border?

Since the Select Committee made its recommendation on this point last year, we have gathered some interesting allies to our cause. I am thinking in particular of Professor Ross Harper, the president of the Scottish Conservative and Unionist Association, who has become a recent convert to the idea of moving the whole of the Department of Energy north of the border.

I do not want to be too rough on Professor Harper because in the past few days he has had some hard lessons on the reality of power politics between Edinburgh and London. No doubt some English Members have been following this interesting episode in Scottish politics. Professor Harper was the nominee or choice of the Secretary of State for Scotland for the post of chairman of the Conservative party in Scotland. Unfortunately for Professor Harper's ambitions, he ran into the Prime Minister's favourite son, the Under-Secretary of State for Scotland, who was appointed against the advice of the Secretary of State. Professor Harper has been learning some lessons about where the power lies in the Conservative party and where power lies in relations between Edinburgh and London.

It would be worthwhile for Professor Harper to examine why for the past 10 years there has been no move by the Department of Energy to locate oil staff north of the border. The only move in that direction was 15 years ago, when the Offshore Supplies Office was established in Glasgow as a direct result of political pressure from the Scottish National party at the time.

It would also do Professor Harper some good to look at the Select Committee's minutes of 25 January this year. On that day, I was engaged in discussion with the Secretary of State for Energy about a related matter—where it would be proper to locate the office of the Director General of Electricity Supply. I suggested that perhaps that office could be located in Scotland. The Secretary of State replied that that was "an eccentric notion". Perhaps Professor Harper should consider why the Secretary of State for Energy regards it as an eccentric notion to try to supervise the electricity industry of England and Wales from north of the border yet finds it entirely natural and normal that the direction and policy of the oil industry, which is located largely north of the border, should be run from London. That is a clear example of the hypocrisy and the fatuous reasoning that underlies the location decisions of the Department of Energy.

Those in the regions of England and in the nations of Scotland and Wales are of the opinion that it is high time that they ceased to subsidise the south-east of England through the concentration of Civil Service staff in London. That subsidy arises not just from the payment of Civil Service salaries and inner London weighting but from the whirlpool effect on the private sector and on private sector headquarters. This process of subsidy has ceased to be acceptable in the regions of England, and in Scotland and Wales.

The opinion in Scotland is that it is totally unacceptable that the oil divisions of the Department of Energy should continue to be located in London. That is not because we think that it is crucial that the 200 staff of the division should be located north of the border but because we recognise the thousands of jobs that would follow from the major oil companies if the Department made such a decision. It is not acceptable that the oil jobs concentrated in Scotland should be the jobs at the sharp end of the industry—the dirty, dangerous, offshore jobs. We are entitled to the policy jobs and the corporate headquarters employment now located in London which should be in Scotland.

Hon. Members have referred to the question of the continuation of the Department of Energy itself. The oil industry provides a neat illustration to show why it is by no means rational to say that because segments of the energy industry have been privatised we do not need a Department of Energy to overlay a policy. At present, no less than one third of the Department's total staff is employed on oil-related matters. For a number of years the oil industry has been largely in the private sector and it is now almost completely in that sector, yet the Government concede that there is still a need for a large proportion of the Department's staff to be devoted to that vital industry. Whether industry is in the public or the private sector, there remains a public policy requirement and a requirement for an energy strategy—something, of course, which this Government have manifestly failed to provide.