Wednesday, 23 March 2011

Twenty-eight Percent.

Last night, we were along to Peacock Visual Arts to attend the premier screening of Fraser Denholm's timely and apposite documentary film: "Run Down Aberdeen."
(Own-trumpet-blowing warning: Other Aberdeen's Alan was one of Fraser's interviewees in the doc.)

The film was followed by an open-floor and panel discussion, with the film-maker Fraser flanked by local politicos Deputy City Council Leader Cllr Kevin Stewart, Cllr Martin Greig and Lewis Macdonald MSP.

Here's the film to watch online - pass it on:

Run Down Aberdeen from Fraser Denholm on Vimeo.

We'll write a bit more about the film and the issues it covers later today, but for now we want to explore one particular statistic - mentioned in just one sentence during the floor discussion - from our Deputy Council Leader, Cllr Kevin Stewart.

A question from the floor relating to Aberdeen's role in the Oil and Gas industry was being handled by the panel. Labour and SNP agreed wholeheartedly that Aberdeen was an "economic powerhouse". And that's not just for the North East, but for the whole of Scotland and the UK, according to Lewis Macdonald MSP. Deputy Council Leader, Cllr Kevin Stewart, said that Aberdeen contributed 28% of UK tax revenues to the UK Exchequer.

This is not true. And the fact that both Stewart and Lewis believe that it is tells us more about these politicians than they mean it to. Just have a think about it... that statement suggests that of all the revenue collected by the UK government, more than a quarter comes from the economic activity of less than half-a-percent of the population. What an assertion to make! Really, if this were the case the whole world would beating a path to our small corner to learn the secrets of our special sauce.

But we've seen this error trotted out before by local press and local business-sector bloggers. (We trust that it is a genuine misunderstanding - and not a willfully disingenuous manipulation - politicians wouldn't do that, would they?) So, let's see where the source of the error comes from:

Firstly, like all misunderstandings of this type, it contains a kernel of truth. The 28% figure is within this document (big PDF) from special-interest business lobby group Oil & Gas UK.
[Edit: The figure has actually been revised recently, and now stands at 30% - even more than Cllr Stewart asserts!]

But, that 28% figure relates to Corporation Tax revenue - not all revenue, and it relates to the entirety of the oil and gas sector, not just the 'upstream' (finding and getting) activity which dominates business in Aberdeen.

So, for the avoidance of doubt, Oil & Gas UK rightly assert that the oil and gas industry generated 28% of UK corporation tax receipts during the tax year 2008/09.  But ask yourself: "What else happened during that period?" It's then quite easy to see why the oil and gas industry banked more than the "Square Mile in London" (as has been said elsewhere) at that time: As the oil-price spiked to that $147/barrel record, the energy companies enjoyed windfall taxable profits against the dark background of the financial sector falling into more-or-less ubiquitous loss. It is also relevant to point out that many UK Oil & Gas sector companies operate in a variety of overseas locations, but are stock exchange listed in the UK.

It is also telling that our local representatives to attempt to attribute the entirety of that oil and gas activity exclusively to this town. This is risible. Upstream (finding and getting) oil and gas is a cost centre for the energy companies. Profits are generated in transport, refining, trading, electricity generation & transmission and value-added retail. None of which impinge much on this region. We are exasperated that this boosterism based upon fallacy continues to characterise the discourse in this town and is continually repeated by our local press and politicians. We find it a bit nauseating.

Our local politicians appear to have fallen into the trap of believing Aberdeen's hubristic self-styling as Oil Energy Capital of Europe. It is not. London, Rotterdam, Paris and Moscow vie for that title. No-one outside Aberdeen who works in this huge industry which spans many regions and activities calls Aberdeen "Energy Capital of Europe". When these people in the industry outside Aberdeen hear the term they snigger, as a rule. In the words of novelist Cristopher Brookmyre:
"Europe's Oil Capital. Honestly. The first time he heard the expression, he'd assumed it was a bit of self deprecatory humour. That was before he learned that there was no such thing as self-deprecatory humour in Aberdeen, particularly when it came to the town's utterly unfounded conceit of itself."
Now, please don't misinterpret what we're saying. There's definitely much to be proud of in the business world in Aberdeen "City and Shire" (ugh). But there's no need to "enhance" these good things with disingenuous or demonstrably false hubristic misrepresentations which make us look vaingloriously stupid. To do so devalues that which is genuinely good and praiseworthy about our town. To do so undermines our standing amongst our competitor regions. And to do so undermines calls for greater support from central government and other non-governmental actors - help which Fraser Denholm's pertinent and well-timed new documentary aptly demonstrates that we need.

The future will contain many challenges. We need to face them with open eyes and realism. As we've said before, oil and gas reserves are finite. The day will come when we will all dearly wish that we had started down the difficult road of re-balancing our energy supply earlier than we have. In Aberdeen we will, additionally, wish that we had started down the road of re-balancing our local economy a little earlier too.

At Other Aberdeen we greatly fear that the currently high oil prices, the hubris they inspire and the offensive (and, as we have seen, ill-founded) triumphalism they provoke militates against the redirection of capital towards the development of a sustainable economy in Aberdeen, be that in the shape of the switch to renewable energy technology, the burgeoning development of the Scottish life sciences sector or other more traditional business sectors. We, unsurprisingly, would be happiest to see the creative and arts sector help lead in the regeneration of Aberdeen's built townscape and business landscape through grassroots bottom-up inclusive creative initiatives. We were gratified to hear during the panel discussion that Lewis Macdonald MSP supports this hope.

But then, there we were, at Cineclub hosted by Peacock Visual Arts. Should we have been surprised to see a politician (who is seeking re-election) wearing his metaphorical "I support the Arts" badge? Not for the first time this week, we realise that to ask the question is to answer it.

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