Rachel Reeves is facing demands from one of her own Scottish MPs to use £50billion of new borrowing powers to save the Grangemouth oil refinery. The Chancellor has announced she will rewrite the government’s fiscal rules in next week’s budget to fund large scale infrastructure projects in a bid to kick-start the UK economy.
Revealing the scheme in Washington DC last week she named clean energy and carbon capture and storage schemes are key priorities. But there has been outrage at the government’s failure to step in and save Scotland’s only oil refinery from closure and secure a long term green transition for hundreds of highly skilled workers after owners Petroineos confirmed closure plans in September.
Brian Leishman, the Labour MP for the Grangemouth area, has now demanded his own party use some of the new investment potential freed up by the fiscal rule changes to secure the plant’s future.
He said: “The closure of the refinery will be a catastrophic blow for this area, for the Scottish economy and for Britain’s energy security. This is a key test of what kind of country and society we want to build. We band around this phrase ‘Just Transition’, but this is the definition of an unjust transition, and I am horrified.
“I read the government’s new Industrial Strategy Green Paper which was published earlier this month and every page is screaming Grangemouth. When we talk about the reindustrialisation of parts of the country that need it, of industries that are struggling, of industries that need investment to transition to a greener future – Grangemouth is clearly the ideal candidate for every page of that report.”
Grangemouth operator Pertoineos is a joint venture between billionaire Jim Ratcliffe’s Ineos and Chinese Government owned Petrochina. The firm wants to turn Grangemouth into an import terminal for oil refined in foreign countries – a move which would leave Scotland as the only major oil producer without a refinery.
Urging Reeves to use new borrowing powers to invest in Grangemouth, Leishaman added: “We have an owner operator made up of a multinational conglomerate and the petrochemical wing of a foreign government. I think it is ridiculous that either of those entities have control over such a large piece of critical infrastructure in our country. But equally we can’t allow an imperfect solution to get in the way of the best solution.
“I know that nationalisation is a scary word for a lot of people, but it is an option. Equally taking a transitional stake alongside the current operators is an option. That Industrial Strategy document talks a lot about working hand in hand with private capital.
“If we can take a stake alongside Ineos to retain jobs and bring the investment needed to accelerate towards the green industries of the future, then that is the definition of a Just Transition and there could not be a better use of the new infrastructure money than that.”
Leishman, who won the Alloa and Grangemouth seat for Labour in July, added: “Parts of my constituency have never recovered from the closure of the mining industry decades ago and I do not want to see that happening again. Another 20 years from now we will look back on this time, documentaries will be made, and they will either be about how we abandoned these communities to decades of decline, or whether we supported them and did the right thing. There is still time to do the right thing.”
Scottish Secretary Ian Murray has insisted the first Labour Budget for over a decade will “herald an era of growth for Scotland”. He was speaking as Rachel Reeves prepares to deliver what will be the first Budget from a Labour Chancellor since 2009 on Wednesday. While Reeves has claimed the economic situation left by the Conservatives will mean difficult choices, she has said her Budget will “begin to fix the NHS and start to rebuild our economy”.
Murray said: “Nobody should be in any doubt about the scale of the challenge the Labour Government inherited when it comes to the public finances. The Tories left us a £22billion black hole, emptying the reserves meant for disasters and emergencies three times over. This Budget will herald an era of growth for Scotland, after years of damaging austerity from the Tories, made even worse for Scottish public services by the incompetent SNP.”
Holyrood Finance Secretary Shona Robison announced £500million of savings in September, amid what she described as “enormous and growing pressure on the public finances”. But hitting out at the Scottish Government, Murray added: “While Labour cleans up 14 years of Tory mess, the SNP created a mess of their own making, having wasted £5billion over their years in office due to their own buy now, pay later policies.
“For three consecutive years services have endured emergency in-year cuts from the chaotic SNP. Labour will end this short-term, populist politics and fix the foundations for the long-term. There will be no return to austerity. The SNP must ensure any additional funding for public services reaches the front line, bringing down waiting lists in the NHS and raising attainment in our schools – it can’t be used to plug the gaps. Scots rightly expect results.”
Scottish public finance minister Ivan McKee however voiced doubts that there would be an “end to the era of Westminster austerity” under Labour. Speaking ahead of what he described as “make or break moment” with the Budget, McKee said: “It is welcome that the Chancellor has finally agreed to the SNP’s calls to change the fiscal rules – but this cannot come alongside billions of pounds of cuts in departmental spending.
“It must lead to increased investment in our public services immediately – and not only reversing the cuts to Scotland’s capital funding but significantly enhancing it. The UK Government is facing a make or break moment in this Budget – and without the immediate investment in public services that we need to see, it will be clear that this Labour government is committed to the same ruinous path as the previous Tory government.”
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