UK 17:14 Friday, 23 October 2026
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I continue the theme of what capitalism really means from yesterday's bonus bearcast on the news that North Sea oil companies want Chancellor George Osborne to use your hard earned cash to bail them out. I explain why the Chancellor needs to ignore this completely even if it means that the North Sea basically goes bust taking a number of listed companies - I mention XCite (XEL) specifically - with it. Sorry, I don't care if Aberdeen becomes a ghost town. Taxpayers from the profitable part of the economy should NEVER subsidise loss making sectors, be they milk farmers, oil companies or the Yorkshire coal miners that the great and much missed Maggie Thatcher quite rightly put on the dole.
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Comments
Steve Brown
Tom,
You will be surprised to hear I agree. The oil industry shouldn’t be subsidised. But I do call for George to pick up the bloody ball and change the tax system. For the upstream business pays CT at 30% when the rest of UK industry pays at 20% and then has an extra tax of 20% on top of that. My recent article was calling for some extra allowances on that tax. So no subsidies, you are getting confused by the eco-loons who think that a reduction in a punitive tax is a subsidy.
Steve
wildrides
Naah …………. bail it out with Whinnys millions . We need it as a strategic reserve incase of world war 3 type situations or the collapse of global currencies . Any one with a second home in Greece deserves to pay more tax anyway .
BobbyChariot
Hello Tom – disagree on this one as the UKCS is a strategic reserve. What would happen if god forbid we entered a war with Russia or such like? We need stability of supply and we also need to keep the skilled O&G people in the UK. You know how hard it is to regain skills lost as we have seen in manufacturing etc.
GO should nationalise one of the struggling oil companies (PMO?) and buy up some cheap fields while there is blood on the streets. Build the company up and and it is a win win situation. Profits could be put into a sovereign wealth fund as the Norwegians do to hedge against the bad times.
Plus it can always be privatised later on to suit the uber capitalists.
bob brush
Tom
You are wrong. Dead wrong.
My opinion on this has nothing to do with being nice, nothing to do with jobs, nothing to do with popularity. its just about money.
We shouldn’t be bailing out structurally unprofitable industries like coal because as you say it makes no sense. this is a totally different story because the north sea is not structurally unprofitable, it only needs bailing out in the current artificially created oil price crisis. The north sea has contributed a huge amount to the exchequer and the national economy over the years and if we let it go bust, that will stop. the amount we have to give them now, will be re-paid once oil price recovers.
I am not saying we should save all of the marginal fields and companies, we should let the weakest and most expensive fail, but the guys who need $40-50 should be helped through this so that they can continue to contribute later. after all, if we don’t bail them out now, we will have to pay for all the oil workers to go on the dole, we will have to replace the oil income to the exchequer, which will cost your wallet much more over time.
You are missing the bigger picture here and using a generalisation that is true for milk farmers (structurally uncompetitive) and assuming an ideal view of capitalism that ignores the fact that all the competitors who are being propped up by their own governments and not playing by the same rules. if we let the OPEC cartel and others totally destroy our oil industry it will do us much more harm than propping the better producers up for a while.
Steve
“What would happen if god forbid we entered a war with Russia or such like?”
Presumably one of the first things the Russians would do would be to destroy highly vulnerable oil rigs.
turbograndad
Tom, have a certain sympathy and agreement with the old capitalist model, BUT one mans capitalism is another s poison, and capitalism can be gerrymandered like everything else.
Capitalism is an extension of ourselves, it is our way of institutionalizing and exploiting, and part of that process is rogue, brutal, expedient, unintended, enhancing, redeeming, enslaving, distorting,beneficial, etc. There is the big picture and the short term, all with consequence.
With capitalism, we can easily let it rule us, and lose sight of our humanity, we are human first, capitalism is a way of doing it, don’t lose your humanity, you are altruistic at heart, that’s why you do what you do, exposing fraud, and ultimately we may progress to a better form of capitalism, one that is more altruistic, rather than this one , which will be exposed for what it is in time.
Drunken Sailor
Hitting an industry with windfall taxes when they are making large profits because prices are high is not capitalism either if you take the risks get extra lucky you should keep all the rewards. Oil companies have been hit with windfall taxes in the good times. It is only reasonable that some form of temporary tax break in the bad times is provided.
The alternative is pure capitalism where there the tax rate agreed at the time of issuing the licence is the tax you pay and there can be no changes and companies are told if you get a good patch don’t piss all the money away on bonuses and dividends but put some aside for a rainy day because there will be no sympathy when it starts to rain and you have not got an umbrella.
warun boofit
War with Russia could be good for the house price bubble in the South East, the grim north might become a relatively desirable place to live once once more as there would be less Polonium 210 in our tea pots.
Philip
I live near Aberdeen having emigrated here from the South East of England 7 years ago.
Only recently (ie pre this oil price crash) this area of the UK was the only area in the UK in growth,and it was asked (nay,to use the local Doric,required by Mr Osborne) to pay additional taxes on all North Sea oil extracted.This was only 3 years ago.To the extent that calls for tax relief should now be given as Aberdeen finally falls into the recession that everyone else has already been through.the additional taxes levied back then should be reversed,effectively restoring the status quo of before 3 years ago.This is how tax systems work,not capitalism,but this would be “the right thing to do” tax wise.
Moving onto the subject of Capitalism beyond the very specific tax issue that the North Sea currently has,Tom is right in his comments concerning Coal Miners (or any other special interest group,currently Oil).I recall 1982 to 84 very well,when indeed I “did a Tebbit” and got on my bike,and that recession was a LOT worse than this one is without any doubt,or indeed any recession since 1984,which have all since been about bursting various speculative bubbles (Property in 1992 for example,leading to the phenomenon of negative equity).No tax relief was changed for that property situation as no tax relief changes were made prior to negative equity raising its head as an issue,same goes for coal miners which were structurally and totally unviable (as was many other industries,such as Steel.The site in Corby employed 20,000 workers doing the work of 6,000,ie 14,000 jobs were not required on that site back in the early ’80’s,ie totally unsustainable).Besides,throwing a few hundred tax millions at a problem is decidedly “pissing in the wind” and usually a complete waste of time,money and effort.Osborne is no King Canute,and nor is he Jesus Christ (or Mohanmmed,take your pick).
Recessions are always brutal,people will scream all sorts during one,and Aberdeen is currently learning what a full blown recession is the hard way without any doubt,but always from recessions come the boom times.
Oil is no different to whats gone before elsewhere in time that I’ve seen,but to see an Aberdeen person on £250,000 pa doing little more than being a glorified personnel manager which even in London fetches less than £100k pa,I’m not that surprised to learn that that post was recently “eliminated”,amongst many other posts similar to that description I’ve just given.This is EXACTLY why capitalism should be allowed to work,to eliminate boom time excess’s.
I recall also in passing Gordon Browns boast when Chancellor that he’d eliminated “boom and bust” at various despatch box blatherings,the guy was in denial and completely detached from reality when he said that (repeatedly!) and I note hes saying nothing at all these days! At least Osborne is avoiding making that kind of totally unfounded comment (so far,lol),but therein lies Labours economic credibility as the alternative to the current incumbent,which is nothing new to me.
Aberdeen and the North Sea Oil industry’s drop in prosperity has cost a few marriages I’m aware of and “millionaires row” in Aberdeen is taking a fearsome pounding (not before time lol,prices there were beyond even London prices which I’m extremely familiar with coming from the South East of England which just goes to show how out of touch property prices are and still are in Aberdeen),but fundamentally my position is that beyond reversing those tax hikes by specifically the Coalition government of 3 years ago capitalism should be allowed to “do its thing” as Tom says.
Striebs
Tom ,
What is better for the taxpayer , to subsidise employees in industries like steel X per year or pay them 2X unemployment benefits ?
Due to factors including low interest rates , ridiculously favourable tax treatment of land , a restrictive planning system and open door immigration policy , accommodation prices are so high that they require amongst the highest wages in the world to pay them – which makes us uncompetitive .
Certainly with steel , UK companies and workers are having to compete with countries which shirk their obligations to their poor and sick and subsidise these industries . They are selling at cost , or below in order to drive Western producers to the wall – after which prices will rise .
Your idea that letting UK producers go to the wall is capitalism is flawed in a global economy when nobody else is interested in playing by the rules .
wildrides
The main flaw in your very flawed thinking is that oil price will take 5 years to recover . More like 5 months . We have a 10% oil market oversupply world wide . On top of that 80% of the worlds producers cant make money at this price so have stopped drilling , steaming ,flooding, pressing or whatever . You seem to think you know something about decline rate rates so you should twig that the supply imbalance will quickly rectify .
So you would sacrifice the North Sea industry and all future revenues and tax take for saving the cost of helping them out for a few months . Your more deluded than I thought .