Paul Wheelhouse on BiFab, fracking and the challenges posed by Brexit

Written by Liam Kirkaldy on 6 December 2017 in Inside Politics

Exclusive interview with Paul Wheelhouse, Minister for Business, Innovation and Energy

Paul Wheelhouse - image credit: David Anderson

Holyrood sits down with Paul Wheelhouse towards the end of what has been a busy few days for the Minister for Business, Innovation and Energy. Just hours before, after days of speculation, ministers had announced they had reached a deal to help save engineering firm BiFab from going into administration and Wheelhouse is clearly relieved.

It was a rescue operation which seemed to bring in each of the three aspects of an eclectic portfolio. A business engaged in the renewable energy supply chain trying to reinvent itself to win future contracts. Energy, business, and innovation, all rolled together.

With thousands of workers facing the prospect of losing their jobs the month before Christmas, the future of the firm had drawn headlines across Scotland. It was an obvious good-news story. Yet, as ever in Scottish politics, the question of how to ensure a secure future for the business had become a matter of party politics, with new Labour leader Richard Leonard facing criticism after suggesting that “the combined pressure of BiFab workers, their trade unions and the public have forced a deal from the Government” and claiming the rescue deal, expected to protect 1,400 jobs in Fife and Lewis, showed the “Labour movement at its very best”.

The statement provoked the usual outrage from the SNP. Wheelhouse questioned what role Leonard seemed to be claiming for himself in the deal. Shirley-Anne Somerville said Leonard had made himself seem “utterly foolish”. Roseanna Cunningham, meanwhile, went further, and responded that the statement had: “No grace, no charm and [was] utterly deceitful given [the] huge amount of effort put in by Paul Wheelhouse, Keith Brown and Nicola Sturgeon as well as [the] union.”

In person, though, Wheelhouse is reluctant to stir up any more trouble. “It was a real team effort, that’s the thing I’d like to stress. Myself, the cabinet secretary [Keith Brown], the First Minister obviously came back from Bonn early to support the work, and we had a really hard-working team of civil servants, and people from Scottish Enterprise as well. So ministers might well be in the front pages but there’s a real team of people who have worked their socks off. I want to thank them all because we have got to where we are now, we have stabilised the situation, and we have the opportunity to help BiFab be a really successful business going forward.”

So was Richard Leonard right to point to the role of the unions in bringing about a deal?

“Well,” he says, “the unions were really significant. I don’t think it was lost on anyone involved, not least ourselves, just how committed the workforce were to finding a solution. You often get a situation where people’s heads go down, there can be a fatalism to it, but it was very moving, actually, seeing the BiFab workers coming to parliament. It was bigger numbers than even the unions probably expected. That sends a really strong signal to everyone involved that the workforce are up for turning the company around.

“Hopefully, if there’s a chance to attract investment to the company in future, that will stand it in really good stead, because people will see they have a really committed workforce. People were prepared to work for nothing – in the hope they got paid, of course, but with the risk that they wouldn’t get paid if the company went into administration. That is hugely instructive about how much they care about the future of the company and how important it is to them and to their families.”

BiFab is one of several companies working within the energy supply line in Scotland, with the growth of the renewable energy sector over recent years providing huge opportunities for business. Yet energy strategy has been a source of constant tension between the Scottish and UK governments, particularly after Amber Rudd’s decision to pursue gas and nuclear as the two key generation sources over the next few years.

To observers within the Scottish Government, the decision to sideline investment in renewables such as tidal energy was an odd one given Scotland’s potential generating capacity, and it’s no secret that the move exasperated ministers north of the border.

Wheelhouse suggests he has received more positive signals from Whitehall officials in recent months, though he maintains that communications from Scottish ministers still go routinely ignored.

Before Theresa May came in as Prime Minister and carried out a post-Brexit reshuffle, rumours suggested that the former chancellor, George Osborne, had been the sticking point in channelling money from the Treasury to renewable innovation. With Osborne gone, then, and Wheelhouse detecting more positive noises down south, could there be room for optimism in the renewable energy sector?

“The Treasury was seen as the problem. I think in reality – and you would need to ask UK ministers if this is true – there was probably a bit of a power struggle between the Treasury and the old DECC department, which was seen as being very powerful. Now it has been subsumed within BEIS, and perhaps it’s had its wings clipped a bit. But largely, the same officials are there and the same policy teams are there, and I think Greg Clark is a pro-renewables secretary of state.

“Obviously the decision around Hinkley [nuclear plant] was hugely disappointing. Given the scale of public support for that project alone, it could have funded a huge amount of renewable technology investment. But I do believe he is coming round to supporting key technologies like remote island wind and offshore wind.

“I am hoping we can persuade Mr Clark that although there is a local political dynamic in England which is anti-onshore wind farm, in Scotland, there are many communities which are supportive. Not all – I am well aware there are many communities which are hostile to onshore wind development. But in general, the Scottish people and many local communities are actually seeking the opportunity to develop onshore wind projects. I think having a differentiated approach between England and Scotland to allow us to develop a key technology for our energy needs, and which delivers a lower price for consumers, would be a very welcome move.”

While Wheelhouse lobbies the Treasury over the direction of energy policy, officials in his own department have spent the last year drawing up plans for the new energy strategy. Due out by the end of the year, the strategy is apparently “putting a bit of pressure” on the minister.

He laughs. “Sometimes you make these targets to try and drive yourself forward and then end up regretting them later… But we are pressing on – we had a really successful consultation and I want to thank everyone that took part.

“We have been working the numbers and modelling in relation to the Programme for Government commitments on electric vehicles and ultra-low carbon vehicles. That [the announcement] was something I very much welcomed but we need to work through what the implications are for the energy supply mix and other parts of government policy.”

Does that mean Wheelhouse had to tear up a year’s work after the PfG and start again?

“No, I didn’t personally, thankfully, that is one task I don’t get to do. But we got a chance to feed in and it is a really exciting programme, across a number of fields. I have an interest in innovation as well [as green energy] and I welcome the fact the FM was so clear and resolute that we don’t just want to use low carbon technology here, we want to develop it here as well and get the full economic benefit of that. It was music to my ears.”

The PfG was widely praised by environmental and green energy groups. In fact support came from further afield, with the Scottish Government’s renewables policy, as well as its decision to ban fracking, both receiving plaudits from big names outside of Scotland. Following the fracking ban, US senator Bernie Sanders called on the US to follow Scotland’s lead, saying: “Congratulations to Scotland for taking the very significant step to ban fracking following enormous public opposition to the practice.”

That sort of recognition must have been a boost for officials. Yet Wheelhouse seems more pleased with praise from Hollywood. “The hulk!” he points out. “That was the thing that most impressed my 13-year-old boy, getting [praise from] Mark Ruffalo, the Hulk. It boosted my cred enormously.”

Ruffalo greeted the fracking decision with a tweet: “Scotland DID the right thing! Yay Scotland!” It’s the sort of backing that would probably make being a minister in the Scottish Government more impressive to a 13 year old.

“It did, yeah. Suddenly, Dad has a bit of a relevance to his agenda. But it was a morale boost for everyone. We’re not a huge country in absolute terms but what we can do is provide an example to others by learning and doing. Sometimes in finding what works and what doesn’t work we can help inform other countries about what path they can take. They can learn from our mistakes, such as they are, and from our successes, and hopefully, we can inspire others to follow in our footsteps. Thankfully, we are part of a much wider movement of pro-climate change mitigation countries. It’s sad that the US has taken the decision it has but we are continuing to work with federal administrations, like in California, and I don’t think the progress of the global community is contingent upon the federal government of the United States, thankfully. In this context, we have opportunities for progressive alliances with key administrations around the world. We are small in physical size but we are punching above our weight in influence.”

The fracking ban came close to uniting parties in the Scottish Parliament – only the Conservatives opposed it – but as ever, like in the case of BiFab, there was still room for disagreement between parties which agreed on an end, but not the means of getting there. With opposition parties calling for a legislative ban, ministers instead decided to implement it via planning powers, following a consultation in which 99 per cent of responses were opposed to fracking.

Wheelhouse says: “It is a policy ban, it’s not a legislative ban, and obviously we have had to explain the reason we have gone down that route on this issue. I hope the support we had in parliament in the final vote demonstrates that people are supportive of the position we have taken. Not the Conservatives, but I was really pleased we managed to find consensus with Labour, the Greens and the Liberal Democrats because it means we can act more quickly. We still have to go through the strategic environmental assessment, as you would with any key policy change of this nature, but if that finds in our favour and supports the position we have taken, then we can move very quickly to have an effective ban on any fracking in Scotland. That is probably helpful to developers to have that clarity and certainty on the position we have taken.”

Wheelhouse adds: “It was never going to be a referendum, or an opinion poll of sorts, it was too important for that but where we have referred to the weight of opinion, with 99 per cent opposed, that surprised us, about how strong the negative response was. We had expected there might be more people opposed than in favour, but the weight of response was hugely negative against the industry and when you’re talking about something that would have happened in the most densely populated part of our country, in the central belt, that was really important. For any industry like that to take place, it would need to have a social license that meant communities were supportive of it happening in their area and clearly, that was not the case.”

Opposition parties and environmental campaigners warned that, without a legislative ban, ministers had left the door open for future administrations to easily overturn the decision. It seemed to amount to a gamble on the future make-up of parliament. So is it fair to describe the decision to use planning, rather than enact the ban in legislation, as an SNP bet against a future minority Tory government?

Wheelhouse doesn’t look overly concerned. “In a minority situation, clearly a majority can make its view well known. I put it to colleagues in opposition parties that the only way it would come about is if they were to support the Tories being a minority government. Obviously there are conventions about the largest party getting the first chance to form an administration but that’s not a given and I don’t think we should assume it. It’s for other parties to make sure we don’t allow the Conservatives to win an election in Scotland and I am confident we can avoid that situation.

“But putting it into the National Planning Framework is an additional step. I was pleased to work with other parties to adopt that position – it’s an additional safeguard that would kick in from 2020 onwards in revised planning policy, in the National Planning Framework, and it sends a strong signal that that is a strategic planning position, subject to the SE. It adds permanency to the decision, rather than if it was left to an executive decision from this administration.”

Part of public concern stemmed from safety issues over the effects of drilling for shale. But while some submissions suggested that effective regulation could ensure safety, others worried about how drilling for more gas would exacerbate the danger posed by climate change. Wheelhouse seems to lean towards the latter concern in explaining the ban. Yet if this is his justification, isn’t it hypocritical for Scotland to use shale imported from the US, while boasting of our environmental commitment by refusing to drill for the stuff here?

Wheelhouse shakes his head. “Where ethane is sourced from is of interest to us, but it’s largely driven by commercial decisions. What I would say to those who are critical of our decision is that, within our National Performance Framework, we take account of our carbon footprint, which includes all the emissions globally which are associated with products and services we consume, as well as looking at our production emissions, which are the ones we produce in Scotland alone. It is an issue for us if we are consuming a product that is creating more emissions elsewhere, but I believe there are opportunities in the North Sea to find more ethane. Who knows what gas discoveries will come west of Shetland or in other areas that may yield more ethane. But ultimately, the sourcing of those feedstock products, such as ethane, is a matter for [the] companies concerned.”

So the Scottish Government wouldn’t restrict companies from using fracked gas even if it could?

“Well, first of all, we don’t have the power to do that if we wanted to. But we wouldn’t unless we had some compelling reason to do so. I am the energy minister for Scotland and the planning minister is only the planning minister for Scotland – we have to rely on other administrations to safely regulate industries where they are happening. Whether it is Pennsylvania or somewhere else, it is for regulators in that part of the world to make sure that the supplies of ethane are produced safely.”

Wheelhouse says he likes the diversity of the portfolio and the opportunity to engage in innovation, along with the chance to support environment secretary Roseanna Cunningham’s work in drawing up the climate change plan.

He has now been in his brief for around 18 months and it has clearly been a busy time. Between the energy strategy, the fracking decision, the ongoing travails of North Sea oil and gas and pressing issues such as the BiFab rescue, Wheelhouse has had plenty to occupy himself since moving from Community Safety and Legal Affairs in May 2016. He seemed to enjoy his time as environment minister, before it was brought up to cabinet secretary status, though he quashes any suggestion of taking on Cunningham’s brief at some point in the future – he describes her as a “good friend” who is “doing a grand job”.

But still, the last year has not been a calm one. In fact, even leaving aside the day-to-day issues in his brief, Wheelhouse is also responsible for business at a time of deep economic uncertainty. So has Brexit ruined everything?

“It is a real worry. There are some very practical issues, take the European Medicine Agency  moving from London to Amsterdam – the UK has no one to blame but itself for that happening. The UK has been a large part of developing the European Medicine Agency and the regulatory environment, which is a very good one, and it’s a real pity that because of Brexit that influence is being lost.

“What we are worried about is the impact on free movement of skilled staff in key industries – whether it is data analysis, or every company I go to, the space sector, life sciences, chemical sciences, renewables – you name it, they are all highly dependent on migrant labour. We welcome those individuals here, they are vital for our economy – we just saw a report showing that £4.5 billion is added to GDP annually by migrants coming to Scotland. They are a million miles away from being a burden – they should be seen as an asset to our country – yet they feel unwelcome because of the narrative south of the border. That’s a great pity, and I hope we can overcome these challenges and continue to work closely with our European counterparts. In areas like marine energy, for example, that is absolutely vital, Scotland is a world leader in wave and tidal energy at a time when Europe is investing significant new funding in the development of the industry. In theory, we would have support from the European Investment Bank but I am worried that because of a self-defeating decision by UK ministers to leave the EU, it will hamper these key industries.”

He adds: “Apart from anything else, migrants have clearly enriched our society. I grew up in Edinburgh, and I wouldn’t want to dismiss Edinburgh as boring, but it used to be a less cosmopolitan, less exciting place than it is now, and that is because of migrants that have come to Scotland. We have seen an enrichment of everything, from our nightlife to our workplaces – it’s a positive thing and I would be very, very concerned if our relationship with our neighbours is affected because of Brexit.

“It wasn’t on the ballot paper, in spite of what some say, it was very much about ‘taking back control’ – whatever that means – and I think some of the positions taken by the UK Government on a hard Brexit were never honestly described to the public before they voted. I am confident if there was another decision today there would be an even stronger vote in Scotland to remain than there was in June 2016. So we are where we are, the Scottish Government has come up with what I think are constructive propositions on retaining single market access and the customs union. It was very concerning to see the Labour group in Westminster, apart from some individuals, like Ian Murray, voting to end the customs union. That’s crazy, and very much against the interests of the UK economy, but we seem to be bashing our heads against a brick wall in convincing people of the common-sense position that we should stay in the single market.”

The chances of the UK staying in the single market certainly look slim, regardless of what Scottish ministers think. Since coming to power, Theresa May has seemed determined to interpret the vote in the most extreme terms, and given her longstanding commitment to reducing immigration, any prospect of retaining free movement also looks fanciful.

The Liberal Democrats have argued for a second referendum on the deal – a vote which would include the option of remaining in the EU and reversing almost everything that has happened in UK politics over the last year. Even Nicola Sturgeon has suggested she has sympathy for the argument for a second vote. Would that be something Wheelhouse could support?

He says: “What is going to become evident, when people realise the landing point for Brexit is a lot more unpleasant than many Leave voters realised, I think there will be all sorts of calls for action. I just hope we are in a position where we have the least harmful outcome we can possibly achieve, which would be to stay in the single market and the customs union.

“I will leave it to the First Minister and others to determine whether we need a second referendum but I have detected a real shift in people’s opinion since June 2016. Many people who were strong leave are now weak leave and in some cases, people who were leave are now remain. That is just from speaking to people at a local level – farmers and the like who have realised this is a potential disaster. Certainly in industries such as life sciences, chemicals, food and drink, financial services, it’s hard to think why anyone would support a Brexit position because I can’t really see any advantages at all. There is no good Brexit – there is only a very harmful one and one that is moderately less harmful.”

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