David Cameron says oil companies should give profits to staff as pay rises

Prices have fallen from $114 a barrel in July to just under $50

Click to follow
The Independent Online

Companies should pass some of their windfall from plummeting oil costs back to staff in the form of pay rises, David Cameron has said.

His comments were made during talks at the White House where he discussed the volatility of world economy – and the impact of tumbling oil prices – with President Barack Obama.

Prices have fallen from $114 a barrel in July to just under $50, forcing North Sea oil companies to lay off hundreds of workers with the prospect of thousands more redundancies to come.

While the oil industry may be reeling, ministers believe the sliding prices will provide a significant boost for the British and struggling eurozone economies by reducing the cost of fuel and oil-based manufacturing ingredients.

Asked whether he would encourage firms to turn some of their extra profits into higher salaries, Mr Cameron told reporters: "Obviously I want to see companies’ success passed through in terms of wage increases.

"It has to be done in a way that’s affordable, and in a way that companies can continue to grow. Falling oil prices is going to benefit a lot of businesses and a lot of countries, and we want to see those benefits passed through in all the ways they can be."

The Conservatives have come under fire from Labour over falling living standards since 2010 as prices outstrip pay. Despite gathering evidence of economic recovery, Labour insists the improvements are not felt by the majority of ordinary families.

The scope for pay increases was reinforced by figures this week indicating that the profitability of British companies has risen to a 16-year high, thanks to dropping oil prices.

Excluding banks and North Sea oil producers, corporate profitability in the third quarter of 2014 was 12 per cent, its highest since the end of 1998.

The North Sea oil industry issued a statement of unity yesterday, after a meeting in Aberdeen between the unions and Oil & Gas UK, the companies’ representative group.

Workers and employers are calling for lower hydrocarbon taxes. The North Sea tax rate is between 60 and 80 per cent, and the industry wants this capped at 30 per cent.