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Aberdeen, the oil city where boom and bust happen at the same time Aberdeen, the oil city where boom and bust happen at the same time
(2 months later)
The taxi driver swings The taxi driver swings his brand-new BMW out of Aberdeen train station. Behind him the sleek glass-fronted £250m Union Square shopping centre, with its Apple store and Hugo Boss shop, glistens in the afternoon sunshine. "Welcome to the oil capital of Europe," he says with a smile.
his brand-new BMW out of Aberdeen train station. Behind him the sleek As we drive past Aberdeen harbour, crowded with cargo ships, he talks about his grandson. A multinational oil company is paying the 17-year-old £12,000 a year to study mechanical engineering at college. He will graduate into a guaranteed job. "He’ll be on £100,000 by the time he’s 25," the cabbie says confidently.
glass-fronted £250m Union Square shopping centre, with its Apple Such stories are common in oil-rich Aberdeen. The Granite City boasts the highest concentration of millionaires in the UK. Three-star hotel rooms can cost upwards of £370 a night. In a city of 220,000, unemployment is just 2% and average annual salaries more than £39,000, around £12,000 more than the UK average in 2013.
store and Hugo Boss shop, glistens in the afternoon sunshine. Spiralling cost of living has led to calls for the introduction of an Aberdeen weighting, similar to the mechanism used in London. The city has one of the most unequal wage structures in the UK [pdf]. Yet despite being awash with oil money, and the fact that it is Scottish National Party heartland, surveys suggest Aberdeen is one of the areas where support for independence in September's coming vote is weakest.
"Welcome Indeed, Aberdeen can feel like a world of its own, uncoupled from the rest of Scotland. Locals speak a distinctive Lowland Scots dialect known as Doric; the solidly regional Press and Journal is Scotland’s most popular daily newspaper. The capital, Edinburgh, is a hundred miles south; London is a further 300. "There is no city in Europe that is as distant from government as Aberdeen," says Barney Crockett, convenor of the enterprise, strategic planning and infrastructure committee on Aberdeen city council. "It is an almost purely private sector city. Aberdeen is more buoyant now than at any other time since oil was discovered [in the 1970s]."
to the oil capital of Europe," he says with a smile. A copy ofthe Financial Timeslies open on the councillor’s desk. Outside his window, miniature flags of world nations hang from streetlights on Union Street, Aberdeen’s mile-long main thoroughfare. "This is the centre for world oil, not just the North Sea," he says. Over 900 companies serve the energy sector in Aberdeen, employing around 40,000 people.
As With average rent more than £1,000 a month, Aberdeen is by some way the most expensive city in Scotland. In the leafy West End, elegant Victorian houses routinely sell for seven figures. Across the city, house prices rose a vertiginous 17% in the last year. "Aberdeen is a good place to stay. It’s a nice place to bring up your kids. It’s near the sea," says David Geddie, property partner at Simpson and Marwick.
we drive past Aberdeen harbour, crowded with cargo ships, he talks Development is brisk. Cranes signal the arrival of yet more new office blocks and hotels. Kingswells, five miles outside the city, was just a village in the early 1980s. Now this booming suburb is home to thousands of oil industry workers, as well as Prime Four, billed as "Aberdeen’s first and only world-class business park". Oil and gas companies such as Apache North Sea, Nexen and Transocean are all based here. Norwegian giants Statoil will soon be joining, too.
about his grandson. A multinational oil company is paying the And yet with the independence vote looming, there are concerns about the future of Aberdeen's oil and gas economy. Around 30,000 people work offshore, with as many as 10 times that employed in tertiary sectors. Some are bullish about the industry’s prospects. "There’s probably about 30 to 40 years of oil production left," says Robin Watson, chief executive of Wood Group PSN, one of the Aberdeen’s biggest employers.
17-year-old £12,000 a year to study mechanical engineering at Others are less sanguine. "We are already in decline," says Jake Molloy, Aberdeen-based regional organiser for the RMT union. Molloy, like many in Aberdeen, is critical about the lack of investment in infrastructure; there is no rail link to the airport, and construction has yet to begin on a bypass, announced in 2003, to deal with the city’s chronic congestion.
college. He will graduate into a guaranteed job. "He’ll be on What's more, if you walk just a few minutes from the council offices you can see a very different side to Aberdeen's boom. Craig is at the local food bank making his weekly shop. In a former fish-filleting warehouse lined with rows of tinned soup and bags of rice, he picks up a few punnets of yogurt, a block of cheese and a packet of pasta. "I’ll make macaroni and cheese when I go home tonight," says the slight 27-year-old.
£100,000 by the time he’s 25," the cabbie says confidently. Craig sleeps on a sofa bed in his friend’s bedsit. He and many others just can't afford Aberdeen's astronomical rents. "If the food banks weren’t there a lot of people would struggle, and that’s even people that’s working," says Craig. "I’ve seen a lot of people coming in here who work."
Such There has been a dramatic increase in demand for food banks, says Dave Simmers, chief executive of Community Food Initiatives North East, which forms part of the Aberdeen Food Bank Partnership. Over 70% of those attending are experiencing problems related to welfare reform. "The perception is that Aberdeen is affluent, but we have people who are on low incomes and their poverty is reinforced by the affluence around them," Simmers says.
stories are common in oil-rich Aberdeen. The Granite City On Union Street, the payday loan shops, half-hidden among the imposing granite facades, attest to the difficulties. Down an adjacent side street, a dozen men sit finishing an evening meal of vegetable soup at a drop-in centre run by the Cyrenians homeless charity. Music television blares in the background. Some of these men sleep rough in derelict buildings, others in cars by the beach.
boasts the highest concentration of millionaires in the UK. Three-star hotel rooms can cost upwards of £370 a night. In a city The number of people using the drop-in centre has doubled since January. "I’ve never seen anything so bad," says Scott Baxter, deputy chief executive of the Aberdeen Cyrenians. "A lot of guys who come to us maybe would have worked in the oil and gas sector all their lives, and suddenly have found themselves in need."
of 220,000, unemployment is just 2% and average annual Although the 2008 financial crash registered as a temporary blip in Aberdeen’s upward curve, for local charities the fallout was severe. The Cyrenians saw their budget reduced by more than a third as Aberdeen city council made swingeing cuts in response to a fall in the block grant it receives from the Scottish government. "The city has more lap dancing clubs than libraries now," says one local resident.
salaries more than £39,000, around £12,000 more than the UK average in 2013. The corporate sector took up some of the slack. Many blue-chip companies provide volunteers and help with fundraising drives. But even that is not enough. "Aberdeen is just too expensive for many people," says Baxter, sipping tea from an Exxon Mobil mug.
Spiralling The North Sea’s resources are not just an economic issue. Oil is a central plank of the SNP’s independence pitch, with the party committing to establishing an oil fund if Scotland votes yes on 19 September.
cost of living has led to calls for the introduction of an Aberdeen "Resources taken from the North Sea have been squandered by the Treasury in London," says Kevin Stewart, SNP Member of the Scottish Parliament for Aberdeen Central. "The UK and Iraq are the only two countries that have oil but don’t have an oil fund."
weighting, similar to the mechanism used in London. The city has one of the most unequal wage structures in the UK [pdf]. Yet despite being awash with oil money, and the fact that it Although the SNP holds all the North-East constituency seats in the Scottish Parliament, surveys suggest Aberdonians are mostly opposed to independence, says Lynn Bennie of the social science department at Aberdeen University. Many here, even Scottish nationalists, are wary of constitutional change potentially disrupting the oil industry, Bennie says. "There will be lots of people who vote SNP but won’t be voting yes in September."
is Scottish National Party heartland, surveys suggest Aberdeen Whatever the referendum result, Aberdeen needs to think seriously about how its economy can transition from fossil fuels. "There will be a time when the oil runs out," says Greg Williams, a supply chain manager in the oil industry. "The big question is can Aberdeen attract non-oil business on account of its skills base and its infrastructure?"
is one of the areas where support for independence in September's coming vote is weakest.
Indeed, Aberdeen
can feel like a world of its own, uncoupled from the rest of Scotland. Locals speak a distinctive Lowland Scots dialect known as
Doric; the solidly regional Press and Journal is
Scotland’s most popular daily newspaper. The capital, Edinburgh, is
a hundred miles south; London is a further 300. "There is
no city in Europe that is as distant from government as Aberdeen," says Barney Crockett, convenor of the enterprise,
strategic planning and infrastructure committee on Aberdeen city
council. "It is an almost purely private sector city. Aberdeen
is more buoyant now than at any other time since oil was discovered [in the 1970s]."
A copy of the Financial Times lies
open on the councillor’s desk. Outside his window, miniature flags
of world nations hang from streetlights on Union Street, Aberdeen’s
mile-long main thoroughfare. "This is the centre for world oil, not
just the North Sea," he says. Over
900 companies serve the energy sector in Aberdeen, employing around
40,000 people.
With average rent more than £1,000 a month,
Aberdeen is by some way the most expensive city in Scotland. In the leafy West End, elegant Victorian
houses routinely sell for seven figures. Across the city,
house prices rose a
vertiginous 17% in the last year. "Aberdeen
is a good place to stay. It’s a nice place to bring up your kids.
It’s near the sea," says David Geddie, property partner at
Simpson and Marwick.
Development
is brisk. Cranes signal the arrival of yet more new office blocks and
hotels. Kingswells, five miles outside the city, was just a village
in the early 1980s. Now this booming suburb is home to thousands of
oil industry workers, as well as Prime Four, billed as "Aberdeen’s
first and only world-class business park". Oil
and gas companies such as Apache North Sea, Nexen and Transocean are
all based here. Norwegian giants Statoil will soon be joining, too.
And yet with the independence vote looming, there are concerns about the future of Aberdeen's oil and gas economy. Around 30,000 people work offshore, with as many
as 10 times that employed in tertiary sectors. Some are bullish
about the industry’s prospects. "There’s probably about 30 to
40 years of oil production left," says Robin Watson, chief
executive of Wood Group PSN, one of the Aberdeen’s biggest
employers.
Others
are less sanguine. "We are already in decline," says Jake Molloy,
Aberdeen-based regional organiser for the RMT union. Molloy, like
many in Aberdeen, is critical about the lack of investment in
infrastructure; there is no rail link to the airport, and
construction has yet to begin on a bypass, announced in 2003, to deal with the city’s
chronic congestion.
What's more, if you walk just a few minutes from the council offices you can see a very different side to Aberdeen's boom. Craig is at the local food bank making his weekly shop. In a former fish-filleting warehouse
lined with rows of tinned soup and bags of rice, he picks up a few
punnets of yogurt, a block of cheese and a packet of pasta. "I’ll
make macaroni and cheese when I go home tonight," says the slight
27-year-old.
Craig sleeps on a sofa bed in
his friend’s bedsit. He and many others just can't afford Aberdeen's astronomical rents. "If
the food banks weren’t there a lot of people would struggle, and
that’s even people that’s working," says Craig. "I’ve seen a lot of people
coming in here who work."
There has
been a dramatic increase in demand for food banks, says Dave
Simmers, chief executive of Community Food Initiatives North East,
which forms part of the Aberdeen Food Bank Partnership. Over 70% of those attending are experiencing
problems related to welfare reform. "The
perception is that Aberdeen is affluent, but we have people who are on
low incomes and their poverty is reinforced by the affluence around
them," Simmers says.
On
Union Street, the payday loan shops, half-hidden among the imposing
granite facades, attest to the difficulties. Down an
adjacent side street, a dozen men sit finishing an evening
meal of vegetable soup at a drop-in centre run by the Cyrenians homeless charity. Music television
blares in the background. Some of these men sleep rough in derelict
buildings, others in cars by the beach.
The number of people using the drop-in centre has doubled since January. "I’ve
never seen anything so bad," says Scott Baxter, deputy chief
executive of the Aberdeen Cyrenians. "A lot of guys who come to us
maybe would have worked in the oil and gas sector all their lives, and
suddenly have found themselves in need."
Although
the 2008 financial crash registered as a temporary blip in Aberdeen’s
upward curve, for local charities the fallout was
severe. The Cyrenians saw their budget reduced by more than a third as Aberdeen city council made swingeing cuts in response to a fall in
the block grant it receives from the Scottish government. "The city
has more lap dancing clubs than libraries now," says one local
resident.
The
corporate sector took up some of the slack.
Many blue-chip companies provide volunteers and help with fundraising
drives. But even that is not enough. "Aberdeen is just too
expensive for many people," says Baxter, sipping tea from an
Exxon Mobil mug.
The
North Sea’s resources are not just an economic issue. Oil is a
central plank of the SNP’s independence pitch,
with the party committing to establishing an oil fund if Scotland
votes yes on 19 September.
"Resources
taken from the North Sea have been squandered by the Treasury in
London," says Kevin Stewart, SNP Member of the Scottish Parliament
for Aberdeen Central. "The UK and Iraq are the only two countries
that have oil but don’t have an oil fund."
Although the SNP holds all the North-East constituency
seats in the Scottish Parliament, surveys suggest Aberdonians are mostly opposed to independence, says Lynn Bennie of the social science department at Aberdeen University. Many here, even Scottish nationalists, are wary of constitutional
change potentially disrupting the oil industry, Bennie says. "There will be lots of
people who vote SNP but won’t be voting yes in September."
Whatever
the referendum result, Aberdeen needs to think seriously about
how its economy can transition from fossil fuels. "There will be a
time when the oil runs out," says Greg Williams, a supply chain
manager in the oil industry. "The big question is can Aberdeen
attract non-oil business on account of its skills base and its
infrastructure?"
For many, however, the most pressing concern is the present, not the future. At the small cafe in Powis Gateway Community Centre, young mothers play with their children and munch on homemade scones (25p) and sandwiches (£1). But with unemployment in the nearby rows of neat postwar social housing running at almost 30%, many cannot afford even those reasonable prices."There is poverty here," says local pastor Andy Cowie. "You have to use your eyes. You'll see kids wearing the cheapest of shoes, the soles falling off. You'll meet people who are three or four generations out of work. The vast bulk of Aberdeen is in denial."For many, however, the most pressing concern is the present, not the future. At the small cafe in Powis Gateway Community Centre, young mothers play with their children and munch on homemade scones (25p) and sandwiches (£1). But with unemployment in the nearby rows of neat postwar social housing running at almost 30%, many cannot afford even those reasonable prices."There is poverty here," says local pastor Andy Cowie. "You have to use your eyes. You'll see kids wearing the cheapest of shoes, the soles falling off. You'll meet people who are three or four generations out of work. The vast bulk of Aberdeen is in denial."