Lib Dem leader says oil sector taxed highly enough already

Liberal Democrat leader Nick Clegg spelled out his opposition to a windfall tax on the offshore oil and gas industry yesterday.

Speaking after a Scottish Council for Development and Industry (SCDI) gathering in Aberdeen, Mr Clegg said the sector was taxed highly enough as it was and dismissed calls from environmentalists, unions, consumer groups and others for the UK Government to take a larger slice of profits.

Record quarterly figures from BP and Royal Dutch Shell last month reignited demands for a windfall tax, but Mr Clegg said companies doing well should be celebrated rather than attacked for it. He said: “The oil and gas industry is a very important part of the economy,” adding that energy suppliers were a better target for raising cash to help the UK to recover from a recession.

The Lib Dem leader told SCDI members earlier that windfall subsidies given to generating companies could be directed elsewhere as part of measures to revive the stricken economy.

Other ideas for new green taxes are aimed at the aviation sector and “shaping people’s behaviour in terms of the products they buy”.

Mr Clegg also outlined his proposals for a radical rebuild of taxes to put money back in the pockets of people on low incomes, while he said investment in major public projects – “such as building up our housing stock” and insulating homes – was a better strategy for economic recovery than the fairly meagre and temporary cut in VAT unveiled in the pre-Budget report on Monday.

Mr Clegg said new transport developments were just the kind of infrastructure needed to come out of the recession as soon as possible and suggested that mortgage lending could be freed up to stimulate the economy by bypassing existing banks, possibly through a new national bank or a merger of government-owned Bradford and Bingley and Northern Rock.