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George Osborne defends stewardship of the oil and gas sector

Chancellor George Osborne visits the Montrose platform last year
Chancellor George Osborne visits the Montrose platform

George Osborne has defended the coalition’s stewardship of the oil and gas sector amid criticism over the appointment of a fourth energy minister in just four years.

The UK Government came under fire last week after Michael Fallon was replaced by Matthew Hancock in the latest Westminster reshuffle.

Mr Hancock is the 15th oil and gas minister in 17 years, prompting Scottish Energy Minister Fergus Ewing to accuse the Conservative-Liberal Democrat leadership of showing “indifference” to the industry.

In an interview yesterday, Mr Osborne rejected criticism that the ministerial revolving door was damaging to the stability of the North Sea sector.

He said: “Well, first of all these people go on to be promoted into the cabinet, we are putting our brightest and best through these jobs and of course there is the top team continuity as well, of myself and the chief secretary to the Treasury.

“Judge us by our decisions, judge us by the investment that’s going in as a result of those decisions.”

The Conservative MP faced calls from the SNP to “apologise” for “tax grabs” on the industry – a reference to the 2011 budget increase in the supplementary charge on oil production and a decision this year to slap an extra tax on rigs and flotillas coming into the North Sea to carry out work, a practice known as bareboat chartering.

However, Mr Osborne insisted that the overall raft of measures introduced by the UK Government – including brownfield and shallow gas allowances and a £20billion commitment to decommissioning relief – had in fact helped the sector significantly.

He said: “What has been the end result?

“We now have a record amount of investment in the North Sea.

“Last year there was 14billion of investment which the industry themselves say half of which was directly linked to the whole tax package.

“I’m also the first to say that more needs to be done, but we are looking at what is the right tax regime over the next few decades.”

Treasury figures show the overall tax take from UK oil and gas production has slipped from £10.8billion in 2011/12 to £4.7billion in 2013/14.

Mr Osborne insisted the coalition’s strategy was correct.

He said: “If you look at what has happened on investment decisions in the past, perhaps a decade ago, you have seen some of the consequences of that. What’s much more encouraging now is much more investment going in the last couple of years.

“We have just launched a consultation on the future of the tax regime for the long term, so I am open to ideas and suggestions – if there are things we can do to get that last drop of oil out, then I will do them.”

Last night, a spokesman for Scottish Energy Minister Fergus Ewing said: “George Osborne should apologise for the Treasury’s ‘dodgy dossier’ on the finances of an independent Scotland, just as he should apologise for Westminster’s damaging 2011 tax grab on the North Sea, which his deputy Danny Alexander boasted about before being forced to scrap it.

“The Treasury’s oil figures have been described as missing ‘a mountain of black gold’ by respected economist Professor Sir Donald MacKay.”

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