Tax breaks hinted for North Sea as prices fall

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Chancellor George Osborne has hinted that further tax breaks will be introduced to help the UK offshore industry amid growing pressure for urgent action to address tumbling oil prices.

Mr Osborne will use his March Budget to unveil a tax “bailout”, it was reported yesterday.sun

He is working on emergency measures to reverse a worrying decline in investment which threatens the future of the UK oil and gas sector, the report said.

Last night, a Treasury spokeswoman said she could not speculate about “what may or may not be
in the Budget”.

Scottish Energy Minister Fergus Ewing said prospects for the sector hinged on Westminster taking swift action, adding: “It is time for the UK Government to act and deliver a tax cut for the oil and gas industry.

“The Tories have promised much and delivered little for the North Sea. We want to see a bright future for Scotland’s oil
and gas industry and that will only be achieved if the UK Government takes the action the industry and the Scottish Government have repeatedly called for.”

Speaking before a trip to London to promote investment in Scotland’s energy sector Mr Ewing said: “Exploration rates in the North Sea are at historically low levels.

“If action is not taken, this will reduce the number of discoveries and in turn future production. While this is not simply a fiscal issue, urgent fiscal stimulus is required to improve the exploration outlook.”

Last week, Mr Ewing laid out a package of fiscal measures for the oil and gas industry which he argued could boost investment in the sector by more than £40billion.

Chief among his recommendations was the creation of a general investment allowance for fields that are more expensive to develop, based on economic rather than geographic factors.

The SNP also wants a phased reversal of Mr Osborne’s “tax grab” in 2011, when the supplementary charge on profits went up from 20% to 32%.

Gordon Liberal Democrat general election candidate Christine Jardine yesterday called for investment to protect north-east communities from the effects of the slump in oil prices, which have plunged by nearly 60% in just six months.

Ms Jardine said Scottish Government savings generated by the drop in fuel prices could be used to support the region through “this difficult spell”.

She added: “Now families are worried about what falling oil prices could mean for their jobs and businesses, it’s time the SNP government stepped up to the plate rather than passing the buck to Westminster again.”