The Budget this week was a hodgepodge of measures for the economy with some moves being made to help the oil and gas industry, however, yet again prime opportunities have been missed by the Chancellor to make a more substantial positive impact on the sector.
For over a year now one of the loudest calls to the UK Government from the SNP and various Trade Unions has been for the headline rate of tax to be cut.
Eventually after months and months, it appears this message has now been heard. We welcomed that announcement from George Osborne yesterday, along with his news of changes to decommissioning relief, but there are further measures the UK Government must bring in sooner rather than later to really bolster the sector.
Rather than allowing Westminster to pick away at various taxes in the industry, the SNP has been calling for a full comprehensive review of the complex tax regime of the North Sea so complementary measures could be brought in for the most effective impact for the sector.
Whilst cutting the headline rate of tax has been a good move, 40% tax on oil and gas fields offshore is still significantly higher than onshore corporation tax of just 17%.
Whilst infrastructure and immediate business may feel slightly more secure as a result of new measures introduced, an absence of forward planning in the budget leads me to think the UK Government have little-to-no strategy to boost exploration and production of the 20 billion barrels of oil left in Scotland’s North Sea basin.
The SNP have been calling for the potential of the North Sea to be realised and supported by the Tory UK Government.
It is Westminster which has the power to put the necessary financial provisions in place which would allow oil and gas companies to explore the rich North Sea basin without incurring excessive financial risk at a time of high cost exploration, and still high taxation.
The fact of the matter is that the low oil price and high exploration costs are resulting in significant cuts in the oil and gas industry, which means jobs have been lost over the past year.
It’s estimated around 65,000 jobs supported by the sector have gone since 2014.
The SNP led Scottish Government acted as soon as it could to help address these challenges, setting up the Energy Jobs Taskforce to directly address redundancy issues establishing a £12million fund to retrain individuals in the energy and manufacturing sectors and putting £379million into business and investment in Aberdeen amongst other measures.
Despite our disappointments from George Osborne in his previous Statements, I and my SNP colleagues in Westminster had hoped that he may finally step up to the mark and announce a renewed confidence from his government in the potential of the oil and gas industry, which has already put £300 billion into the treasury over the past 40 years.
Instead, the Chancellor has kept up the fiscal barriers to enhanced oil recovery and made no moves to ensure better access to finance and loans for many smaller companies in the sector which could benefit from it.