Incentives needed to get most out of offshore industry

An 11th-hour plea to Chancellor Alistair Darling last night called on him to use Wednesday’s mini-Budget to announce plans for tax changes “to breathe new life into the North Sea oil and gas industry”.

The call from SNP energy spokesman Mike Weir ahead of the delayed pre-Budget report follows months of campaigning by leading figures in the offshore industry warning further incentives are needed to extract the maximum resources. The latest was leading north-east businessman and chairman of Aberdeen-based Wood Group Sir Ian Wood who said the industry could be the saviour of the UK economy by hauling the country out of its massive debt provided government and industry get together on a plan to maximise output and boost the economy for years to come.

Oil and Gas UK chief executive Malcolm Webb, has warned savage tax increases over the past six years have depressed investment below levels needed to finance the exploration and development needed.

And the Commons energy committee said in a report 50,000 jobs could be at risk if the offshore industry is allowed to go into decline.

Mr Weir, MP for Angus and a member of the committee, said Wednesday’s statement “must promote investment and exploration in the North Sea”.

“The Oil and Gas industry is powering the UK’s economy and delivering huge revenues to keep the Treasury afloat. With £800billion of oil and gas potential under our seas the industry is right to demand a fair deal from the UK Government. We must ensure the government encourages investment – not drive it away through punitive taxes.”

He said that if the Scottish Government had devolved power over taxation it would use it to tailor the offshore tax regime to maximise extraction. He said tax incentives were also required to ensure the maintenance of offshore pipelines and other infrastructure so they would remain available for a potentially huge new industry pumping carbon cleaned from power station emissions into disused oilfields.

Meanwhile, SNP defence spokesman Angus Robertson, MP for Moray, attacked as “folly” Ministry of Defence plans to slash £4million off the Army Cadet Force training budget because it could threaten future recruitment.