Scotland’s oil and gas industry kept a stiff upper lip after UK Chancellor Phillip Hammond’s first Autumn Statement failed to deliver further support for the North Sea as it faces record low exploration, sluggish investment and tens of thousands of job cuts.
The SNP’s energy spokesman Callum McCaig branded the few comments made by the chancellor yesterday as a “complete failure” to “support production” in the North Sea”.
Lindsay Gardiner, regional chair for PwC in Scotland also said that “some will have hoped for more to boost the recovery of the area and the energy sector”.
But the Autumn Statement report set out the chancellor’s wish to “recommit” to its Driving Investment review which was published in 2014.
The Treasury also confirmed that oil and gas revenues are forecast at minus £0.5billion for 2016/17 but would rise by £2.5billion in 2020-21 – and would be positive from 2017-18 onwards.
Deirdre Michie, chief executive of trade body Oil and Gas UK said the statement would send a “strong signal to investors that the government recognises that the UK oil and gas tax regime needs to be predictable and internationally competitive”.
She added: “Today’s Treasury forecasts show our industry will be contributing £10billion more in production taxes over the next five years than was previously expected.
“While this can be attributed in part to changes in commodity prices and exchange rates it also reflects the significant work of industry to make our operations more efficient and to increase production.”
Both OGUK and petro-economist Professor Alex Kemp are holding out hopes that tax breaks on decommissioning will be on the agenda in the Spring budget next year.
The Aberdeen University professor said: “Certainly, industry would have liked more tax relief and I thought that might promote the MER (maximising economic recovery) strategy.
“I also thought there was a case for helping facilitate late-life asset transactions.
“That has been under discussion. It did not happen today, but I’m guessing it is still under review and may come up in next year’s Budget.”
Scott Lehmann, VP of marketing at Aberdeen-based software firm, Petrotechnics, welcomed the Chancellor reinforcing commitments made to the North Sea in the March Budget.
But he added: “While this is good it’s not enough.”
Aberdeen South MP Callum McCaig said the Autumn Statement proved the UK government is happy to use the North Sea as a “cash cow” with “precious little in return”.
He said: “There has been no new support for the oil and gas sector in this Autumn Statement. The Tories have been using the North Sea – and the north-east of Scotland’s economy – as a cash cow for decades and we are getting precious little in return.
“Billions of pounds have flowed out of the north-east over the years, and today’s statement proves the Tories aren’t serious about giving anything back.
“Philip Hammond has failed to move on loan guarantees, failed to encourage exploration and a failed to deal with decommissioning; risking the future of the industry and the many jobs it provides.”
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