We watched yesterday’s Autumn Statement from the Chancellor George Osborne, with feelings of hope and trepidation.
We understand the economic constraints under which today’s Autumn Statement is delivered and there’s consensus in our offices this afternoon that the immediate reduction of two percentage points in its tax rate is an important first step towards improving the fiscal competitiveness of the UK North Sea – but, without question, more needs to be done.
The industry currently pays tax on oil and gas production at between 62 and 81%, the move will reduce these to 60 and 80% respectively, a modest change at best, but significant when we consider this is the first cut in tax rates for the UK North Sea in 21 years – and the Treasury has also now stated its intention to reduce North Sea tax rates further.
We also welcome the extension of the ring fence expenditure supplement, which we will hope will help attract new entrants into the basin.
Now, we look forward to the start of a more productive tripartite relationship, between industry, the regulator and HM Treasury. Hopefully, that will start now, as Treasury ministers Danny Alexander and Priti Patel visit our Aberdeen office to discuss future reforms.
One thing is for sure – Government needs to send a strong signal that the UK continental shelf is open for business.
The Autumn Statement underlined the importance of this industry and the contribution it makes to our country, perhaps another reason to be a little more optimistic about the future.
Malcolm Webb is CEO of Oil & Gas UK
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