ALEX Salmond has called for new legislation to stop the UK Treasury imposing shock tax increases on the oil and gas industry.
The first minister said the “cack-handed” decision to levy a windfall tax on oil companies by raising the supplementary charge on production from 20% to 32% without consultation “has done great damage”.
Chancellor George Osborne stunned offshore companies in March by launching a £10billion raid on the sector to fund a 1p cut in fuel duty.
Mr Salmond said yesterday the decision has “without doubt” resulted in the cancellation of projects.
The SNP leader said a statutory consultation on changes is necessary to give greater certainty and restore investor confidence to the industry.
“The chancellor’s shock decision to increase the supplementary charge on the North Sea oil and gas profits, without any consultation, has done great damage,” he said.
“The decision was described by Chief Secretary Danny Alexander as ‘absolutely right’ despite clear evidence that it would lead to fewer new fields being developed and greater reliance on more expensive foreign imports.
“What needs to happen is a new initiative and I am now calling on the chancellor to establish a procedure for a statutory consultation period of a year before applying changes to oil and gas taxation, in order to restore much-needed certainty and confidence and undo the damage caused by the Treasury’s cack-handed conduct.
“This new approach would enable UK ministers to think through the consequences of their proposals for a sector that is one of the greatest industrial success stories of our generation.
“The alternative to this approach is a new North Sea boom being threatened by a UK Government which runs the risk of killing the goose that lays the golden egg.”
Mr Salmond met Malcolm Webb, chief executive of the industry body Oil and Gas UK, yesterday before Offshore Europe, which starts today.
He added: “The Treasury introduced its tax increase with no consultation, without doubt resulting in the cancellation of projects that would otherwise have gone ahead. This is all unnecessary and puts at risk a new boom that can be generated with the right environment and taxation regime.”
Mr Webb said: “Such a move would be welcomed by the industry. Oil and Gas UK has indeed already suggested to the Treasury that prior consultation would be a purposeful step towards reducing unpredictability and restoring investor confidence.”
A Treasury spokesman said the government was committed to stability in the tax system and had introduced measures to improve the way tax policy was consulted upon.
He added: “However, it is also important to have the flexibility to respond to priorities – such as the record pump prices faced by motorists at the time of the Budget.
“We continue to engage closely with the oil and gas sector. Recent announcements by several companies show the North Sea remains an attractive area for new investment and the UK Government will continue to work alongside oil and gas companies to support growth and jobs in the UK.”
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