CHANCELLOR George Osborne walked into a fresh row with oil and gas bosses yesterday, claiming they had made “apocalyptic” predictions about the North Sea’s future after his £10billion tax raid.
He defended the levy rise and insisted the Treasury had “got the balance right” when it increased the supplementary tax rate for operators.
Industry leaders hit back last night, insisting Mr Osborne had ignored projects worth billions that had been shelved because of his tax decision, announced in the Budget in March.
During a visit to Global Energy Group’s Nigg fabrication yard in the Highlands, along with Chief Secretary to the Treasury Danny Alexander, Mr Osborne said the tax rise had not jeopardised investment and jobs.
And he pointed to multibillion-pound announcements made this year. Since the Budget, BP has confirmed a combined £7.5billion of investment in its Clair and Schiehallion fields, while Statoil said it would go ahead with its £3billion-plus Mariner development after halting work in the wake of the levy rise.
Yesterday Mr Osborne said: “I understand no one likes a tax rise, but I think we have made a fair balance between the taxes that motorists were paying on oil and the taxes the industry was paying, given that the oil price had gone up significantly.
“There was apocalyptic talk about how there would be no more investment in the North Sea and the truth is we have had big announcements from BP and we have had the Statoil announcement. It has not stopped investment and jobs – far from it.”
A survey by industry body Oil and Gas UK (OGUK) revealed 25 projects worth a combined £12billion were now unlikely to go ahead.
Industry chiefs confirmed the levy had hit projects in the region. James Edens, managing director of CNR International (UK), said the firm had slowed down its work in the North Sea, reallocated resources to Africa and accelerated plans to decommission some UK assets.
Derek Leith, oil and gas partner at professional-service firm Ernst and Young, said the industry never claimed it would “shut up shop and never invest in the North Sea again”, as Mr Osborne had suggested.
Alex Kemp, professor of petroleum economics at Aberdeen University, said the chancellor had “not taken the full picture into account”. He said: “Investment this year will still go ahead, but I do not agree with Mr Osborne at all – it is a few years down the line where the danger lies.”
Recommended for you
