Shadow Chancellor Ed Balls has insisted Labour will announce “detailed plans” to reform the tax regime for the North Sea if George Osborne does not act swiftly.
The Labour MP would not be drawn on the specifics of any future policy yesterday, but argued that the Chancellor cannot afford to wait until the Budget in March to make changes to secure jobs and safeguard investment.
Speaking in Aberdeen amid news of fresh lay-offs in the north-east, Mr Balls also argued the Scottish Government could be doing more to mitigate against the wider impact of the oil industry downturn.
Mr Balls said Labour wants action from the UK Government in three areas – the supplementary charge tax rate, capital allowances for new investment and support for the “dis-establishment” of North Sea oil fields.
He said: “I think it is right that we should sit down with the industry and talk through the details of what is needed, but you have got to make it absolutely clear up front that you are determined to act.”
Mr Balls added: “I’m not going to say to you today, here’s the detail of my Budget announcement, what I will say is that if George Osborne doesn’t get on with it, we will set out in a detailed way what action which could potentially be across all those three areas.”
The shadow chancellor would not say if he would support a call from industry body Oil and Gas UK to scrap the supplementary charge on corporation tax profits.
In his Autumn Statement, Mr Osborne announced a cut in the rate from 32% to 30% in a partial reversal of an earlier shock raid in 2011 when it was hiked up from 20%.
Mr Balls said: “I have said to you three areas where I think that the Chancellor needs to be signalling now, one is around the supplementary charge, which has been increased substantially during a period when the oil price was high.
“I don’t think there is any doubt that the oil industry and independent experts believe if that continues it will lead to a loss of investment jobs and tax revenues in the long term.
“It ends up being a good example of cutting off your nose to spite your face to carry on with the current level of the charge.”
The Labour MP also demanded action from the Scottish Government, arguing the impact of job losses in the sector would hit hardest north of the border.
Mr Balls said: “That is something for which the Scottish Government needs a plan, they need to show where the resources will come from to support people who are hit by the fall in the oil price.
“I’m not sure if I’ve heard too much from the current Scottish Government about what they’re going to do.”
Shadow Energy Minister Tom Greatrex, who travelled to the north-east with the shadow chancellor and Scottish Labour leader Jim Murphy, stressed the importance of implementing the recommendations of Sir Ian Wood’s review on the future of the UK Continental Shelf.
Mr Greatrex said: “It was urgent and important when the oil price was a lot higher and it is now critically important.”
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