Energy Minister Urges Talks Over North Sea Tax Breaks
02 July 2009
New Energy Minister Lord Hunt called last night for more dialogue between the offshore oil and gas industry and the Treasury over the tax breaks needed to maximise the extraction of North Sea resources.
Addressing a Subsea UK reception in the Commons, he gave a muted response to the highly-critical report issued by the Commons energy and climate change committee, which warned that without more help to encourage development and exploration, the industry could go into decline and put 50,000 jobs at risk.
Lord Hunt said that as he was not a Treasury minister he could not talk directly about tax matters, but he added: “I can say I have discussed this with industry and I am certainly encouraging a dialogue between the Treasury and the industry on this issue.”
The report said tax incentives in the Budget to encourage the development of particularly difficult new finds was not working.
The minister said the report raised some very important issues and he wanted to assure the industry “that this government recognises the importance of the North Sea and the UK continental shelf and we will do everything we can to support it”.
Lord Hunt also told Subsea UK chief executive Alistair Birnie, who appealed for government action to persuade the banks to restore lending to firms operating offshore on reasonable terms for investment, that he was aware the issue was critical. He said: “I am very well aware of all the difficulties you face attracting investment.”
He said the government had been encouraging the banks to start lending again. Lord Hunt agreed the situation was “very tough” but claimed there were “encouraging signs that measures the government has taken are working through”.
Mr Birnie had said earlier: “We must, as a matter of urgency, curtail the predatory behaviour of some of the key banks acting in their self-interest, which is jeopardising jobs and the long-term future of an industry which supports 40,000 jobs contributing over £4.5billion to the UK economy.”
Venture Production chief executive Mike Wagstaff warned the UK was a world leader in subsea engineering only because of activities in the North Sea.
He said: “Without sustainable levels of activity in the North Sea, we believe that the nexus of the subsea industry will very quickly move to Houston, Singapore, Rio, Perth or wherever the action happens to be.”