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Oil and Gas Industry

Volume 606: debated on Tuesday 1 March 2016

This Government are clear that the broad shoulders of the United Kingdom are 100% behind our oil and gas industry and the thousands of families it supports. Last March, my right hon. Friend the Chancellor announced a wide-ranging fiscal package, including reducing the headline rates of tax and a new investment allowance, further expanded at the summer Budget to drive investment and support maximising economic recovery.

Oil and Gas UK has highlighted that headline tax rates of 50%, or 67.5% for companies paying petroleum revenue tax, are no longer sustainable. As the UK continental shelf enters an new, ever more mature phase, and the oil price remains lower for longer, the fiscal burden needs to reflect these changing circumstances and to be permanently reduced. Will the Government listen to the industry, and what fiscal support will they bring forward for the oil and gas industry in this year’s Budget?

In the “Driving investment” paper, the Government absolutely recognise the need over time to change the fiscal structure. The scale of what my right hon. Friend did reflects the fact that the figure stood at £1.3 billion. The most recent of the headline tax reductions took effect on 1 January this year.

I echo these points. The North sea oil and gas industry is facing very serious challenges at this time. Working with the industry and the Oil and Gas Authority, the Treasury can help to overcome the problems. May I urge the Minister to include in the Budget tax-cutting initiatives and support that build on last year’s measures and help to attract investment to this basin and to ease the worries of many very worried people?

My hon. Friend highlights the fact that many jobs supported by the sector are in England as well as in Scotland. I commend the work he has been doing with New Anglia local enterprise partnership on supporting companies that have found themselves in difficulties, working particularly on skills and so on. I assure him that we continue to listen to the industry, to the Oil and Gas Authority, to Oil and Gas UK, and to many individual companies to see what more can be done to support this vital sector.

OGN in North Tyneside has now shed all its 2,000 jobs. The company has been in touch with the Government to ask for help with a rather difficult contract to develop wind farms, but as yet has heard nothing about any help that can be given. Will the Minister see whether there is going to be any help, or will he meet me and representatives of OGN for the sake of these jobs?

I thank the hon. Lady. I would of course be very happy to meet her and the company to see what proposal it would put forward.

An application for shale gas exploration in my constituency may result in many millions of pounds in community benefits. Does the Minister agree that those community benefits should go to the communities most affected by development?

My right hon. Friend the Chancellor has said that the shale wealth fund could deliver up to £1 billion of benefits to communities hosting shale gas development. This is in addition to the existing industry scheme. My hon. Friend is entirely right that it is important that communities see those benefits and have the reassurance of additionality.