Scotland’s First Minister Nicola Sturgeon last night pressed UK Prime Minister to urgently cut UK Government’s Supplementary Charge on the North Sea oil and gas industry as part of a package of support to give the sector an immediate boost after crude oil prices dived more than 50% in the past six months and hundreds of job losses in Aberdeen have been announced.
In Holyrood, Sturgeon presented the Prime Minister with a paper on the urgent action required to help the oil and gas industry and she called on the UK Government to act now on key priorities;
- an immediate reversal of the increase in the Supplementary Charge implemented by the UK Government in 2011
- introduction of an exploration tax credit to help increase levels of exploration and sustain future production
However, the First Minister also welcomed the UK Government’s announcement on a consultation on an investment allowance – a move the Scottish Government has been calling for since early January.
According to industry data, additional activity generated by an investment allowance could support up to 26,000 jobs per year, with a substantial proportion based in Scotland.
Sturgeon said: “I was pleased to meet with the Prime Minister to outline face-to-face the action his government needs to take to improve the oil and gas tax regime and provide immediate support to the industry and protect jobs.
“Chief among the action required is an immediate reversal of the 2011 hike in the Supplementary Charge. I made it clear that it is not sufficient for this change to wait until the March budget as Alistair Carmichael, the UK Scottish Secretary, suggested.
“Last year, the UK Government announced a 2% reduction of the Supplementary Charge rate – this reduction doesn’t go far enough. In boardrooms worldwide, oil companies are now making decisions which will impact on jobs in Scotland. Investors need a strong signal that the North Sea is open for business and that the UK Government understand the needs of the industry – and they need that signal now.
“I also raised the need for an exploration tax credit that will sustain future production by encouraging increased exploration. And I welcomed the announcement, made earlier today, that the UK Government are to now bring forward a consultation on an investment allowance, a move we have been calling for since the turn of the year.
“For years the Scottish Government has called for effective, operational reform to the oil and gas tax regime, and for years it has been ignored. That is why today I took the opportunity to address these concerns directly with the Prime Minister.
“The last few weeks have demonstrated the very real challenges the industry faces and we must tackle the on-going cost pressures and the fall in oil prices head on.
“After years of accumulating revenues from the North Sea, the UK Government must finally and urgently take substantive action. There is a long term sustainable future for the North Sea and the Scottish Government are committed to using every lever at our disposal. It is time for the UK Government to follow suit.”
See also today on Scottish Energy News:
‘No second chances to cut N. Sea taxes, industry chief warns Cameron’.
Mark McDonald, a North-East SNP MSP, commented: “Experts like Sir Ian Wood and Professor Paul Stevens have made clear that action cannot wait until the budget in March as companies will be making decisions on future production and staffing before then.
“Further Westminster delay and inaction would be completely unacceptable – it’s time for them to step up to the plate and give our oil industry and hard-working staff the support they deserve.”