The Scot-Govt is seeking an urgent meeting with UK chancellor George Osborne to urge him to lower taxes on energy companies after the north-east suffered heavy job losses due to the crude oil price crash – which has fallen by around 70% over the past two years to around $30-barrel today
The Chancellor made a series of tax cuts and offered other incentives last March, helping an industry dealing with tumbling oil prices.
Since then, crude prices have continued to slide and Scotland has lost around 10,000 jobs as oil companies cut costs and scrap projects to respond to weaker revenues.
First Minister Nicola Sturgeon emphasised that while fiscal policy is the main lever for incentivising investment, exploration and production in the North Sea, tax policy is reserved to the UK Government.
She said: “The Scottish Government is taking action to support the industry at this difficult time, but this needs to be matched by a commitment from the UK Government to address the fiscal regime in which the industry operates.
“Only the Chancellor can deliver the competitive tax regime that the sector requires at this moment and following our discussions today, we will continue to make the case to the UK Government for urgent action in the forthcoming Budget to lower the tax burden on the industry, a move that will help to protect jobs and investment.”
Scottish Finance Secretary John Swinney will seek an urgent meeting with Chancellor Osborne before he presents the UK annual budget in March to set out the Scottish Government’s view that the tax burden on the industry must be reduced.
The Scots Cabinet also agreed to focus on ensuring the N. Sea retains high-level skills, that oil companies continue exploring for oil and gas and that new technologies are applied to improve services.
Later, in response to a question in Holyrood from SNP MSP Mark McDonald, Scottish Energy Minister Fergus Ewing said that the Scottish Government is yet to receive any indication whether the UK Government plan to offer support to the oil industry in the upcoming spring budget.
Ewing said that the UK Government should use the budget to introduce a series of tax measures, including clarifying decommissioning liabilities, a refinement of the investment allowance and fiscal measures to incentivise exploration.
He went on to say that the UK Government should “step in” and help North Sea industry “at its time of greatest need”.