Experts to look at how taxation can help North Sea sector

Experts are to consider how taxation can be used to help the North Sea oil and gas sector.

The UK Government also plans to publish a discussion paper on how to support the industry, which has been hit hard by the slump in oil prices.

The move was announced by Chancellor Philip Hammond when he delivered his first Budget statement to the House of Commons.

An expert panel will be set up to look at how the tax system can assist sales of oil and gas fields in the North Sea, helping to keep them productive for longer.

Industry body Oil and Gas UK has already called for more to be done to “facilitate the transfer of assets in the basin and so stimulate additional investment”.

Scottish Finance Secretary Derek Mackay has also been demanding action from the Chancellor.

Earlier this month, the SNP minister wrote to Mr Hammond, calling on him to “step up to the plate” and improve decommissioning tax relief for the North Sea sector.

Mr Mackay said on Wednesday: “A particular issue for both Scotland and the UK is the future of the oil and gas industry.

“We have repeatedly called on the UK Government to take steps to incentivise investment and maximise economic recovery.

“It is encouraging that the UK Government has finally listened to the Scottish Government about the failings of the decommissioning tax regime.

“This is an area where we have repeatedly called for reform and which the UK Government have been slow to react, therefore it is important that this group comes to a swift conclusion and is not simply another talking shop.”

UK Government minister for Scotland, Andrew Dunlop, said: “This is really positive news for Scotland's oil and gas industry.

“There are very significant reserves still in the North Sea, and it is vital that the UK Government does all it can to help the industry maximise these.

“Our oil and gas industry is very much open for business, and the north-east of Scotland is a great place to invest.

“We need to ensure that our tax regime helps support the industry in the most appropriate way.”

Oil and Gas UK Deirdre Michie said: “We welcome the Chancellor's response to our call to resolve the tax issues slowing down asset transfers and his recognition of the need to maximise recovery of remaining UK oil and gas reserves.

“The publication of the statutory instrument giving further details of how the existing investment allowance will be extended to operating expenditure is also good news and we look forward to reading the detail.

“The UK Continental Shelf continues to offer an attractive range of opportunities and it is vital that we draw in a diversity of investors to ensure these are realised.

“Enabling assets to transfer when appropriate to new owners is key to this strategy. As the Chancellor has indicated, the tax regime has presented some significant barriers to asset trading, which we have been working on with Treasury for a number of years.”

Trade union Unite's Scottish secretary Pat Rafferty said: “The Chancellor's expert panel is a small step in the right direction but it's vital that workers have a seat around the table.''

The measures were criticised by Labour for not going far enough.

Shadow Scottish Secretary Dave Anderson said: “It was speculated before the budget that there may have been some tax relief for the industry but we have now heard that the Chancellor has taken the inadequate step of launching a consultation in the form of a formal discussion paper.

“Time and time again, the Tory government has hidden from the problems facing the oil and gas industry and kicked it into the long grass to be dealt with at a later date.”

Meanwhile, environmental groups were disappointed.

Friends of the Earth climate campaigner Simon Bullock said: “This Budget signals more support to gas and oil corporations at a time when we desperately need stronger action to tackle climate change.”