Salmond to call for oil duty change in list of demands to the Chancellor

Published on Sunday 22 May 2011 17:27

OIL revenues will be top of First Minister Alex Salmond's agenda today when he meets Conservative Chancellor George Osborne as part of talks with UK ministers over the next 48 hours.

Mr Salmond is set to present his list of demands to the Chancellor as well as Energy Secretary Chris Huhne, before meeting Deputy Prime Minister Nick Clegg tomorrow.

He is to call for changes to the increase on oil revenues announced in the Budget to fund the fuel stabiliser.

The 10 billion tax grab by Mr Osborne has, according to oil companies and the SNP, put 10,000 jobs in Scotland at risk with companies choosing to invest elsewhere.

But the UK government has already warned that while Mr Salmond will be "met with respect", he is set to be frustrated on key issues such as devolving corporation tax, alcohol duty, broadcasting and the Crown Estates to Holyrood, as well as giving Scotland its share of the 200 million fossil fuel levy.

He is also likely to be pressed on his plans to hold an independence referendum in the second half of the parliament, with government ministers already voicing concerns that if it is delayed, it is likely to cause economic instability for Scotland.

A senior Whitehall source said: "It is up to Mr Salmond and the Scottish Government to come up with detailed proposals on these matters.

"We remain unconvinced, otherwise they would already be in the Scotland Bill, which is going through parliament.

"But we believe in the respect agenda, so we will listen to what Mr Salmond has to say."

Ahead of the meetings, the First Minister made it clear that he believes he now has the mandate to demand major changes to the way Scotland is governed, following his party's election victory.

"The priority of the new Scottish Government, for which we carry the overwhelming mandate of the Scottish people, is to ensure that we strengthen the parliament's ability to build sustainable economic growth and create new jobs and future prosperity from our nation's great resources," he said.

"I am keen that we make progress in improving the Scotland Bill, currently proceeding through Westminster, to give it real economic teeth.

"The people of Scotland voted for the Scottish Parliament to take on greater financial responsibility and new job-creating powers, including an enhanced borrowing ability and responsibility for corporation tax and excise duty, as well as for the Crown Estate - so we can ensure that Scottish communities benefit from the generation of our vast renewables resources offshore.

"I will also urge the Chancellor to rethink the Treasury's recent damaging tax hike on North Sea oil and gas. We must work to support investment in the energy sector rather than to put it at risk.

"I will offer alternative proposals which demonstrate how it could be possible to focus the tax increase on those who are taking excess profits out of the North Sea, while still incentivising those companies prepared to invest."

Taxes, borrowing and fossil fuels levy

WHEN Alex Salmond sits down with UK ministers over the next two days he will do so safe in the knowledge that he is the only party leader to command a parliamentary majority in the UK.

His list of demands includes some new ones, added following his party's election victory, but also some old gripes which he will hope to resolve.

In his most important meeting with Chancellor George Osborne, he will want changes to the recent 10 billion tax grab on North Sea oil and gas revenues which he believes could put 10,000 Scottish jobs at risk.

There is also the issue of new tax powers, including over corporation tax and alcohol duties, which he argues he has cross-party support for.

One of the easier subjects could be that of borrowing powers, the one area the UK government has indicated it is willing make concessions.

But one old grievance is on the 200 million fossil fuel levy for renewable projects, which Scotland cannot touch without losing the same amount from the block grant. Other meetings will look at the cost of energy transfer charges from Scotland and there will be demands for powers on areas such as broadcasting.

The UK government is also likely to be pushing Mr Salmond on his plans to hold an independence referendum in the second half of the parliament.