Chancellor Philip Hammond is set to keep tax breaks for the oil and gas industry in place when he delivers his Budget at the end of the month, following fears that a rising oil price could see the sector raided for additional revenue.
Robert Jenrick, the Exchequer Secretary to the Treasury, said the government intended to maintain a “competitive, stable and predictable” tax regime for the North Sea oil and gas sector despite government taking in a smaller share of revenue.
Incentive schemes were introduced in response to a collapse in the oil price in 2014 that saw exploration grind to a halt. However, the price per barrel is now in excess of $80, more than double the level when the tax breaks were introduced.
The Treasury has come under pressure from the SNP not to use oil and gas as a “cash cow” while the industry recovers, and the Scottish Conservatives have joined appeals for restraint.
“We want to see globally competitive, stable and predictable taxation for the oil and gas industry, and we expect that to continue,” Mr Jenrick told The Scotsman.
“When those reports circulated earlier in the summer, I went to Aberdeen on behalf of the Chancellor, met Oil & Gas UK, and was very clear with them that the principles set out in 2014 remained.
“We appreciate that the sector is still fragile, both the large oil companies but particularly the supply chain, who have suffered the brunt of job losses and squeezed profits, and we want to continue to support them.”
Colin Clark, the Conservative MP for Gordon, welcomed Mr Jenrick’s comments. “This is a strong signal that the Treasury is listening to industry, and to MPs here in the North-east of Scotland,” he said. “It is particularly welcome to hear recognition from the government.”