WIREDGOV

PM pressed to enact immediate cut to oil and gas supplementary charge.

First Minister Nicola Sturgeon has pressed the Prime Minister to enact an urgent cut to the 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.

In face-to-face talks in the Scottish Parliament, Ms 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

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.

During the meeting, the First Minister and Prime Minister also discussed the Smith Commission legislation published yesterday. During the talks, Ms Sturgeon raised her concerns over the welfare provisions in the legislation, outlining her desire to remove any veto currently in place over key policy areas.

And the First Minister emphasised her continued commitment to working with the UK Government to improve the clauses and ensure that the problems highlighted by the Scottish Government are rectified.

Speaking after meeting, the First Minister said yesterday:

“I was pleased to meet with the Prime Minister today 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 and I made it clear that it is not sufficient for this change to wait until the March budget as Alistair Carmichael suggested would happen today.

“Last year, the UK Government announced a 2 per cent 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.”

Notes To Editors

Industry data relating to investment allowance relates to economic multipliers for capital and operating expenditure published in the Oil and Gas UK Economic Report 2013, Page 58.

The oil and gas paper presented by the First Minister to the Prime Minister is published here:www.scotland.gov.uk/Publications/2015/01/8196