27 April 2011
Waveney MP Peter Aldous, speaking in the House of Commons Debate on the Finance Bill yesterday, called for further scrutiny of proposals to increase taxation on the oil and gas industry which unfairly penalise smaller oil companies and have an adverse effect on the gas sector.
Mr Aldous argued that a flat-rate tax regime could unfairly penalise smaller oil companies looking to work marginal fields, resulting in projects becoming financially unviable and companies diverting their activities to other countries where the taxation regime is more favourable. He warned that this could lead to the loss of local jobs and income to the Exchequer and lead to an increasing UK dependence on energy imports.
He also argued that the proposals in the Bill could have an adverse effect on the gas sector, which is particularly important in the southern North sea. He warned that this could result in gas projects becoming uneconomic, with schemes not proceeding and lower-priced North sea gas production replaced by higher-priced gas imports. This could result in higher gas and power prices for domestic and business consumers.
Aldous suggested that the proposals in the Bill could discourage investment by energy companies that work on a global stage and are footloose in deciding where to invest.
He argued that whilst offshore renewables provide an exciting future for Lowestoft and Great Yarmouth to reverse years of economic decline and create new long-term jobs, there is a danger that discouraging investment in oil and gas in the North sea could lead to the supply chain and skills base, many of which are transferable from the oil and gas sector to wind and wave technology, being damaged.
Aldous proposed that the Government look closely in the Committee Stage of the Bill at the proposed tax increase to ensure smaller oil companies are not discouraged from making investments in marginal fields and that there should be a different taxation regime for gas to reflect the differences between the oil and gas sectors and the lower profitability of gas.
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Mr Aldous argued that a flat-rate tax regime could unfairly penalise smaller oil companies looking to work marginal fields, resulting in projects becoming financially unviable and companies diverting their activities to other countries where the taxation regime is more favourable. He warned that this could lead to the loss of local jobs and income to the Exchequer and lead to an increasing UK dependence on energy imports.
He also argued that the proposals in the Bill could have an adverse effect on the gas sector, which is particularly important in the southern North sea. He warned that this could result in gas projects becoming uneconomic, with schemes not proceeding and lower-priced North sea gas production replaced by higher-priced gas imports. This could result in higher gas and power prices for domestic and business consumers.
Aldous suggested that the proposals in the Bill could discourage investment by energy companies that work on a global stage and are footloose in deciding where to invest.
He argued that whilst offshore renewables provide an exciting future for Lowestoft and Great Yarmouth to reverse years of economic decline and create new long-term jobs, there is a danger that discouraging investment in oil and gas in the North sea could lead to the supply chain and skills base, many of which are transferable from the oil and gas sector to wind and wave technology, being damaged.
Aldous proposed that the Government look closely in the Committee Stage of the Bill at the proposed tax increase to ensure smaller oil companies are not discouraged from making investments in marginal fields and that there should be a different taxation regime for gas to reflect the differences between the oil and gas sectors and the lower profitability of gas.
| Hansard
