Tax changes are vital for the future of the UK’s North Sea oil and gas industry, according to the sector’s representative body.
Oil & Gas UK called on Chancellor George Osborne to take urgent action to reduce and simplify North Sea oil and gas taxation.
Chief executive Malcolm Webb said the right action could result in additional investment in the North Sea.
His comments echoed those of industry leader Sir Ian Wood who said tomorrow’s Budget could be the most important in the history of oil and gas development in the North Sea.
Mr Webb said: “A double-digit reduction in the Supplementary Corporation Tax charge, plus a single simplified Investment Allowance, is urgently needed in order to help re-establish the competitiveness of the UK oil and gas industry.
“The Chancellor is well-informed of the industry’s current situation and I trust he will do the right thing for this sector and for the country on Wednesday.”
He continued: “The UK North Sea sector is paying the price for having become a high cost, high tax and poorly regulated region.
“The industry is working flat out to improve its cost efficiency but significant investment is required alongside action on costs and regulation.”
He said a clear signal must be sent out that the UK tax regime has been restructured in order to attract and sustain much needed investment for the long term.
Earlier Sir Ian called for the Chancellor to announce “really significant” action, and warned the UK economy stood to lose a “huge amount” unless the right measures were put in place.
Mr Osborne is widely expected to announce a change in the North Sea tax regime tomorrow to support the sector sent reeling by the plunging price of oil.
Sir Ian said: “This is a watershed moment.
“I know it’s a difficult Budget for the Chancellor but it’s absolutely essential that he’s prepared to make some significant reduction in the headline rate (of tax) as well as the investment allowances.”
The founder of the Wood Group conducted a review of offshore oil and gas recovery for the UK Government.
l CBI director-general John Cridland reiterated calls for the Chancellor to help the UK’s medium-sized businesses to grow.
A stable investment environment had to be created for ambitious firms looking to expand.
He added: “Our economy is in good shape, but there’s still no room for complacency, so spending wisely on measures that will help to keep growth heading in the right direction while staying the course on deficit reduction has got to be the priority.”