Finance (No. 3) Bill

My right hon. Friend is absolutely right, and he makes his point with the authority of having been Energy Minister for many years in the previous Government. The security that our indigenous oil and gas industry gives us is one of its most important benefits. We have never had full energy security, but the industry gives us a considerable edge in the current climate. I mentioned the volatility of oil prices and the tax system in the UK, and the risks to future investment are real. The Chancellor has introduced even more uncertainty into the system with his proposal to link oil tax with fuel prices. We have a volatile system, and most predictions for oil prices in the medium to long term are wrong. We have not seen the Chancellor's scheme for the new tax system, but it seems clear that it will add to more uncertainty about the tax rate. The Government are absolutely right to express their concern about rising fuel costs, particularly given the impact on taxation, but I cringe a little when I hear Ministers talk, as the Chief Secretary did, about the Labour Government's escalator. The escalator was introduced by the previous Tory Government, and during the Labour Government, particularly after the fuel crisis at the turn of the century, it was dropped. In 11 out of our 13 years in power, the escalator was suspended. That is the reality. The current Government could have dealt with the problems faced by motorists in another way, without introducing all this complexity and the confusion that it will cause—particularly if the crisis in the middle east recedes and the oil price declines again. They have made a serious error by linking fuel costs to the taxation of the oil and gas industry. Importantly, the oil industry has reacted very badly to the increases, with one senior figure describing them as a ““drive-by shooting””. The industry relates to government in a very sophisticated way, and it probably has more contact than any other industry with government, but there is clearly genuine shock and concern about this Government's decisions. I have had many years of contact with leading figures and companies in the industry, and in the past I have seen the industry cry wolf more times than I care to remember. At the end of the day, it makes whatever adjustments necessary and gets on with it. This time, however, it seems very different. The sense is that there has been no proper consideration of the needs of the industry, as an industry in decline but one that will make a major contribution to our economy with the right support and management from government. The sense is that Treasury Ministers in particular do not understand the industry and simply see it as a cow to be milked. They have taken a short-term decision, and the sense is that the cow has been milked for short-term political reasons—to throw some crumbs to the motorists and to accelerate the reduction of the deficit. Both are perfectly respectable aims, but not at the cost of causing the severe damage that Alex Kemp's report envisages to our indigenous oil and gas industry.