Finance (No. 3) Bill

Precisely. We come back to that time and again with this Government. They are looking at the very short term for quick revenue gain or political gain, not taking a longer-term approach. The point should not have to be made that if the Government want to encourage growth in the private sector, which they are always talking about, they need to encourage investment and have the right economic climate for that investment to take place. If the tax regime is not stable, that is put in jeopardy. I accept that it may not be possible for the Government to consult widely on every tax policy. There is a balance to be struck between robust scrutiny and consultation and the Government's freedom to act when necessary in the national interest, and consultation may flag up to certain companies that they ought to engage in tax avoidance measures, but in this case, the Government not only ditched their brand new tax policy framework, but went back on specific assurances to the oil industry. The previous Government had formed a good working relationship with the industry, which may now be damaged. After a meeting in 2008 between the then Prime Minister and Chancellor and the oil and gas industry, the Government consulted with the industry to develop a package of new measures to revitalise investment in UK oil and gas reserves. Those were announced in the 2009 Budget and included the new field allowances and other incentives for companies to invest in the UK's smaller and more difficult fields. Such close working together is vital to the stability of the tax system for North sea oil and gas. Unfortunately, it will become more difficult if the Government cannot restore trust with the industry. Although it sounds hard to believe, as I said earlier, last year the Government created new golden rules for themselves to make tax policy more predictable, more stable, and more transparent. We can only conclude that the Government have ditched those rules altogether, just a year after taking office, because we cannot see how Treasury Ministers are"““committed to providing clarity and certainty on the future direction of tax policy.””" The industry body for the UK oil and gas industry agrees with us, saying that the measure has damaged the industry's confidence and trust in the tax regime. I cannot see either how the Treasury still believes, as it said last year, without a hint of irony, that consultation is"““an integral feature of all policy making””," which"““helps ensure that changes are well targeted and without unintended consequences, and that legislation is right first time.””" What happened to that statement of intent from the Government? Clause 7 is a perfect example of a policy for which there was no consultation. As a result, it is poorly targeted, has potentially serious unintended consequences for the industry, and is certainly not a policy that they got ““right first time””, and all because the Government did not consult on their decision. The Government also called specifically for tax stability for the oil and gas industry. In the last Budget, their only message to industry was that they recognised the importance of a stable and fair UK oil and gas tax regime that provides certainty for business. In 2009, the then shadow Chancellor even told the industry in Aberdeen that he would fix the oil and gas tax regime for the lifetime of the remaining reserves in the North sea. After all those fine words, why have the Government ended up hitting the panic button on oil and gas? Were they scrambling for a quick response on fuel tax after their last idea failed to stand up to scrutiny? Before the election, the Conservative party told voters that it would consult on a fair fuel stabiliser. It said that it would ensure that families, businesses and the whole British economy were less exposed to a volatile oil market. The Prime Minister was very clear about how that would work:"““Our plan is to say when the petrol price goes up the tax should come down. Sadly that means when the price goes down the tax would have to go up but at least it would give you certainty as you go about your lives.””" He said that it would"““help with the cost of living by trying to give you a flatter and more constant rate for filling up your car.””" The then shadow Chancellor was also very clear that that would be delivered in the Government's first Budget.