Finance (No. 3) Bill

The right hon. Member for Gordon (Malcolm Bruce) said in his opening remarks that the Government wanted the UK to be seen to be open for business. That is a very good objective, but the problem is that an 81% marginal rate of tax on anything, and the instability caused by a shock 60% increase, puts at risk their stated aim of promoting the UK in that way. The right hon. Gentleman made the point about investment, and investment levels are unchanged generally, but there is now less focus on frontier developments than on investment in the mature North sea, and that is a huge concern. The 60% rise in the supplementary charge that was created, it is told, by the Chief Secretary to the Treasury—whom I see leaving the Chamber barely at the start of the debate—was the most damaging thing that the Government did in the Budget. The Government will take £2 billion a year extra in tax from the sector, on top of the £4 billion windfall that they got last year, to which the right hon. Member for Gordon referred, and on top of the windfall that they will get this year—2011-12—over the 2010 forecast. All that runs counter to the Chancellor's stated objectives of tax stability, delivering a growth agenda and production here in lieu of imports. Let us remember that when that bombshell was announced, leading industry members reportedly met in a state of disbelief about the Government's plans. There were immediate reports about the threat to some 40,000 jobs. Statoil immediately announced the suspension of the Mariner and, possibly, Bressay investments, and it was argued that a slowdown in North sea activity would increase the UK's reliance on imported oil and gas, with the consequence of an even higher balance of payments deficit and the corresponding impact of a suppression of GDP growth. On tax receipts, Alan Booth, the chief executive of EnCore Oil, rightly said:"““Undeveloped and undiscovered oil and gas pays no taxes,””" and it got worse, of course, because Valiant immediately announced that it was not going to invest in its £100 million project, saying that it was"““no longer viable because of the surprise Budget move.””" Chevron warned that there would be ““unintended consequences””, and let us remember that Oil & Gas UK was very clear when it said that the measure had"““shaken investor confidence to the core.””" The right hon. Member for Gordon said at one stage that Ministers had robustly defended their position. I do not believe that they have. When these fears and concerns were put to the Chancellor, a Treasury spokeswoman said:"““Mr Osborne did not expect investment to be damaged.””" That is not a robust defence of a position; it is intransigence and a failure to understand the consequences of the actions that the Government had undertaken. There are other consequences. Jim Hannon from Hannon Westwood, the drilling analysts, said that 30,000 people could lose their jobs if exploration activity dropped by merely 15%. The detailed work by Professor Alex Kemp—I will not go through it in detail but it is well worth everybody in the House reading it—has warned that up to 2 billion barrels of oil and the equivalent amount of gas could be left in the North sea, untaxed and unused. Derek Leith from Ernst and Young has warned of projects being delayed and cancelled, saying that the Statoil decision was"““only the tip of the iceberg…There are a lot of companies that will not pursue projects but will not go public about it.””"