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| Budget 2017: Chancellor to outline North Sea help | Budget 2017: Chancellor to outline North Sea help |
| (35 minutes later) | |
| The chancellor is to use his budget to outline plans to help the North sea oil and gas industry, the Treasury has confirmed. | The chancellor is to use his budget to outline plans to help the North sea oil and gas industry, the Treasury has confirmed. |
| Philip Hammond will investigate the use of tax incentives to make it easier for operators to sell oil and gas fields, helping to keep them productive for longer. | Philip Hammond will investigate the use of tax incentives to make it easier for operators to sell oil and gas fields, helping to keep them productive for longer. |
| A panel of experts will be set up to examine the issue. | A panel of experts will be set up to examine the issue. |
| A discussion paper on how to help the industry will also be published. | A discussion paper on how to help the industry will also be published. |
| The Treasury said the moves would further help a vital industry that meets around 50% of the UK's primary energy needs. | The Treasury said the moves would further help a vital industry that meets around 50% of the UK's primary energy needs. |
| It said the measures would build on "unprecedented support already provided to the oil and gas sector through £2.3bn packages in the last three years". | It said the measures would build on "unprecedented support already provided to the oil and gas sector through £2.3bn packages in the last three years". |
| Industry body Oil and Gas UK has already called for more to be done to "facilitate the transfer of assets" to stimulate additional investment. | Industry body Oil and Gas UK has already called for more to be done to "facilitate the transfer of assets" to stimulate additional investment. |
| In its Business Outlook report published on Tuesday, Oil and Gas UK said it was "continuing to ask the Treasury to revise the tax treatment of decommissioning liability in support of this". | In its Business Outlook report published on Tuesday, Oil and Gas UK said it was "continuing to ask the Treasury to revise the tax treatment of decommissioning liability in support of this". |
| The report warned of a major drop-off in production without additional capital investment, but said there were some signs of optimism with confidence "slowly returning to the basin" despite the global slump in oil prices. | The report warned of a major drop-off in production without additional capital investment, but said there were some signs of optimism with confidence "slowly returning to the basin" despite the global slump in oil prices. |
| Derek Mackay, the Scottish government's finance secretary, had also written to the chancellor calling for "action to improve decommissioning tax relief, ensuring that the right assets are in the right hands". | Derek Mackay, the Scottish government's finance secretary, had also written to the chancellor calling for "action to improve decommissioning tax relief, ensuring that the right assets are in the right hands". |
| Analysis by Kevin Keane, BBC Scotland energy correspondent | Analysis by Kevin Keane, BBC Scotland energy correspondent |
| So what are these "tax breaks?" Well, the commitment to decommissioning was always a joint liability between the operators and the government, both of whom have benefitted from the bonanza. | So what are these "tax breaks?" Well, the commitment to decommissioning was always a joint liability between the operators and the government, both of whom have benefitted from the bonanza. |
| The operator would stump up the cash and the treasury would pay back some of the tax paid over the years. | The operator would stump up the cash and the treasury would pay back some of the tax paid over the years. |
| But it was always assumed oil fields would stay in the hands of big players like BP and Shell until the bitter end. | But it was always assumed oil fields would stay in the hands of big players like BP and Shell until the bitter end. |
| A lot of fields aren't now making enough money for those oil majors and they want rid. But there are new kids on the block with the skills and commitment to produce the last few drops of black gold who would consider buying fields and keeping them going. | A lot of fields aren't now making enough money for those oil majors and they want rid. But there are new kids on the block with the skills and commitment to produce the last few drops of black gold who would consider buying fields and keeping them going. |
| But there's a blockage. When it comes to decommissioning the responsibility shifts to them. Because they've not been around for long, they've paid a lot less tax than the big boys. | But there's a blockage. When it comes to decommissioning the responsibility shifts to them. Because they've not been around for long, they've paid a lot less tax than the big boys. |
| And because they can only claim from the Treasury what they've already stumped up, much more of the liability shifts from the government to this small operator. What the panel will work out is how the full value of tax refunds, which would have been paid to the old operator, can shift to the new one. | And because they can only claim from the Treasury what they've already stumped up, much more of the liability shifts from the government to this small operator. What the panel will work out is how the full value of tax refunds, which would have been paid to the old operator, can shift to the new one. |
| That move should prompt more of these older fields to be sold and not decommissioned early. It shouldn't cost us, the taxpayer, any more and potentially because it keeps the oil fields producing, it should even benefit the treasury. | That move should prompt more of these older fields to be sold and not decommissioned early. It shouldn't cost us, the taxpayer, any more and potentially because it keeps the oil fields producing, it should even benefit the treasury. |
| Responding to the Treasury announcement, Mr Mackay said it was "encouraging that the UK government has finally listened to the Scottish government about the failings of the decommissioning tax regime". | Responding to the Treasury announcement, Mr Mackay said it was "encouraging that the UK government has finally listened to the Scottish government about the failings of the decommissioning tax regime". |
| He added: "This is an area where we have repeatedly called for reform and which the UK government have been slow to react, therefore it is important that this group comes to a swift conclusion and is not simply another talking shop." | He added: "This is an area where we have repeatedly called for reform and which the UK government have been slow to react, therefore it is important that this group comes to a swift conclusion and is not simply another talking shop." |
| Mr Mackay also called on the chancellor to offer "much needed financial relief" for households and public services. | Mr Mackay also called on the chancellor to offer "much needed financial relief" for households and public services. |
| He said: "The UK government plan for an additional £3.5bn of spending cuts in 2019-20, at precisely the point when the UK's departure from the EU could occur is disastrous. I say clearly to the chancellor - this is the wrong time for austerity". | He said: "The UK government plan for an additional £3.5bn of spending cuts in 2019-20, at precisely the point when the UK's departure from the EU could occur is disastrous. I say clearly to the chancellor - this is the wrong time for austerity". |
| Scotland Office minister Andrew Dunlop, said the announcement was "positive news for Scotland's oil and gas industry". | |
| He added: "There are very significant reserves still in the North Sea, and it is vital that the UK government does all it can to help the industry maximise these. | |
| "We need to ensure that our tax regime helps support the industry in the most appropriate way." | |
| The Treasury said Mr Hammond would also announce further investment in areas such as education and skills in England - which would see the Scottish government receive "an important uplift in its budgets" through the Barnett formula. | The Treasury said Mr Hammond would also announce further investment in areas such as education and skills in England - which would see the Scottish government receive "an important uplift in its budgets" through the Barnett formula. |
| Upbeat assessment | |
| This would add to the £800m boost to the Scottish government's capital budgets from the Autumn Statement, the Treasury said. | This would add to the £800m boost to the Scottish government's capital budgets from the Autumn Statement, the Treasury said. |
| Elsewhere in his first budget, Mr Hammond is expected to deliver an upbeat assessment of Britain's economic prospects after Brexit, despite admitting that more austerity is in the pipeline as he battles to get the deficit down. | Elsewhere in his first budget, Mr Hammond is expected to deliver an upbeat assessment of Britain's economic prospects after Brexit, despite admitting that more austerity is in the pipeline as he battles to get the deficit down. |
| The chancellor will say that he is ready to take further "difficult decisions" on tax hikes and spending cuts to get the books into balance, even though he recognises that many voters are still feeling the pinch 10 years on from the financial crash of 2007/08. | The chancellor will say that he is ready to take further "difficult decisions" on tax hikes and spending cuts to get the books into balance, even though he recognises that many voters are still feeling the pinch 10 years on from the financial crash of 2007/08. |
| But he will insist that the UK government's economic programme is laying the foundations for a "stronger, fairer, better Britain" outside the EU and will promise to do everything he can to help ordinary working families. | But he will insist that the UK government's economic programme is laying the foundations for a "stronger, fairer, better Britain" outside the EU and will promise to do everything he can to help ordinary working families. |
| Mr Hammond has already set out plans for £500m for additional spending on schools in England, and a further £500m to boost science and innovation with support for electric vehicles, robotics and artificial intelligence. | Mr Hammond has already set out plans for £500m for additional spending on schools in England, and a further £500m to boost science and innovation with support for electric vehicles, robotics and artificial intelligence. |
| How to follow Budget on BBC | |
| Scottish Labour called on the chancellor to "call a halt to austerity and start seriously investing in our public services". | Scottish Labour called on the chancellor to "call a halt to austerity and start seriously investing in our public services". |
| The party's Jackie Baillie said: "The chancellor claims to be on the side of working people. He should use his budget to prove it by investing in the public services that we all value, improving living standards for families across the UK and reversing planned welfare cuts." | The party's Jackie Baillie said: "The chancellor claims to be on the side of working people. He should use his budget to prove it by investing in the public services that we all value, improving living standards for families across the UK and reversing planned welfare cuts." |
| The Scottish Greens called on Mr Hammond to "desist" with his austerity policies and instead introduce measures to improve Green infrastructure. | The Scottish Greens called on Mr Hammond to "desist" with his austerity policies and instead introduce measures to improve Green infrastructure. |