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UK Government ‘open’ to £1trillion sector deal for oil industry

The UK Government is “open” to the prospect of agreeing a £1trillion sector deal with the oil and gas industry, according to a Cabinet member.

Scottish Secretary David Mundell told the Press and Journal that there was “every possibility” that the lucrative package can be finalised.

The Conservative minister raised hopes of an agreement as he warned that the North Sea industry should be “very worried” by recent comments from Labour leader Jeremy Corbyn, who signalled that he could review offshore taxes if he becomes prime minister.

Industry leaders believe a sector deal could be worth a massive £1trillion to offshore firms over the next 17 years if it is delivered.

Scottish Conservative leader Ruth Davidson revealed in the Press and Journal last month that she was lobbying “very, very hard” for such an agreement and she hoped to “bring that home” in the coming year

Asked if he shared Ms Davidson’s confidence, Mr Mundell said: “We’ve gone along a route in the sense that we’ve got the UK industrial strategy.

“That’s a very important backdrop. It’s a strategy that recognises the importance of the industry and recognises the scope for sector deals.

“We’re open to such a deal and it has to be said the oil and gas industry is one of the most effective at making its views known to government.

“I think there’s every possibility that there can be an oil and gas sector deal and that dialogue continues.”

The UK Government confirmed it would press ahead with a series of sector deals in November when it launched its industrial strategy, with the first awards going to construction, artificial intelligence, automotive and life sciences.

Offshore industry representatives have since been drawing up proposals to try to secure their own agreement.

Details have yet to be released but a sector deal for oil and gas would be expected to focus on extending the life of the North Sea and boosting the UK’s capabilities around transformational technology, decommissioning and underwater engineering.

Mr Corbyn said last month that he would “look very carefully at tax changes” for the industry if he became prime minister, particularly those linked to training, investment, and research into high quality products and techniques.

But Mr Mundell insisted the sector should be wary, saying: “I would be very worried if I was the oil and gas industry about any Jeremy Corbyn tax review because every other Jeremy Corbyn tax proposal is to increase tax on everybody, on individuals, on businesses, on everybody.

“I find it very hard to be believe with all his other proposed tax rises, that the one industry that Jeremy Corbyn would single out for tax cuts would be the oil and gas industry. I just don’t think it’s credible.

“His position is that business is a cash cow for tax, that business doesn’t pay enough tax and business should pay more tax.”

Source: Aberdeen Journal

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