§ 7. Mr. William Hamilton
asked the Chancellor of the Exchequer what are the latest estimates of the revenue expected from North Sea oil over the next five years, broken down between the relevant revenue elements.
§ Sir Geoffrey Howe
I have nothing to add to my replies to the hon. Member for Batley and Morley (Mr. Woolmer) of 14 April and 22 April 1980.
§ Mr. Hamilton
Will the right hon. and learned Gentleman tell the House why the Government seem deliberately to have under-estimated the revenues from this source? Does he agree with the assumptions made by Phillips and Drew and Wood Mackenzie & Co.—namely, that 697 revenues from this source will be at least four times what he has estimated for 1983–84? From where do those firms get their figures and from where does he get his?
§ Sir G. Howe
One of the more obviously conspicuous reasons for variation is that a number of other forecasters are forecasting on their projection of current price terms several years ahead, which immediately produces scope for a wide difference. Beyond that, the hon. Gentleman will remember that this is an area in which there is notoriously scope for over-estimating and over-optimism. It will be apparent that most of the forecasts made in previous years of the volume of output have exaggerated what actually happened. The fact remains that the figures for North Sea revenues contained in our medium-term financial strategy provide our best assessment of the reality.
§ Mr. Forman
Whatever the totals and eventual breakdown of these windfall North Sea oil revenues, will my right hon. Friend assure the House that suitable priority will be given in using those revenues to necessary capital expenditure, to infrastructure projects, to reducing public debt and preferably to investment in replacement sources of energy?
§ Sir. G. Howe
That is a substantial catalogue of possibilities. I think that my hon. Friend recognises that the medium-term financial strategy attaches prime importance to the value of North Sea revenues and securing a progressive reduction in Government borrowing.
§ Mr. John Garrett
Does the right hon. and learned Gentleman agree that Britain has the most benevolent oil tax regime in the world outside the United States for oil companies? What does he think of the proposal in the Norwegian Government's white paper that in future oil companies should be reduced to the status of consultants and paid agents of the State and should merely receive a fee for the cost of exploration and production?
§ Sir G. Howe
The hon. Gentleman's last suggestion seems to be a prescription for disaster. If one thing is beyond doubt, it is that Britain owes a great deal to the skill and managerial competence of the oil companies in exploiting North Sea 698 oil. I do not agree that our oil tax regime is the most benevolent in the world. It produces a substantial yield and one that is likely to grow.