HC Deb 23 February 1981 vol 999 cc646-7
14. Mr. Eggar

asked the Secretary of State for Energy whether he is satisfied that the present regime of taxation of North Sea Oil producers is optimally suited to the needs of United Kingdom energy policy.

Mr. Gray

I am confident my right hon. and learned Friend the Chancellor of the Exchequer will take full account of United Kingdom energy policy requirements when considering his Budget measures.

Mr. Eggar

Although I accept the case for additional taxation, is there not a real danger that frequent changes to a taxation policy that is already extremely complicated will lead to a decrease in activity in the North Sea, which will be very harmful to the long-term development of our energy policy?

Mr. Gray

I feel confident that the proposals that will be announced by my right hon. and learned Friend will not place any inhibition on the oil companies. I remind my hon. Friend that of the seven changes in taxation affecting the oil companies that have taken place since the Government came to power, albeit some of them very minor, six had already taken place before the announcement of the seventh round of licensing, yet, with 123 applicants, we broke all records in that.

Mr. Edwin Wainwright

Does the Minister realise that many financial experts think that the major oil companies are getting away with much bigger profits than they should be allowed? Will he therefore use his influence with the Chancellor of the Exchequer to make. certain that the country gets a fairer and better share of the profits from North Sea oil?

Mr. Gray

I suggest that the hon. Gentleman has exaggerated slightly. It is necessary for us to have a steady flow of investment in the North Sea. The line that we draw between getting the proper benefit in the national interest and providing an incentive for those who wish to invest is a very delicate one. I am sure that my right hon. and learned Friend the Chancellor of the Exchequer will get it right.

Mr. Viggars

Although high rates of taxation are, to a greater or lesser extent, no doubt a disincentive to exploration in the North Sea, does my hon. Friend agree that uncertainty is also a disincentive? Does he agree, further, that there may be grounds for considering quite soon some kind of assurance on the lines of the Varley assurances given in 1970–74, which would give some idea of future stability for the industry?

Mr. Gray

My hon. Friend will be aware that we honoured the Varley assurances. It might be useful to look at something along the lines that he suggests. We are always prepared to consider these matters. I assure him that this is receiving serious consideration at the moment.

Later—