§ Q66. Mr. Hunterasked the Prime Minister what will replace revenue currently derived from North sea oil production when the level of production has decreased significantly; and if she will make a statement.
§ The Prime MinisterThe North sea tax revenues are being put to good use. Inflation has been reduced to the lowest level since the 1960s and the level of Government borrowing relative to GDP is one of the lowest anywhere in the world. A considerable part of the public sector's overseas debts have been repaid and overseas assets are being built up. Domestic fixed investment is expected to have reached record levels in 1984.
This will place the public sector finances and the economy itself in a good position to withstand falling oil revenues when oil production eventually begins to decline. The non-North sea economy and overseas earnings will tend to generate additional revenues as oil production declines. The Green Paper on "Public Expenditure and Taxation into the 1990s" (Cmnd. 9189) showed that, with restraint in public expenditure, falling debt interest costs should allow both non-North sea taxes and the level of borrowing (relative to GDP) to be reduced despite declining oil revenues.