Mr. O'NeillTo ask the Chancellor of the Exchequer what assessment his Department has made of the likely effect of Budget changes to petroleum revenue tax on exploration activity in the North sea; and what assessment his Department has made of the likely effect on offshore investment of the changes announced in both petroleum revenue tax and advance corporation tax.
§ Mr. Dorrell[holding answer 25 March 1993]: Doubling the marginal rate of return should encourage investment in, and extend the life of, existing PRT-paying fields. For the future, finding and producing oil will be taken completely out of PRT. As with any tax cut, that will both increase after-tax costs and increase after-tax profits that would have been subject to PRT. Commercially viable exploration should continue unaffected, except by the greater scope for companies to benefit from success.