§ Mr. SalmondTo ask the Secretary of State for Trade and Industry what discussions regarding the change in the North sea fiscal regime were conducted with PILOT prior to the announcement of the 2002 Budget. [59385]
§ Mr. WilsonTax policy is a matter for my right hon. Friend the Chancellor of the Exchequer. The reforms of the North sea fiscal regime announced in Budget 2002 were not discussed in advance in PILOT.
§ Mr. SalmondTo ask the Secretary of State for Trade and Industry how the Government have assessed the likely effects of reduced industry cash flow due to North sea taxation changes on exploration and appraisal drilling in the North sea. [59375]
§ Mr. WilsonLast year, after investing nearly £4 billion, the North sea oil and gas industry generated cash flow of close to £10 billion after all taxes. The impact on industry cash flow of the changes to North sea taxation announced by my right hon. Friend the Chancellor of Exchequer in Budget 2002 will depend, among other things such as the level of oil and gas prices, on the level of industry investment. The carefully designed package of measures combines two key elements—a 10 per cent. supplementary charge and a 100 per cent. investment allowance. The third element, abolition of North sea royalty, will of course increase rather than reduce industry cash flow.