As expected, the chancellor rejected calls for a windfall tax on North Sea oil companies, even though Shell and BP’s profits totalled over £18bn for 2000.
Gordon Brown said the North Sea tax regime would not be subject to short-term considerations, such as last year’s high oil prices, but would continue to strike a balance between raising a ‘fair share of the revenues’ for the country and allowing for continuing long-term investment offshore.
The UK Offshore Operators’ Association, which represents the 32 oil and gas companies operating on the UK Continental Shelf, welcomed his statement. It said: ‘The Government understands fully the economics of the UK industry and the challenges it faces from other parts of the world for investment capital. Recent announcements have confirmed that investment is returning to the North Sea and the stability of the UK fiscal regime is one of the reasons for this.’
Sir Ian Wood, chairman of North Sea contractor Wood Group, added that the efforts the industry and government had made since 1998 to tackle problems in the UK offshore sector had been rewarded with greater investment and activity over the past 12 months and that ‘this continued fiscal stability is vital for the 270,000 jobs in the sector’.
However, energy-intensive manufacturers were left non-plussed by the Budget speech. Jeremy Nicholson, economic adviser to the Energy Intensive Users’ Group, said: ‘There was nothing tangible on energy taxation. It was a bit of a non-event as far as we were concerned.’
The chancellor said a list of energy-saving technologies qualifying for 100% rebates against the Climate Change Levy would be published by the end of the month, but Nicholson said this was unlikely to include any surprises.
The chancellor cut fuel duties on ultra low sulphur (ULS) petrol by 2p a litre with immediate effect and extended the concession to lead replacement petrol and unleaded petrol to June 14. He also cut the price of ULS diesel by 3p a litre and announced a 20% cut in the duty on bio diesel from next April.