THE North Sea oil and gas industry yesterday hailed George Osborne’s decision to offer more tax breaks to bolster investment in the sector.
The Chancellor said income from older fields will be spared from paying full duty to ensure they are fully exploited.
It is the latest in a series of reliefs introduced for the industry after the coalition Government was criticised for hiking the supplementary charge on North Sea producers from 20% to 32% last year.
The new Brown Field Allowance will shield up to £500m of income from the charge when firms are boosting production from established oil or gas fields ... potentially cutting their tax bill by £160m.
The move is expected to cost the Exchequer £100m per year initially, but officials insist long-term tax revenues will be significantly higher.
The industry supports around 66,000 jobs in the North East where there are thought to be around 1,500 supply chain companies.
Mr Osborne said: “The tax allowance is more good news for the North Sea, good news for jobs and good news for the broader economy.
“It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers.
“This Government has signalled its absolute determination to get more investment in the North Sea, a huge national asset.
“Just last week, I saw the benefits at a supply chain factory creating many hundreds of jobs in the North East thanks to Government support for North Sea gas which made a major project possible.”