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13 Nov 2002 : Column 124—continued
John Healey: I want to respond to the points made by the hon. Gentleman.
Let me turn to the question of the tax on infrastructure. I am aware of the work of the joint UK-Norway group, which has been helpful so far, and I shall encourage Treasury officials to discuss the matter further; but, like all tax issues, it is clearly a matter for the Chancellor and the Budget. We will treat any representations accordingly.
The Chancellor also committed the Government to abolishing royalty in its entirety. It is widely acknowledged to be regressive: it is ripe for the axe, and it will be axed. I welcome confirmation from the hon. Member for West Aberdeenshire and Kincardine that in his view abolition will reinforce confidence in the industry. It makes economic sense. The consultation ended last month; the date for abolition will be announced soon, when the results of that consultation have been fully analysed.
Royalty can damage new investment in older fields—the very investment in the North sea that now needs to be encouraged. That is important not just to extend the life of existing fields, but because their infrastructure will play a key role in serving other future fields and developments. Without that infrastructure, many new smaller prospects may not be developed at all.
UK tax rates remain below those of all other major oil and gas-producing nations, and immediate relief for virtually all North sea capital investment is available, so I reject the argument that the North sea oil regime is uncompetitive. The UK remains an attractive place in which to invest.
We now have a principled and sustainable fiscal regime for the North sea, which combines maximum incentives for investment with a sensible marginal rate of tax on the profits from a finite valuable national resource. It is right for the next stage of the industry's development, it provides a new fiscal stability which will
continue into the next Parliament, and it underlines the UK Government's continuing strong commitment to the North sea oil and gas industry.
- Adjourned accordingly at twenty-nine minutes past Ten o'clock.
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