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Memorandum Submitted by HM Treasury (OTI 09)
Thank you for your letter of the 10th July to Jane Kennedy asking whether the Treasury would like to add any further evidence to that already submitted to the committee in the session of the 31st October last year, I am responding as the Minister responsible.
I would like to reiterate that as officials stated in that session the Government is committed to a strong and vibrant UK oil and gas industry and has a specific objective to maximise the economic recovery of the UK's oil and gas reserves.
The Government believes that the North Sea fiscal regime continues to promote investment, whilst ensuring that the UK taxpayers receive a fair return from the exploitation of the UK's national resources.
The increase in the rate of supplementary charge at PBR 2005 acted to restore the balance between producers and consumers in light of the significant increases in the oil price since 2001, increases that have continued, with oil prices recently touching $80 a barrel in September this year.
Since the evidence session last year Treasury officials, alongside HM Revenue and Customs, and the now Department for Business, Enterprise and Regulatory Reform, have continued to discuss potential structural issues within the North Sea fiscal regime with the oil and gas industry.
Alongside Budget 2007 the Treasury published a discussion paper setting out its conclusions on the discussions that had occurred since PBR 2005, and I include a copy of that document for the committee.
Since Budget 2007 officials have continued to discuss the issues raised with Industry, and as stated in this months Pre Budget Report, Government will now be considering its conclusions and will be publishing a consultation document in due course examining the options for further actions.
I look forward to seeing the outcome of the Committee's inquiry. I am copying this letter to the Secretary of State for Scotland.
Angela Eagle MPExchequer Secretary to
the Treasury 11 October 2007
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