The Chancellor’s plan to tax the oil and gas industry has been slammed by his opposite number.
Ed Balls said the plan would backfire on George Osborne.
Mr Balls told the Daily Mail: “It’s clear the Government failed to think through their tax raid on the North Sea. The consequence of this botched decision is that companies are reconsidering their future in Britain and we risk losing jobs and investment as well as secure energy supplies.”
Trade body Oil & Gas UK has already expressed their disappointment with the tax rise. After a recent meeting with the Chancellor, their chief executive Malcolm Webb said that “both the unexpected nature and the scale of the increase to between 62 and 81 per cent tax has damaged investor confidence and will hamper investment, maximum recovery of the UK’s oil and gas and job creation.”
In light of the tax, British Gas owner Centrica has warned it may not be financially viable to reopen one of three gas fields in Morecombe Bay that are currently closed for maintenance.
The company said in a statement today: “Following the increase in Supplementary Corporation Tax in the Budget, UK oil and gas producing fields are now subject to some of the highest levels of tax in the world. Our South Morecambe field is now taxed at 81 per cent.”
Government advisor John Whiting, director of The Chartered Institute of Taxation and head of the Office of Tax Simplification deemed the tax rise “precipitate and unexpected”, City A.M reported today.
The Treasury has asked to continue discussions with Oil & Gas UK on the tax issue.