Oil industry 'should be consulted on tax changes'

The First Minister of Scotland, Alex Salmond stresses that companies in the oil industry should be consulted before any new changes to offshore taxation is implemented.

Alex Salmond has been reported saying that the "cack-handed" decision to charge a windfall tax on oil companies "has done great damage".  Without any consultation the supplementary charge on production has risen from 20% to 32%, which Mr Salmond has suggested has led to fewer fields being developed.

The First Minister has suggested that consultation on any new proposed changes will generate greater certainty and restore investor confidence in the industry.

Before the UK's largest oil and gas conference, Offshore Europe, the First Minister met with Malcolm Webb, chief executive of the industry body Oil & Gas UK, and Gordon Ballard, co-chairman of the organisation's board in Aberdeen.

Speaking before the conference, Mr Salmond said: "The Chancellor's shock decision to increase the supplementary charge on the North Sea oil and gas profits, without any consultation, has done great damage.

"The decision was described by Chief Secretary Danny Alexander as 'absolutely right' despite clear evidence that it would lead to fewer new fields being developed and greater reliance on more expensive foreign imports.

"What needs to happen is a new initiative, and I am now calling on the Chancellor to establish a procedure for a statutory consultation period of a year before applying changes to oil and gas taxation, in order to restore much-needed certainty and confidence and undo the damage caused by the Treasury's cack-handed conduct."

A Treasury spokesman commented: "The government is committed to stability and predictability in the tax system, and has introduced a number of measures to improve the way tax policy is consulted upon and legislated.

"However, it is also important to have the flexibility to respond to priorities, such as the record pump prices faced by motorists."