Phasing Out of Aprt

Part of Orders of the Day — Finance Bill – in the House of Commons at 7:45 pm on 28th April 1983.

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Photo of Mr John Smith Mr John Smith , Lanarkshire North 7:45 pm, 28th April 1983

I did not have the benefit of knowing that, but it occurs to me that the hon. Gentleman might not have attracted support because he did not argue his case persuasively or successfully. That is usually why people do not get support. We are now -asked to shower the Government with compliments because they have changed their mind, and that is ridiculous in this instance.

A balance must be struck between what is the appropriate take for the nation and what should be left to the companies in the North sea. Every Government must think about that balance with great care. If they leave too much money in the pockets of the companies, that places an additional burden on the taxpayer. On the other hand, the Government could, if they overdid their taxation policies, bring development in the North sea and the supporting industries to a halt, or at least present them with extreme difficulty. That becomes most acute for the small marginal fields which are extremely expensive to develop. The taxation policy that should be shaped is one that brings forward development and therefore creates the revenues, but does not give absurdly generous incentives that turn out not to be beneficial to the taxpayer.

The Minister referred to royalties. We will have a debate shortly on the Petroleum Royalties (Relief) Bill. It has to be taken into the picture. It cannot be approached in this manner. I am far from convinced that it is appropriate at this stage to say that there will be no royalties whatsoever for any new finds in the North sea except for the southern basin. There would be a case for —it has always been recognised that there is a case—and there is in the existing legislation a possibility of, remitting royalties in appropriate cases where the company can show that it is necessary for the development of the field not to pay the royalty. Why should we say that in all cases, in all fields in the North sea, there will be no royalties at all?

That is another lurch of Government policy. It is lurching wildly in one direction, having lurched wildly in the other. I give notice to the Government that we shall probe them carefully on that point when we discuss the Petroleum Royalties (Relief) Bill. We shall expect them to make a convincing case, which has not yet been done, why there should be such a sweeping change in North sea oil taxation.

If nothing else, this short debate has allowed us to ventilate some of these subjects. We shall return to them in the Committee on the Petroleum Royalties (Relief) Bill. If the Government want to get it through, the way things are going, they had better move smartly. We shall be happy to debate it as soon as possible. With the thought that we are not leaving this subject for ever, I beg to ask leave to withdraw the amendment.