If he will propose changes to the taxation system which would encourage further investment in the exploration and production of North sea oil and gas. [83189]

The Government are committed to the success of the North sea oil industry and promoting investment in this sector and in the economy more generally. The fiscal regime must be consistent with this objective while ensuring that all North sea oil companies pay their fair share of tax.

I thank my hon. Friend for that reply. Given the importance of the offshore oil and gas industry to our national economy—it accounts for 350,000 jobs, 5,000 contractors and 16 per cent. of total industrial investment—and given the fact that the industry is now involved in the exploitation of marginal fields, does my hon. Friend recognise that fiscal measures can play an important part in ensuring that it remains economically viable to exploit our remaining reserves over the next 30 years? Specifically, will she consider the case for capital gains tax rollover relief, as that would be a well-targeted measure that would bring forward investment; and will she look to encourage innovation such as the recommissioning of platforms, which would have great environmental benefits?

Of course I know that my hon. Friend takes a very close interest in these matters, as he is chairman of the all-party British offshore oil and gas industry parliamentary group. I strongly agree with his assessment of the great importance of the industry. That is why I have twice met representatives of the industry; and my right hon. Friend the Chancellor of the exchequer has also met them. As the House will know, there were three helpful measures in the Budget, including one to reduce compliance costs. We continue to have discussions with the industry. We should take into consideration the current rosier price of oil and not come to any hasty conclusions.

Although the industry was no doubt grateful that the Treasury backed off from its threat of additional tax last year because of the situation in the industry, and although the Minister will no doubt want to review carefully the current state of effort in the North sea compared with that prevailing until a year or two ago, will she have a word with her right hon. Friend the Secretary of State for Trade and Industry about the implications of the gas moratorium which, as well as the present rate of taxation, is sending a negative signal about the future development of the North sea?

I am rather surprised at the hon. Gentleman's remarks. He will know as well as anyone who knows the industry that my right hon. Friend the Chancellor's statement in September 1998—that, at that time, in view of the low oil prices, he would not proceed with reform of the North sea tax regime—gave the industry what it had long sought: a firm basis on which to plan for the future. As the House is well aware, the changes that we have made to business taxation—the lowering of corporation tax—will help all industry, particularly that in the North sea.