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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 7:56 pm on 30th April 2002.

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Photo of Michael Weir Michael Weir Scottish National Party, Angus 7:56 pm, 30th April 2002

No, I shall not give way on this occasion.

I want to refer to some specific clauses. Clause 90 changes North sea oil taxation. I am not sure about its effect in Wales, but it will make a great impact in Scotland. The changes in royalties are largely red herrings because they affect only pre-1982 fields. The new 10p tax is more important and could have a detrimental effect on employment in the North sea, especially on the utilisation of marginal fields. Earlier, Mr. Blizzard made the good point that many fields in the North sea are marginal. Indeed, the UK Offshore Operators Association said that the changes

"could undermine investor confidence in the long term viability of the North Sea."

In constituencies such as Angus, there is substantial employment in the offshore oil industry and there are worries about the possible knock-on effects of the changes on employment. Has the Financial Secretary considered the new regime's effects on North sea oil jobs? Mr. Jack is no longer in the Chamber. He asked for the business case for the changes to be placed in the Library. It would be interesting to read it.

The Government are ushering in a substantial change in a vital industry, apparently without undertaking any public-economic assessment of its effect on the 264,800 jobs that depend on the industry. The changes will reduce industry net cash flow, and that will have a negative effect on exploration, which is already low. Exploration and appraisal have decreased by approximately 55 per cent. since 1996. We tabled an amendment in the debate on the Budget; alas, it was unsuccessful, but we may return to it.

The Chancellor must know about the huge damage caused to the rural and remote parts of Scotland by the high cost of fuel. The Budget did not increase fuel duty, but froze it. That is cold comfort to those who experience steadily rising prices. The most cynical among us—that must include most of us—wonder how much of the new 10p North sea oil tax will be passed on to consumers at the pumps. Fuel duty may be frozen, but taxation of fuel may effectively rise. Will the Financial Secretary take any action to ensure that it is not passed on to customers in rural petrol stations?

Perhaps the Financial Secretary will not be surprised to learn that we also have severe difficulties with clauses 126 to 130, which cover the aggregates levy. It is likely to have a disproportionate effect on Scotland's economy. In Scotland, many small quarries will experience dramatic increases in costs through the levy. It is a flat rate levy; that means that the increase will be proportionately greater in Scotland where aggregates are cheaper than in England.

However, the greatest impact of the aggregates levy will be on local authorities and projects such as coastal improvements. In my constituency, Angus council is dualling the notorious A92 road. The levy will add £2 million to the cost of the work. The council tax payer will ultimately bear that cost. That will happen throughout Scotland and Wales because 40 per cent. of all aggregates are used by the public sector.

The aggregates levy will have an impact much further down the line on those who manufacture added-value aggregates products such as pre-cast concrete. I recently visited Montrose Concrete Products, a manufacturer in my constituency. I was told that its products were already undercut by those from Northern Ireland. It appears bizarre, but I am told that the majority of some pre-cast products that are used in construction in Aberdeen come from Northern Ireland.

The Bill provides for transitional relief for Northern Ireland but not for Scotland. That is patently unfair. I do not begrudge Northern Ireland its relief, but Scotland and Wales should receive similar consideration. I appeal to the Government to reconsider the matter. Again, we tabled an amendment in the Budget debate. We received some support from the Ulster parties and some from Liberal Democrats, but not from the main Opposition.

The Chancellor painted a rosy picture of Britain under new Labour, as did the Chief Secretary when he opened the debate.