Oral question asked in the House of Commons, by Alex Salmond (Scottish National Party). It was answered on Tuesday, 13 December 2005 on behalf of the Scotland Office.

Scotland Act

Question: On energy, should we not reopen consideration of the Scotland Act to devolve control of the oil and gas industry to the Scottish Parliament? We know that revenues are reaching a record level of £12 billion, but jobs and exploration are likely to reduce as a result of the Chancellor's clumsy tax hike. We know that the First Minister of Scotland was not consulted—no surprise there—but was the Secretary of State consulted about the tax hike that will affect many Scottish jobs, or is he just a cipher of the Chancellor?

Answer: As the House knows, I have many discussions with my right hon. Friend the Chancellor about a range of matters. On North sea oil taxation, it is necessary to strike the right balance between oil producers and consumers. We want to promote exploration in the North sea—indeed, there has been considerable exploration over the past few years—but it must be borne in mind that the return on capital was forecast to be 40 per cent. for oil companies in 2005 compared with just 13 per cent. for other non-financial companies. The Government have also said that they are committed to making no further increases in North sea oil taxation in the lifetime of this Parliament and have introduced additional incentives to help exploration. I recall that, in 2002, when we last changed the oil taxation regime for the North sea, the hon. Gentleman predicted the end of exploration as we knew it. Since then, exploration has increased and North sea oil activity has proved to be remarkably robust. He is ever the opportunist and ever ready to make the wrong calls, and it is not just us who believe that, but, increasingly, members of his own party.

Secondary information