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Budget Resolutions and Economic Situation

I agree with the hon. Gentleman and, as he knows, I am making a point of chairing the six-monthly meetings with the oil supply industry because it is very important that we have a regime that encourages investment. Two interesting things are happening in the North sea. Some of the forecasts of those who said that the tax changes that we announced at the end of 2005 would be bad for the industry were not borne out. Investment is up, and a very healthy list of people are applying for the last round of licences to explore. We are also working closely with the industry in examining the possibility of extracting oil west of Shetland, where the waters present extreme difficulties, as the hon. Gentleman knows; however, there is a lot of oil there. When we announced the changes to which I referred, we said that the North sea oil taxation regime would remain for the rest of this Parliament. The industry asked us about that as recently as last November, and when I met Pilot, it said that, whatever else happened, it wanted a stable regime. I appreciate that, as of last week, one or two people appear to have decided that that is not what they meant when they said they wanted the regime to stay the same. We recognise the importance of North sea oil, and allowances in that industry are different from the rest of the corporation tax regime, but I believe that the North sea regime is stable and right. What is worrying is that the revenues from North sea oil are down dramatically; indeed, they will be down about £4 billion, on average, over the next few years. For the Scottish national party, which has predicated so much on North sea oil, that is extremely worrying. A lot of the money that it has already ““spent”” simply will not be there.