Oil tax changes 'could cost 21,000 jobs'

A CLAIM that up to 21,000 jobs could be lost as a result of the Government's proposed changes in petroleum revenue tax is made today by the Association of Service Sector Oil-Related Companies.

According to a Mori poll commissioned by Assoc, almost three-quarters of oil industry service sector companies questioned believe that the PRT proposals made in the last Budget go too far and that any changes should be phased in over a period of more than a year.

In his last Budget Norman Lamont, the former Chancellor of the Exchequer, proposed cutting PRT on existing North Sea oilfields from 75 per cent to 50 per cent and eliminating the tax altogether on new fields. He also proposed to end oil companies' rights to set their exploration costs against their PRT bill.

The Treasury has estimated that exploration and appraisal drilling on the UK continental shelf would fall by up to 50 per cent as a result of the PRT changes, earning Mr Lamont the soubriquet 'driller killer'.

Assoc's members are drawn from a wide range of activities supporting the oil industry, including drilling, construction, geophysical surveys, transport, catering and supply services. It said the Mori survey showed that job losses among the 200 companies sampled in the survey were expected to amount to 8 per cent of the workforce. If this percentage was reflected across the whole of the service sector about 21,000 jobs could be at risk.

'The clear message from the survey is that the proposals as they stand will have a severe impact across the UK. It proves that the opponents of the current PRT changes, far from being a vocal minority, represent a substantial majority of oil industry opinion,' Gill Twyman, an Assoc executive, said.

According to Assoc, the main source of contention revealed by the Mori poll was the speed with which the proposals were being introduced. Only 7 per cent of companies supported the immediate introduction of the proposals. Of those in favour of a period of transition, three-quarters of those sampled, 85 per cent believed that the phasing-in should take place over two to three years.

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