George Osborne was accused of delivering a “climate-wrecking” Budget after announcing plans to give the ageing North Sea oil and gas industry £1bn of tax breaks – while promising just £730m to the fledgling renewable energy projects.
The rate of supplementary tax for Britain’s offshore explorers will be halved to 10 per cent, while Petroleum Revenue Tax is being scrapped altogether as the Chancellor seeks to boost an industry that has been hit hard by plummeting oil prices.
The move was condemned by opponents to fossil fuels. “This climate-wrecking Budget shows that the Government’s talk of putting the next generation first is nothing short of sheer hypocrisy. If the Government was serious about creating a decent society for our children and grandchildren then they would be pulling out all the stops to keep fossil fuels in the ground,” said Green Party MP for Brighton Pavilion Caroline Lucas.
“Once again the Chancellor is taking the country down a dangerous path by ignoring the threat of climate change,” she added.
Greenpeace UK policy director Doug Parr said: “It makes no economic or environmental sense to cut support for renewable energy whilst seeking to prop up a North Sea oil and gas sector.”
Campaigners were angered by a separate announcement of plans to scrap the Carbon Reduction Commitment, a tax on emissions for Britain’s biggest companies.
Although the Chancellor said he would make up the revenue loss by increasing another measure to cut carbon emissions, campaigners said the move represented a setback for green power because it would hit renewable energy companies in the process.
The measure – known as the Climate Change Levy – works by taxing companies for energy they use in the hope that it will encourage them to use less power. When the scheme launched in 2001 businesses were not taxed on their renewable energy use, but that changed last year when that incentive for companies to use clean electricity was removed.
While Mr Osborne’s oil and gas tax cuts were strongly condemned in some quarters yesterday, they received a mixed reception from the industry.
Ian McLelland, an analyst at the City firm Edison Investment Research, said: “With so many companies running in the red, tax reductions are not likely to do much to stimulate investment in themselves.”
Alistair Mackie, a partner at the law firm Holman Fenwick Willan, added: “All the talk ahead of the Budget was on the need for a major cut in corporation tax – but the Government has gone even further in what amounts to an overhaul of the tax system for the North Sea.”
“This should go some way to levelling the playing field with other UK industries and potentially incentivise investment,” he said.Reuse content