Taxing oil and gas

 

UK consumers pay dearly for their fuel, mainly thanks to the very high rates of tax on petrol and diesel, and substantial tax on domestic fuels through company tax and VAT Ā as well.Ā  In the debate on Scotland’s future the issue of oil and gas tax revenue is more narrowly focused on Petroleum Revenue Tax, a tax on production, and on corporation tax on the producing companies. So what has been happening to this?

The trend of tax revenues on production from the North Sea has bee downwards for sometime. This is another area where the Treasury has been too optimistic in recent years.Ā  In June 2010 the Treasury forecast Ā£1.8bn of Petroleum Revenue Tax in 2013-13, and Ā£1.7bn in 2013-14.

Instead they received Ā£1.7bn in 2012-13 and Ā£1.1 bn in 2013-14. Current forecasts are for much lower figures from here than the 2010 estimates.

On June 2010 the Budget forecast Ā£8.7bn of offshore corporation tax revenue in 2012-13 in total, and Ā£8.9bn in 2013-14. Instead the Treasury collected just Ā£4.4 bn in 2013-13, and Ā£3.6bn in 2013-14, or 60% less than the 2010 forecast.

As the oil province declines, so the tax take will reduce substantially. The government is having to offer more tax offsets and lower rates to encourage more marginal production, whilst total volumes decline. Once again past forecasts have been far too rosy about higher tax rates and definitions, forcing not only lower estimates but also a change of policy to a less penal regime.

84 Comments

  1. Lifelogic
    July 20, 2014

    Indeed well taxes are so high on fuel that many cannot afford to travel or even go to work if it is far. No very good for growth is you cannot afford to get to work and it is not tax or benefit deductible so often best not to work for many.

    Why incidentally is fuel for cars and trucks taxed at about 150% but for electric cars and trains and for home heating hardly taxed at all? It all produced the harmless gas co2 that government and the BBC get so excited about. If anything the low tax ones produce more co2 per useful mile travelled.

    Why should someone who likes cool houses, wears lots of jumpers and uses hot water bottles be penalised so heavily when he drives to work? He may well be using less energy overall. Why also are black taxis give bus lanes and privileges? They are far less efficient than most private cars in general.

    1. Bazman
      July 20, 2014

      Indeedy! And why should someone with large house and car pay the same for their fuel when they use more and pay more tax on it? Smaller users a should be penalised for using less. Why should motorbikes pay the same road tax when they take up less space use more fuel for their size, but overall less, cause less damage to the roads, do not cause traffic jams need less parking and are still able to blow your car into the weeds?
      Another thing that puzzles me is why rusty push bikes powered by Pot Noodle are treated the same in tax as a 5k bike powered by steak, salmon and fine wines who make massive contributions in VAT. Should there not be some way of claiming some of this back or forcing the rusty pot noodle to pay more?

      1. Edward2
        July 20, 2014

        Two minor points Baz:-
        First motor bikes don’t pay the same amount of tax (if you mean road fund tax) as cars and lorries.
        Secondly VAT is 20% of the purchase price, so if you choose to buy a cheap method of transport you pay less VAT than somone who chooses to buy a very expensive form of transport.
        Fact.

        1. Bazman
          July 20, 2014

          They pay road tax. If there was any justice and the government was serious about congestion they would pay none. Some councils in London even went as far to start charging for moped parking when the congestion charge was introduced. Why should a pot noodle powered rusty bike pay the less? He gets the same facilities as the salmon powered carbon fibre bike who pays more tax?

          1. Edward2
            July 21, 2014

            Nice to see you calling for reduced taxation for a change Baz

        2. libertarian
          July 20, 2014

          Edward2

          Bazman is a Labour Party apparatchik and like his bosses in the Labour Party he doesn’t know that food is zero rated for vat.

          I think his post was an attempt at sarcasm, but being a socialist and not understanding, tax, economics or the real concept of fairness he confused himself.

          1. Bazman
            July 20, 2014

            Food is zero rated for tax. LOL!

      2. Lifelogic
        July 20, 2014

        Motorbikes do not effectively take up less road space, you still have to give them their distance and they can accelerate and turn very quickly so you may have to give them more space. If one is coming you still have to wait for it to pass just the same as a car or even a push bike. The all congest the road but I agree they are better than one red bus with say 5 passengers, taking a very indirect route and stopping to block the main road every 300 yards. Worst still if they get their own usually empty bus lane to block the road with even in their absence.

        Still bus lanes are good for motorist camera muggings and thus paying those state sector remuneration packages.

        1. Bazman
          July 20, 2014

          You miss the point. You take up much more road space. Waiting to pass in your ten year old Volvo!? You are assuming your reactions are quicker than a motorcyclist? Deluded fat nonsense!?

        2. Anonymous
          July 20, 2014

          They are good for filtering through traffic and parking in small spaces.

          The riders also keep the NHS stocked with donor organs which are far better quality than those provided by cyclists powered by Pot Noodles.

    2. Kenneth R Moore
      July 20, 2014

      I am puzzled by this ‘bad’ and ‘good’ CO2 depending on whether it comes from a tailpipe or a central heating boiler. Aren’t they both just as harmfull.
      But with no controls on migration and so many people and cars on the roads , without some rationing in the form of high fuel taxes congestion would be pretty much unbearable in my view.
      Petrol will probably need to go up to Ā£10 a gallon when population reaches 70 or 80 million + 30% extra power generation capacity just to keep the lights on.

      1. Lifelogic
        July 20, 2014

        When we get sensible electric cars and more have them they will surely have to tax the electricity more. How with they distinguish between electric for the house or the car?

        1. ian wragg
          July 21, 2014

          The power for cars will come from the windmills. haven’t you seen the different colour of the power as it transits the cable. Houses will be fitted with filters so green energy can be exempt from tax. Only problem, when high pressure settles over England you won’t be able to get to work as the windmills will be stopped and there will be no power to charge the battery.

        2. Lifelogic
          July 21, 2014

          I mean when they finally get light compact batteries or fuel cells that give sufficient capacity and quick recharging. The current models are useful for most customers and expensive too.

        3. Kenneth R Moore
          July 21, 2014

          I don’t think we will ever have really practical electric cars. They go on improving but only within the envelope dictated by the laws of physics.
          Also bear in mind to mine 1 tonne of copper ore requires the removal of 500 tonnes of spoil with diesel driven excavators. Not very environmentally friendly.

    3. Richard 1
      July 20, 2014

      In posts below a (rather rude and aggressive) leftist / Scots Nationalist blogger called Dennis Cooper disputed the possible conclusion that an independent Scotland might only get a pro rata share of oil – 8.3%. Here a moderate voice argues why that is the case. The writer is concerned for the implications e.g. in Africa should an independent Scotland succeed in a disproportionate grab of oil & gas resources:-

      http://www.ft.com/cms/s/0/b609d594-97cc-11e3-ab60-00144feab7de.html#axzz382Cpr6zZ

      In case the link doesn’t work here are extracts making the points:-

      ‘…one idea is [so far] unchallenged: that the oil in Scottish waters would belong to an independent Scotland. If so, however, it would not only be unethical but also set a dangerous global precedent with potentially lethal consequences…..In most societies, including Britain, it is established in principle and practice that ownership rights are assigned broadly to citizens in preference to a ā€œlocal takes allā€ lottery….’

      ‘Once people have agreed to this principle, it cannot legitimately be challenged by those who turn out to be fortunately endowed. Thankfully, the proper role of the state is to override any local claims to the spoils of national resources…..In Africa these principles are matters of life and death…..In Nigeria, Biafra, the region where oil was discovered, unilaterally seceded in 1967. The rest of Nigeria decided this was illegitimate; the result was a gruesome war.’

      The 8 per cent of Britons who live in Scotland are between them entitled to an 8 per cent share of the proceeds from the British oil that has already been discovered, some of it in Scotland ā€“ no more, no less. If, after independence, some priceless new resource were discovered in the Highlands, it would be exclusively Scottish. Conversely, if it were discovered in Surrey, the Scots would miss out. ‘

      ‘…If the Scots are allowed retrospectively to change the rules of ownership, the implications could be serious’

      ‘….

      1. Lifelogic
        July 21, 2014

        Indeed why one earth kick out this lone voice of sanity on energy and he environment and GM. One assumes because Cameron actual believes this greencrap subsidy religion or just cynically thinks there are vote in it perhaps.

        Cameron chucking the last election and stuffing the country with the libdims was a disaster.

        Start by stopping grant to green NGOs and all the charitable tax releif they get.

  2. Leslie Singleton
    July 20, 2014

    Beats me why oil and gas production is taxed at all; in fact I cannot grasp why it doesn’t get a subsidy like so much else

    1. Bazman
      July 20, 2014

      It does and if you looked into it you would see how much.

      1. Lifelogic
        July 20, 2014

        Nonsense it is heavily taxed not subsidised.

        1. Bazman
          July 21, 2014

          Have you looked into it or do you again just believe you own the facts?

        2. Bazman
          July 27, 2014

          Have you looked yet?

  3. ian wragg
    July 20, 2014

    Taxes from North Sea oil have been the main driver of the welfare state. They have been wasted paying people to do nothing and letting the government neglect other areas of the economy.
    The same can be said of financial services and we saw where that got us.
    Maybe now that tax revenues are falling, we can reduce government spending and concentrate on revitalising our manufacturing base to give us some security in the future.
    Of course with CMD in charge we can continue to waste billions on foreign aid and litter the place with useless wind farms so I won’t hold my breath.

    1. Lifelogic
      July 20, 2014

      Indeed approaching 50% of GDP spent alas not emptying bins, not providing decent health care, decent education nor even fixing potholes. But we have pointless wars, hs2, millions of feckless, bureaucrats, lawyers, white elephant stadiums, hs2, pbs, and pointless wind farms.

    2. Bazman
      July 20, 2014

      Used in the main by Thatcher for propping unemployment caused by right wing dogma much like communism was in the USSR and today to prop up failed banks.

      1. Edward2
        July 20, 2014

        Baz, you forgot to say, and oil revenues were used to help pay down the national debt to zero.
        What was the national debt when Labour’s 13 year reign of terror ended?

        1. Bazman
          July 20, 2014

          You are dreaming. During Thatcher’s rule the national debt rose from Ā£169 billion in 1978 to Ā£570 billion in 1990! Despite all of the North Sea oil revenues and privatisation windfalls, the Thatcher government ran near constant budget deficits and massively expanded national borrowing.

          1. Edward2
            July 21, 2014

            Although it pains me to say it Baz, I think you may be right.
            My mistake was to add the word zero.
            I think you are confusing debt and deficit however in your reply.

          2. libertarian
            July 21, 2014

            Bazman

            Another subject for you to steer clear of . You don’t understand.

            Here are some simple graphs that explain why you’re wrong

            http://www.economicshelp.org/blog/1771/economics/uk-debt-as-a-of-gdp/

        2. sjb
          July 20, 2014

          Baz, you forgot to say, and oil revenues were used to help pay down the national debt to zero.

          It never reached zero, Edward2: please see link to graph below.

          What was the national debt when Labourā€™s 13 year reign of terror ended?

          It is considerably higher now.
          http://www.ukpublicspending.co.uk/spending_chart_1970_2015UKp_13c1li0181277_747cs_G1t

          1. Bazman
            July 27, 2014

            The bankers ideas turned out to be a bit expensive didn’t they? Good for me though, at least while it lasted.. Could they do the same again as I need some more money to carry on my project?

    3. Bazman
      July 20, 2014

      Most benefits are paid to working people and pensioners. A fact ian wragg and many on this site seem to be unable to accept Like liflogics inability to accept that renewable energy is starting to challenge fossil fuels without subsidy and in some cases even if the generating costs were free could not compete. Impossible Sorry it’s true. Interesting how facts and technology grate on deluded conservatives who fail to even check their facts as they believe they own them.

      1. Edward2
        July 20, 2014

        Pensioners are not on benefits or welfare. They have paid over 30 years of contributions from their earnings and receive a pension as per the original agreement.

        1. Bazman
          July 21, 2014

          Not from any fund but from taxation as pointed out to you before.

        2. Cliff. Wokingham.
          July 21, 2014

          Indeed, and what’s more, we were told that our “Extra little tax” (NI) would provide us with a pension which would allow us to have a good standard of living once we retired…..Later, we were told we should pay another “Extra little tax” (SERPS) which would give us an even better standard of living in our old age now, it appears to me, they are trying the same trick yet again with the work place pension.

          It seems to me that the state is setting pensioners up to be their next target, by confusing pensions and welfare and telling the “Boo Hoo Hoo they’ve got something I haven’t got” left leaning population of this once Conservative country that, we, the elderly, are sitting on piles and piles of cash and sucking the country dry, well we’re not.
          Property has never been a cash asset unless you sold it but, you still need somewhere to live and all property has gone up in price since we purchased our own homes and worked our fingers to the bone to pay for them and, all this without state funding via benefits and tax credits.
          We all struggled when we first started off in the world. We all started off sat on orange boxes or deck chairs, because we could not afford furniture, we all struggled to find affordable property: it is not a new thing! One of the biggest differences between then and now was that a married couple could get a council home without too much wait: now, a childless couple who were working would not have a hope in hell of being housed by the council.

          I also think people’s expectations are different now with many wanting it all from day one; a TV, a fridge, a games console, carpets, furniture etc and, unlike us, people today will run up huge debts to fund their lifestyle in just the same way the government does. This causes them to start each month with less spending power because the debts need to be serviced.
          We used to live by the rule of cutting one’s coat according to one’s cloth or, in other words, if we couldn’t afford something we went without it and saved up for it so, something that was priced at say ten pounds, actually cost ten pounds and not ten pounds plus months of never ending interest payments…..This commonsense approach to finance would be a far more useful thing for schools to teach rather than the new false religion of climate change and other indoctrination subjects so loved by the state’s education (indoctrination) system.

          Ahhh, rant over; I feel better for that.

          Remember folks: a divided nation is easier to rule than a united one.

      2. ian wragg
        July 21, 2014

        At almost 70 years of age Baz I work in the “renewable” energy sector and can state categorically that it is not in anyway challenging conventional generation. Remove the subsidy and most would disappear overnight.
        This month I received Ā£565 in state pension and paid Ā£1564 in income tax. I’m not a deluded Tory but a fully paid up member of UKIP. I am flattered that my posts upset you so much.

      3. Lifelogic
        July 21, 2014

        If and when wind, wave, tidal etc. can compete good luck to it. It cannot in most situations yet, by miles. Hence the need for absurd and large subsidies.

        1. Bazman
          July 22, 2014

          In many cases in the world renewable power is becoming a rival to fossil fuels as technology advances. Again you ignorantly believe you own the facts.

          1. Edward2
            July 23, 2014

            By definition any other power form is a “rival” to fossil fuels.

            So please tell us Baz what percentage of power generation is achieved by renewables.

          2. Bazman
            July 23, 2014

            Wholesale energy pricing briefly went negative in the middle of the day in Queensland Australia recently in the middle of the day in Queensland where there is 1.1 gigawatt of solar spread over more than 350,000 buildings.
            http://www.theguardian.com/commentisfree/2014/jul/07/solar-has-won-even-if-coal-were-free-to-burn-power-stations-couldnt-compete
            Just an example of an ever growing trend as technology advances. Probably would not work in the top of Scotland, but that not the point is it? Any plans to stop this technology Edward2? Computers powered by solar carrying out copyright infringements. Gets worse doesn’t it?! LOL!

          3. Edward2
            July 28, 2014

            Not answering the question as usual.

  4. Lifelogic
    July 20, 2014

    On top of the normal taxes we have the back door taxes of the subsidy for absurd wind quotas (now even more expensive with Cameron’s silly shift to offshore) plus PV, bio & even wood shipped in from America. Yet Ed Davey keeps his job despite it seems not having a clue about science or the economics of energy production.

    We are led by green behind the ears religious, pr donkeys as usual. Wrong on every issue.

    1. sjb
      July 20, 2014

      Is Germany wrong, too?

      “renewable sector accounted for 31% of the nationā€™s electricity […] Energiewende, began with the first EEG legislation and has seen PV prices drop from over EUR 0.50/kWh in 2006 to around EUR 0.15/kWh in 2014. PV systems have nearly no operational costs meaning that once the initial capital investment has been paid back they produce power extremely cheaply.”

      1. Mark
        July 21, 2014

        The real value of much of the solar power produced in Germany is negative, or barely more than zero. It comes when it is least needed, in the middle of the day in midsummer, and has to be dumped on neighbouring countries at knock-down prices. So you’re right, they produce cheap power. Trouble is, it doesn’t pay for the cost of the installations – subsidies do instead.

  5. Ex-expat Colin
    July 20, 2014

    I can still hear my father cursing the price of fuel from the mid 50’s as we entered an Esso station on his Matchless 500 (bike/sidecar). Much later I lived in S. Arabia and filled my Chevrolet Impala up for about Ā£4. All I see now is speculative behavior squeezing more and more money from us. It will just get worse:

    On that note it was pleasing to read Owen Patersons piece in the Telegraph.

    http://www.telegraph.co.uk/news/politics/10978678/Owen-Paterson-Im-proud-of-standing-up-to-the-green-lobby.html

    1. Edward2
      July 20, 2014

      I agree Colin
      Mr Paterson has written one of the best articles from an (ex) minister I have ever read.

      1. The PrangWizard
        July 20, 2014

        Me too. It’s a great pity, more than that, a tragedy, that we don’t have more people with the courage of Mr Paterson. Let us have the end of Cameron, heir to Blair.

      2. Margaret Brandreth-J
        July 20, 2014

        If ever there was a a situation where there could be a revolt of the serfs;it is now. We have frankly had enough of working all the hours god sends ( if we are lucky) and set to be until 70yrs old, just to pay bills and put food on the table. After 30 years of owning my house and ensuring I was qualified as a teenager to live a comfortable life, I still have not completely finished renovations and decorating .
        I still try every way I can to start business ventures and the spiteful people try to block every effort . There is something rotten in the state and it is not public life .It is the shysters we have let in.

        1. ian wragg
          July 21, 2014

          Whoa Gal…..Heart attack imminent.

    2. miami.mode
      July 20, 2014

      Ex-ex

      I wonder if this was the same Matchless (I think G9) with sidecar that I bought in 1964 for Ā£30 – it had the same effect on me. Did he live in south London?

      On JR’s point about tax estimates, I’ve always assumed that these were pushed to the maximum so that the Chancellor could give away as much as possible and thus look benevolent.

    3. Big John
      July 20, 2014

      Mr Paterson is the best environment secretary this country has ever had.
      The new replacement, Ms Truss is a backward step, as I am sure she will be supporting the green blob.

    4. Richard1
      July 20, 2014

      What an excellent article by Owen Paterson. Cameron is a fool to have replaced him, and Gove. Let’s hope Mr Paterson provides some leadership against the Green Blob from the backbenches. There are millions of voters and taxpayers in the UK now who reject the Green Blob’s teachings and neo-Marxist policies and want some front line political leadership against it.

      Its very shocking to read that Mr Paterson received numerous death threats from green leftists, with his home address circulated for targeting. The Green Blob’s militant outriders are clearly a revolting bunch. Has anyone been prosecuted for these offenses? They damn well should be.

  6. alan jutson,
    July 20, 2014

    Tax revenues are down because those who pay the tax (the producers) can turn the taps off sit it out and wait until the rates get better.

    Once again we find that if you set tax rates too high, then tax income reduces.

    You really would think that this lesson, would at last be learned given how many times governments over the decades have had the same results.

    Last month diesel in France was approx Ā£1.00 per litre, (exchange rate 1.25 euro’s -Pound sterling) no wonder lorries fill up over there before they come here, and leave here with near empty tanks, to refill once they get back over there.

    1. Cliff. Wokingham
      July 20, 2014

      I have said it before and I’ll say it again; we need a change in the law, so that when someone buys fuel for their car or van, there is a breakdown on the receipt which shows how the cost of that fuel is arrived at……Real cost of the fuel before taxes, the duty charged on that fuel and the VAT charged on that fuel plus the tax on the tax; ie The VAT applied to the duty.
      This simple move would perhaps focus the minds of our politicians so that everyone could see just what a cash cow fuel consumers have become.

      1. Mark
        July 21, 2014

        The sum isn’t difficult – it’s one sixth of the pump price for the VAT, plus 59p for the duty, and its the same for petrol and DERV.

      2. Bazman
        July 24, 2014

        Could we also see oil company profits and subsidies.
        The problem is that governments any government uses fuel as a taxation system and as a road toll, If it were to be lowered it would have to be taken from elsewhere Tax is not zero sum game as the deluded right wing believe.
        In the case of Tobacco the tax is a game of keeping the price high to discourage smokers, but not to high to encourage smugglers. Maybe you believe tobacco taxes should be low too. If so you are just plain wrong.

  7. oldtimer
    July 20, 2014

    These failed forecasts are yet another example of how wrong so-called “experts” (in this instance tax experts at HMRC and Treasury politicians – especially Danny Alexander) can be. What is even worse than getting things wrong, they seemingly fail to learn from their mistakes. This failure applies across many areas of UK tax policy. The combination of hubris and social engineering which infects UK tax policy bears much responsibility for the mess that characterises UK public finances.

    1. Mark
      July 21, 2014

      Quite. Readers of this blog may recall that as soon as Osborne announced his raid on North Sea taxes in his first substantive budget I criticised it here, saying it would lead to premature field closures and loss of key infrastructure that was needed to make small new discoveries viable to exploit. The OBR published a study in which they claimed there would be little or no effect. I think I, not they, was proved right.

  8. Mike Stallard
    July 20, 2014

    I live in the Fens which is some of the richest farmland in the world. People are starving and using food banks.
    The Fens is filling up with windmills again. They didn’t work in the 18th century as a reliable source of power. They do not work now. We have a lot of acres which are earmarked (we did have a Consultation) for sun panels. Work is due to begin very soon.
    Of course, sun panels do not work at night (long nights in winter) or when the sun isn’t shining (it is not Dubai round here). But nobody dares say that. The Green Blob would be furious and send out even more death threats (Owen Patterson in the Telegraph).

    Who pays? Does it perchance have anything to do with the fuel bills or the government tax take?

  9. acorn
    July 20, 2014

    It wasn’t the Treasury that was too optimistic, it was the OBR.

    You obviously don’t remember that when Mr Osborne arrived at the Treasury he was going to hit the Oil industry with a windfall tax; like he was going to slash and burn the public sector. The oil industry said “up yours” and buggered off to other climes.

    I have said before that the first three years of a Conservative austerity government are always the ones that do the most damage to the economy. After that wiser heads prevail and they get down to trying to stimulate the economy with any trick that does not appear to raise the “deficit”.

    The legendary 62% total tax take from the UKCS, the operatives are always crowing about is a myth, nobody pays it. For the last two years Osbo’ has been dangling sweeteners to get the oil boys back. Ā£5 billion of the tax break “field allowances”. Every new field got one last fiscal. They are supposed to compensate for hard to drill technically compromised wells. Apparently 23 old wells suddenly became afflicted and were given an equivalent tax break called “Brown Field Allowance”.

    That’s where the loss of tax occurred JR. That’s three times this week I have smacked for six your round the wicket blog spin. Do I get a prize or should I just go away till after the election. Remember I have a bet on a Tory win.

    1. ian wragg
      July 20, 2014

      Then your wasting your money. CMD would be horrified to think he was going to get an outright majority and have to offer a referendum let alone pursue some Tory policies.

      1. acorn
        July 20, 2014

        I don’t think so. Look at the opposition, there really isn’t any. The Conservative spin machine is superior, particularly with Cameron fronting it. UKIP will give a non legacy party alternative for anti immigration voters across the whole spectrum, but I doubt it will be enough to force a coalition.

        UK voters will follow the print media at the ballot box, as always.

    2. Mark
      July 21, 2014

      Not quite. The UK oil and gas production in million tonnes oil equivalent in recent years (2007-2013) has been:

      Oil……76.6… 71.7… 68.2… 63.0… 52.0… 44.6… 40.6
      Gas…..86.7… 79.4… 72.0… 64.9… 62.7… 53.7… 51.4
      Total..163.3.. 151.0.. 140.2.. 127.8.. 114.6.. 98 .3… 92.0

      The loss of production and field and infrastructure closures caused by the tax increases have not been offset by the subsequent unwinding of much of the increase in Osborne’s first budget.

  10. behindthefrogs
    July 20, 2014

    If we are looking for a tax reduction on petrol and diesel it should be a reduction in VAT rather than fuel duty. This would go a small way to helping those who live in remote areas of the country.

    1. miami.mode
      July 20, 2014

      btf

      To reduce VAT we need the approval of the EU as was demonstrated by Labour when they temporarily reduced it to 15% for 15 months. The reason for this is that the EU gets a percentage of all VAT and as it is not in their DNA to give anything away I assume they would have sought an increase in their percentage to compensate and I would very much doubt that this enhanced percentage would have been reduced when the rate went back up to 17 1/2%, nor when it was increased to 20%.

      I believe that the reduction of 5p per litre offered to the Scottish islands on road fuel was a reduction in fuel duty which would not affect VAT.

      It is doubtful that any government would inform us that we were losing out in any way on VAT and as you may well know I think there is an old French saying that you do not need to inform the frogs if you are about to drain the pond.

  11. Edward2
    July 20, 2014

    There is a similar dilemma arising on tax from road fuels where advances in car tecnology, modified behaviour by motorists and advances in transport logistics zre reducing predicted revenues.
    They will soon have to decide if reduced rates of tax would bring in more revenues.
    Similar to the recent figures for income tax and capital gains tax.

    Perhaps the cows are becoming irritated at being over milked.

    1. Anonymous
      July 20, 2014

      Interesting how, when we comply with tax nudges designed ostensibly to make us preserve the environment, they then go looking at other ways to tax us.

      Was it about the environment or about tax ? Tell us the truth.

      Why are some people given tax relief with work related transport and yet commuters aren’t ? More people are forced to commute owing to unpopular government policies which were did not appear in party manifestos and which no-one voted for.

    2. Mark
      July 21, 2014

      The way around that has been to decrease the fuel’s own efficiency by requiring the use of poor m.p.g. biofuel additives. These have also resulted in damage to engines and fuel systems that result in expensive repairs or early write-off of older vehicles, thus “boosting” the economy.

    3. Bazman
      July 24, 2014

      Got to agree with this one as soon as the MPG of cars went up in a realistic way the price of fuel went up in particular diesel. The fuel has also has less MPG in it and breaks down quicker when not used. A bill for the repair of a motorbike fuel pump because of this for me. We will see the same in the case of renewable energy for sure and already affecting us in more efficient bulbs and appliances. Leading to the question of what is it all about green energy and congestion or tax raising. A bit of both being the answer. Do we want cars to be more dirty? they are cleaner for sure, but live near a motorway or jog on a road tells you how ‘clean’ they are? A lorry is forced to be quite clean in London and getting very clean soon. The same size private car is not required to pay the same a blatant tax on business rightly or wrongly. The customer pays I suppose and is happy with it.

  12. Lindsay McDougall
    July 20, 2014

    Why are we encouraging more marginal North Sea oil production? It’s much, much cheaper to extract and distribute oil from Abu Dhabi, Saudi Arabia and (since fracking started) Texas. Any slump in world oil prices would hit hardest those countries with high extraction costs – Scotland, an I believe Nigeria and Iran.

    Would the investment capital not be better spent elsewhere – on UK fracking, for example?

    1. Mark
      July 21, 2014

      One reason is that you need infrastructure to bring the oil ashore. Close it, and you’ll never justify exploiting small accumulations that remain. While these can piggy-back on existing offshore platforms for treatment and transport to shore, their economics are viable so long as taxes are not too high.

  13. John B
    July 20, 2014

    Forecast in the absence of evidence = guess.

    And of no more credibility or use than a horroscope.

  14. ian
    July 20, 2014

    Oil subsidies 20 billion a year, windmills 4 billion a year, if add in housing subsidies for landlords 14 billion a year, oversea aid 13 billion a year that”s 51 billion a year and i just got started. If you add in R&D loans grants and all the rest of it, it come to over 100 billion a year. Now you got the feacking fracking more waste, no profits. You could run the NHS on all this money or pay off the debt or share if out to all companies in stead of the chosen few.Just go”s to show business are incapable of making a profit. If you shut north sea oil down you would be able to cut the fuel tax. What a mess you are all in. That”s why your going nowhere till you get some intelligence on this planet.

    1. Edward2
      July 21, 2014

      By subsidies do you mean the same taxation rules that apply to all other companies in the UK or does your total figure of 20 billion of “subsidy” relate only to some special treatment for this particular indstry?

    2. Edward2
      July 21, 2014

      And subsidies to landlords…are you calling any housing benefit given to citizens which then is eventually paid to rent a home as a subsidy?

    3. Mark
      July 21, 2014

      There are no subisidies to oil production. Subsidies are payments, as are made to the owners of windmills.

  15. ian
    July 20, 2014

    and don”t forget companies over charging for drugs military equipment and a like to keep them afloat.

  16. Kenneth R Moore
    July 20, 2014

    Up a creak without a paddle. Atleast the titanic had some lifeboats but we have none. Thanks to Dr Tim Morgan for this analogy.

    John Redwood always comes close but he is arguably too close to the political establishment to admit the truth :we are in very deep trouble.

    As North sea oil production declines, so does our reliance on foreign sources in a world where energy costs are soaring. Too much oil and gas has been sold of to make a quick profit.

    We already have horribly high debts, an economy based on buying’ growth by using borrowed money to fuel consumer spending. This is the lunacy of the Brown/Osborne era.
    Our current account deficit is already over 5% of Gdp and dear energy will only make this worse.
    Investment income to the Uk in recent years has ‘gone up in smoke’.
    Profits from Uk companies are leaving the country on a massive scale now that so many are foreign owned
    Our economy is going on the wrong path to a low wage, low skill model.

    I do wonder if those who thought that shutting down loss making heavy industries was the right thing to do were mistaken . Although loss making, at least they had some substance and provided dignity for the working man. They could have een reformed to provide an engine for economic recovery. Why do we have to accept that we are inferior to Germany in this respect ?.

    Are the the old industries any worse than the money men that thought they could create wealth from thin air.
    We have no lifeboats left they have all been burned.

    1. Anonymous
      July 20, 2014

      Kenneth – The people of the loss making industries are still subsidised by the government. Northern sink estates – a welfare class and a welfare servicing class, living better than they did when they were grafting in pits and shipyards and our country bankrupt in all but name.

      Defenestrating the unions whilst dismantling the welfare system would have been too brutal and too dangerous. But what we have now is going to be a lot worse.

      Reformation of industries – even if this would have meant some underhanded protectionism and subsidy – would have been better with hindsight.

      1. Bazman
        July 24, 2014

        No mention of massive corporate subsides to banks and oil companies though have we. Oil companies are not subsidised? Says who? You?

  17. ian
    July 20, 2014

    Your wasting time and money in ukraine because the people will turn on the new government. Ukraine government troops deserting also trap behind rebel lines, you can not resupply by air, you have got to in on the ground,nice touch. Gaza going well for you and the great state of israel and the promised lands,shame about isis problems for you and your friends. Germany still on with bric country, will have to try harder or your game will be up.Better get round some tables quick.

  18. P Cohen
    July 21, 2014

    I don’t often read Peter Hitchens articles in the Sunday Mail now as he seemed increasingly off the wall. However his comment this week that the EU was provoking
    a situation in the Ukraine by encouraging their participation in EU affairs was spot on.

  19. Martin
    July 21, 2014

    Interesting, every time there is talk of Independence in Scotland the treasury wheels out its negative projections.

    Much of the SLAB faithful used to say that coal would be going strong long after oil ran out!

    If Oil is running out why did the mighty Dave state in the The Herald, Monday 24th February, 2014: “Cameron: Yes vote will put oil and gas bonanza at risk” !

  20. ian
    July 21, 2014

    Subsidies are all recorded in the budget 20 billion pounds oil.I know that shipping is subsidize and boats also farming .Housing buy to let and holiday lets are subsidize,but they do not give lot of details. May be john could give us a full brake down, How about it john, full disclosure. Because cannot see shipping and farming royal navy and air force and army coming to that much. I should think air force and army are in the fugues.

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