Chancellor George Osborne has announced £1 billion of tax breaks for the UK’s struggling oil and gas sector in the 2016 budget, as well as funding for new rail lines and flood defences.
In a move to alleviate the crisis in the North Sea industry, which is suffering from the effects of the sustained low price of oil, the government is halving the 20% supplementary corporation tax oil and gas companies pay on their profits in the UK and abolishing petroleum revenue tax.
Petroleum revenue tax was initially deducted at 50% of the profit made from oil extraction, but was reduced to 35% in last year’s budget. Osborne said: “The oil and gas sector currently employs hundreds of thousands of jobs in Scotland and across the country. I made major tax reductions last year, but the oil price has continued to fall, so we’re acting now for the long term.”
This year’s budget also sees £60 million allocated to develop plans for HS3, a high speed rail link between Manchester and Leeds, plus £80 million to further develop plans for Crossrail 2, which will link north east London to south west London.
As expected, the government also pledged further support for the development of autonomous vehicles. This included the installation of wireless communications between London and Dover so vehicles to communicate wirelessly with infrastructure and other vehicles and the trialing of truck platooning on the strategic road network
In addition, Obsorne announced that £700 million extra would be spent on strengthening flood defences in York, Leeds, Calder Valley and Carlisle. He also announced Sir Adrian Smith is to produce a report which examines the case for making all students continue to study maths to the age of 18.
The budget also launched first stage of a competition to identify suitable developers for a small modular nuclear reactors (SMRs) in the UK and said it would publish a SMR delivery roadmap later this year. It also plans to allocate £30 million for an SMR-enabling advanced manufacturing R&D programme.
Within the budget itself, the Treasury said its steps to rebalance the economy since 2010 had been successful and that the manufacturing, construction and service sectors have all grown over the last six years. According to its analysis, some 63% of all new jobs since 2010 have been in “highly skilled” occupations, aerospace production has increased by 30% and car production by 60%, with 16,000 new jobs in the automotive sector. The provision of scientific research and development services had grown by almost 25% and architecture and engineering activities had grown by more than 40% since 2010.