Amendment of the Law

Debate between Angela Eagle and Anne Begg

Tuesday 29th March 2011 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

What does my hon. Friend make of today’s announcement that Statoil, a Norwegian company—from a country where tax is not exactly low—is to put on hold its £3 billion-plus North sea development as a result of the Budget increase in oil and gas tax?

[Ms Eagle]

This smash-and-grab raid on the oil companies to pay for the tax cut appears to be unravelling. Certainly, sudden changes to tax regimes without notice have big implications for investment. The Government need to pay particular attention to what the oil companies are saying, especially about their investment intentions. Having a North sea oil regime that can switch and is not set, because of the $75 a barrel oil price, which is going to change the regime again, may be particularly damaging. We will have to take a close look in Committee at how the Government intend to implement this mechanism.

[Dame Anne Begg]

The offshore oil and gas industry, which was a growing industry and could have been the driver that took the country out of recession, tells me that the one thing it needs to invest in this country is stability, but the fuel duty stabiliser will not give it that stability. Indeed, it will do the very opposite and make things even more volatile.

[Ms Eagle]

My hon. Friend makes a very important point. We will have to look at precisely how the stabiliser mechanism will work. How long will the oil price have to be at $75 a barrel to trigger it and how will that be measured? What will be the implication for future investment decisions? We know that there is a great deal of competition in the oil and gas industry for the use of very expensive infrastructure. My hon. Friend has made very important points and we will be watching like a hawk—to use a phrase that has already been used—to see about the practicalities of the announcement.

I note that the Government are reportedly urgently considering handing out hundreds of millions of pounds in tax breaks to compensate energy companies that are apparently considering shelving existing plans for further investment in UK gas fields or raising domestic prices still further to make up for profits lost. By

“squeezing the maximum amount of tax revenue from Britain’s oil and gas assets,”

the Chancellor

“is putting further offshore investment at risk…He’s more interested in cash today than investment tomorrow.”

That was the current Chancellor speaking in 2007, but now he is in Downing street he seems to be ignoring his own advice. The truth is that this policy was cobbled together at the last minute, the OBR did not have sight of it and now it is descending into chaos. I must issue a warning to the Chief Secretary to the Treasury, because I read over the weekend that he is being blamed for this incompetent piece of policy making on the hoof—apparently it was all his idea. I would be watching my back if I were him. We now see the reality that the fuel duty cut was a classic Tory con that really will not help anyone at all.

Meanwhile, the small print of the Tory-Lib Dem Budget shows that the NHS will be hit with a £1 billion cut in real terms, breaking the Prime Minister’s pre-election poster pledge that he would not cut it. The OBR’s new inflation forecasts reveal that spending on the NHS will fall for the next two years for the first time since records began—that is before the Government waste billions more on a reorganisation that nobody wants. The Tories drained the life out of the NHS in the 1980s and now they are back and are trying to do it all over again.

We were told that the Budget was all about growth and the Government promised to help Britain’s hard-pressed families with the cost-of-living crisis, but they have failed dismally on both counts and today the Bullingdon boys have sent along a Lib Dem whipping boy to defend it. If the Chancellor has “Je ne regrette rien” playing on his iPod, then the Chief Secretary has “Puppet on a String” playing on his. Just last year he promised his party’s Scottish conference:

“In our first year in government, we will invest to create new jobs and boost the recovery.”

Well, 10 months later and two Budgets in he has done precisely the opposite. The fact is that this Government’s extreme experiment with the British economy is failing and British people are suffering.

This Budget was a dodgy Conservative con that was signed off by the ever-compliant Liberal Democrats—the human shields of British politics. Far from making life easier for people, the Budget will make life tougher. The Government’s agenda of cuts, cuts, cuts is ruining lives and dividing the nation. It seeks to pit the private sector against the public sector, the young against the old, the north against the south, the weak against the strong, and the rich against the poor. We reject the politics of division. This is the wrong Budget in tough times. The Government should come back and have a second attempt which does not cut too far, too fast. That is why we will vote to reject the Budget tonight.