I rise, as I did on the autumn statement resolutions, broadly to support what the Government are trying to do. I am pleased that the Minister is in listening mode, which is good because not everything is perfect in these debates. Even if things are not quite right in the autumn statement, there will be further Budgets in the years ahead. I am sure she will have a very successful career and will be in the Treasury for a while, and I therefore hope she will take our comments on board.
Clearly, at a time when money is short and the demands of struggling people are high, it is more difficult to redesign the tax system in an ideal way. I raised in my second intervention the difficulty in which those earning between £100,000 and £120,000 find themselves, and I hope their marginal rate of 60% will be reviewed at a future date.
I have some sympathy with the comments about research and development. The Treasury has a habit of introducing incentives and then worrying about losing too much tax. Actually, research and development should be a priority for this Government. A business investing in new technology wants to know what will happen three, five or seven years ahead. Sudden changes to the research and development rate may undermine the funding model of new businesses. I am sure there will not be a change this year, but I hope we will review this area very carefully, because it was one of our better measures in previous Budgets.
My main remarks are about the windfall tax. I do not like windfall taxes, but the way in which the Government have designed this windfall tax is good because of the investment allowance, which is the subject of a number of amendments. The objective has to be to keep companies investing. We are blessed as a nation, as we have oil all the way around our coastline. The only question is, at what oil and gas price is it worth recovering?
What has happened in the North sea in my lifetime is a tremendous British success story. Getting oil and gas from the great depths of the North sea made us, at one point, self-sufficient. We still have a lot of oilfields that we can develop, but eking out further discoveries needs incentives. I am a bit worried about the windfall tax, but I understand the current political need to have one. I am pleased with the investment allowance, because it will encourage companies to invest, and that investment should help us to produce more oil and gas and should help the British economy.
Something else that has occurred in my lifetime is that Aberdeen and many other areas of the United Kingdom that are near oilfields have created thousands of jobs. Those people may no longer be working in our oilfields, but they are working in oilfields abroad. This is an area that we need to develop.
My concern about extending the windfall tax to 2028—I raised the word “extraordinary” in my first intervention—is that there will come a point at which prices fall, perhaps because there is peace in Ukraine or because other forms of energy come on tap. If we maintain the windfall tax, we will then do great damage
to the oil and gas industry. We need a way of assessing what the Government do and do not consider to be extraordinary.
Some years ago, the Wood review of the North sea looked at what could be done to extend the life of the North sea fields. It would be helpful if the Government reported on where they stand on the oil price and the windfall tax. It might be better if they employed an expert, independent of both the Government and the oil and gas industry, to look at what is being done to assess whether investment is being hurt and whether the rates are appropriate. We assume a rate of 35% all the way up to 2028; we are not assuming a reduction, even if oil prices reduce.
I see the autumn statement as a little like a business plan that we might show to our bank manager. It does not mean that everything will necessarily happen as set out until 2028. If we expect the industry to invest, it is important that it knows what will happen to the tax rate if oil and gas prices change. North sea oilfields and gas fields are five, 10, 15 or 20 years’ worth of investment, so they are long-term, not short-term, investments. We need to focus on the short-term need to raise money, which even the oil and gas industry probably understands. The investment allowance is good, and it will encourage short-term investment, but there will be long-term damage if we are not flexible enough either to reduce the rates or to abolish the windfall tax when we get back to more normal gas prices.