Ministers face oil tax attack

The tax proposals have angered politicians

Ministers have rebuffed opposition claims that new taxes on North Sea oil profits will jeopardise jobs and future investment.

Opposition parties used a meeting of the Scottish Grand Committee at Westminster to pressure the government over the move, which was announced in Chancellor Gordon Brown's Budget.

Companies claim the new 10% supplementary levy will cost £1bn a year.

Alex Salmond raised concerns about the tax

But Scottish Secretary Helen Liddell argued that the new tax was fair - and the big oil companies could afford it.

The North Sea oil industry is one of Scotland's biggest employers and a major sector in the wider economy.

In north east Scotland alone some 40,000 jobs depend directly on the industry.

Over the next six years taxation from exploration and production will swell the Treasury's coffers by £33bn.

Under the Chancellor's plans there will be a new 10% supplementary levy on North Sea oil and gas profits, raising an extra £1bn a year.

Long-term viability

Mr Brown also announced plans to abolish the "royalty" payment on North Sea oil and to improve capital allowances for oil companies.

However, the UK Offshore Operators Association said the Budget was one of "give and take".

The UKOOA, which represents more than 30 offshore organisations and companies, warned that the extra tax could "undermine investor confidence in the long-term viability of the UK Continental Shelf".

The Scottish National Party made the issue the subject of debate at Wednesday's meeting of the grand committee, which is made up of all Scotland's MPs.

Gordon Brown unveiled the plans in his Budget

At a boisterous meeting, the SNP claimed the new tax would have major consequences for jobs in every Scottish constituency.

Speaking before the debate, the party's Westminster leader Alex Salmond told BBC Scotland: "The problem I have got is the way that Gordon Brown has gone about this.

"I think it is going to damage explorations and drilling. That is the future of the North Sea."

The Liberal Democrats and the Tories accused the Treasury of being out of touch and claimed operators would leave the North Sea.

But the Scottish Secretary argued that the tax was fair - and accused the opposition parties of sticking up for the big oil companies.