“The industry welcomes today’s rate reduction, but many will question whether it is has gone far enough. The rate reduction is estimated to cost the government only £55m over the next year, which is a drop in the ocean when compared with this year’s £4.7bn tax receipts for the North Sea.
“Such a small reduction is unlikely to stimulate the step change in investment levels that the North Sea basin needs. Many will now be turning their attention to Aberdeen and Danny Alexander’s announcement tomorrow, hoping for the finer detail behind the Chancellor’s signal today that further reductions are on the horizon.”
“The new £5m investment to provide independent evidence about the robustness of the shale regulatory regime, is a much needed step to alleviate public concerns around shale gas drilling and fracking. The time taken for the necessary planning permissions and regulatory approvals is the current bottleneck to the UK shale industry, and should the independent evidence deliver an improved view on the risks associated with shale gas, the industry would hope that these approvals may be accelerated.
“And while the long-term investment fund announced today in respect of future tax revenues from shale may also appear positive for the public and local communities, it will still be many years before we see commercial shale gas production in the UK, and therefore the near-term benefit is zero.”
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Ann Burton, KPMG Corporate Communications
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.