Westminster Comment - Budget good news for NE

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Last week I attended the last budget statement of this Government as we come to the end of the five years agreed when the coalition was established.

Many sceptics argued it would never last, but this Parliament has demonstrated that this country can sustain a coalition Government.

Speaking in the debate the Chair of the Treasury Select Committee announced he was one of those who thought the coalition would not last. I pointed out that the way Parliament is reported leaves the public with the impression this is no longer a coalition Government.

The budget was very much the product of the coalition and had good news for the North-east. For a start the raising of the tax threshold has given many hard working people a tax cut allowing them to keep more of their wages. This was a policy the Prime Minister said could not be achieved during the election campaign. By contrast it was on the front page of the Lib Dem manifesto and now it is delivered as a result of the two parties agreeing a coalition programme for Government.

Of course, coalitions mean not everything in your manifesto can be delivered as it involves compromise. It is important to remember that the reason you end up with a coalition is that no one party has an outright majority so by definition they do not have the support to insist on every one of their policies. The frustration shown by some of the more extreme backbench conservatives is a reminder that the coalition has made a difference.

The fact that the government was made more moderate helped create a climate that allowed us to start tackling the financial situation. The fact that its proposals could be implemented without major disruption helped reassure the markets and keep the cost of borrowing down.

The coalition has not been dogmatic in its economic policy. For instance when it became clear that the books would not balance as quickly as hoped there was no move to bring in further austerity.

The agreement in principle to a City Deal for Aberdeen City and Shire was an important step in giving the North-east greater power to tackle problems like roads and transport that risk holding back companies from locating their business here.

I particularly welcomed the positive response to the case I have been backing for incentives to invest in North Sea oil and gas production. The cut in the headline rate of tax on profits will send an important signal to investors that we are open for business.

It is important to remember this is not a subsidy but rather a reduction in tax take. Non oil and gas profits will be taxed at 20% whereas oil and gas will pay at least a half in tax. Too high a tax means less investment producing less oil and gas. Oil and gas left behind pays no tax.

The one area of spending to help the industry was a contribution to the cost of new seismic surveys to gain data that will hopefully attract more exploration drilling.

The other incentive was tax relief on investment. This simplified the complex set of reliefs and makes the basin more predictable.

Of course tax is only part of the story. A lasting legacy will be the new Oil and Gas Authority set up by my Lib Dem colleague Ed Davey, the Secretary of State for Energy and Climate Change. He took the initiative when he saw problems facing the industry even before the price fall.

On Monday Parliament is dissolved triggering an election on May 7.