Now help other process industries

With just a few tweaks of its tax rules – plus some gentle persuasion by industry in the form of UK Oil & Gas – the Coalition Government has managed to revive investment of the UK’s most important industrial sector.

The sector is experiencing its highest level of investment for more than 30 years, with spending on track to exceed £13 billion in 2013 – boosting both employment and tax revenues for many years to come.

But the now record investment in new and existing assets and infrastructure on the UK continental shelf follows two disappointing years, according to Malcolm Webb, Oil & Gas UK’s chief executive.

Production fell to 1.55 million boe per day in 2012, down by 14% from 2011 and by 30% from 2010. Much of this fall, said Webb, was due to the damage done to investor confidence by the numerous adverse tax changes in the mid-2000s.

While few other areas of the process industries are sitting on resources so valuable as oil and gas, they still make a major contribution to the UK.

The chemical and pharmaceutical industry for example, contributes £80 million every day to the economy, spends £5 billion each year on R&D and employs over half a million people – making it the UK’s most important manufacturing exporter.

However, many companies in these sectors, particularly those with energy-intensive operations, are facing energy and carbon costs far above those of their overseas competitors.

A more enlightened approach by Government to such problems could unleash the true potential of these industries to deliver innovation, employment and prosperity – as is happening with oil and gas.