Shale gas SMEs could raise over £1.35 billion in taxes

The Treasury, London
Source: WikiCommons, Photographed by Adrian Pingstone

In its latest policy paper, the Onshore Energy Services Group says that, with the right support, small companies in the onshore oil and gas supply chain could one day generate tax receipts of over £1.35 billion at peak for the Government to spend on vital public services.

  • British supply chain SMEs could one day employ over 35,000 people
  • Together with their employees, SMEs could generate taxes of over £1.35 billion at peak
  • The OESG fears smaller companies will lose out to larger rivals

Released ahead of the Budget Statement on Wednesday, the paper was presented to the UK Shale Gas and Oil Forum on Monday 16th March by chief executive Lee Petts

“British SMEs in the existing onshore oil and gas supply chain have both the capabilities and the appetite to play a big role in making shale gas a truly British success story,” he said.

“If they could replicate the success of their aerospace counterparts and achieve 55% of the prize predicted by EY last year, supply chain SMEs could one day be responsible for tens of thousands of jobs, with the workforce alone contributing a staggering £1.33 billion to the economy through their taxes at peak. Taxes on business profits could yield a further £0.02 billion.”

“That’s badly needed money, enough to pay for 19,543 GPs, or 45,006 nurses, or 50,087 teachers.”

“But unless more is done to create the conditions for SMEs to thrive, there’s a real risk the supply chain will come to be dominated by foreign interests and an imported workforce.”

The OESG is calling on the Government to introduce a requirement for mandatory supply chain action plans, and to extend the Advanced Manufacturing Supply Chain Initiative to cover shale gas activities.

It is also developing procurement guidelines aimed at boosting the chances of smaller companies when bidding for contracts, and hopes that the onshore industry will adopt these principles as standard.

“Whilst we welcome the work Government has been doing to create a policy environment that favours onshore oil and gas development as part of the UK energy mix, we hope the Chancellor will use the Budget Statement to announce specific measures aimed at safeguarding the future of home-grown supply chain SMEs that, between now and 2024, could contribute over £6 billion to the economy through taxes,” Mr Petts also said.

Dan Lewis, energy policy adviser at the Institute of Directors, says: “In the years to come, it is clear that shale will only fulfil its promise on jobs, skills and regional growth if we do everything we can to develop a supply chain here in the UK.”

The policy paper is available here.

Image: Her Majesty’s Revenue and Customs, London.

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