However ‘business-friendly’ Gordon Brown tried to make his last Budget appear, it won few cheers from oil and gas companies operating in the North Sea. At a time when cash flows, especially from gas fields, are seen as coming under intense pressure and the average cost of new development is running at $25 a barrel, the industry was disconcerted to learn that it would not benefit from the two per cent corporation tax cut the Chancellor announced.

UK oil and gas production is in long-term decline, having fallen nine per cent last year, and the Treasury’s tax receipts from this source are now expected to be £8 billion, £5.5 billion less than originally forecast. Against this background, tax rates on North Sea profits are to stay at 75 per cent on older fields and 50 per cent on developments given planning consent since March 1993.

The UK Offshore Operators’ Association called on the Treasury to ‘wake up to current realities’. But few observers were optimistic it would.