As the coalition Government marks one year in power this week three of the region’s leading business figures discuss its impact on industry and commerce.

OVER the course of the past year, I have been encouraged by the Coalition’s support of the development of new and alternative energy resources and its commitment to a balanced energy mix for the UK.

This was evident in the address Charles Hendry, Minister of State for Energy, gave at the NOF Energy conference on March 2.

However, the Chancellor’s windfall tax on the oil and gas industry, announced in the recent Budget, is a major blow and will have an adverse impact on future investment in the North Sea oil and gas projects and possibly in the development of new energy resources.

A number of oil and gas operators are developing alternative energy technologies, particularly in the offshore wave and wind sectors, which could find investment funds redirected away from these projects to counter the cost of Mr Osborne’s tax.

It will also make international companies considering investing in North Sea operations, be they oil and gas or renewables, more hesitant about entering the market as they fear the Government’s fiscal and financial strategies lack consistency.

Trust is a vital component to doing business, no matter what industry you operate in, and that trust has been damaged by the Budget announcement.

Equally serious for this region is the far-reaching impact this ill-conceived tax will have on businesses beyond the main players in the market.

It is not only the oil and gas producers who will be affected.

The impact will cascade down the supply chain, which is where North-East firms will really be hit.

The Government has failed to take into account the disproportionate impact on smaller firms that would struggle to survive if projects are now shelved as a result.

There are a number of firms in this region that are reappraising their business plans in light of the Chancellor’s decision and how it might impact on projects that are due to come to the North Sea.

It has the potential to wipe huge amounts off the order books of firms here and lead to hundreds, if not thousands, of job losses.

Our members are part of that supply chain, which relies on the continuing investment of operators.

The sector is operating in a globally-competitive market and adding any extra handicap will put the UK industry on the back foot.

Companies working in the North Sea are already among the most highly-taxed in the country and, therefore, the tax burden should be lightened to encourage the exploration and development of smaller and harder-to-reach reserves.

To counter the tax rise and reaffirm its commitment to a balanced energy future, the Coalition should deliver more incentives to encourage investment in the North Sea and alternative energy resources, such as offshore renewables, which would benefit the economy both in terms of energy production, and the supply chain industry that is required to support it.

By George Rafferty, chief executive of Durham Citybased NOF Energy which represents firms across the UK working in the supply chain for the oil, gas, nuclear and offshore renewables sectors