What Osborne could have in common with roughnecks

In a week’s time a man with a red briefcase will leave his home in Central London. His mission will be to convince the electorate the current UK Government should be the next UK Government. And how will he go about that? Well, he will try to give as many sweeties and lollipops to the people and to industry as he can without making them sick — of him or the political movement he represents.

Obviously I am talking about Budget 2015 and Chancellor George Osborne’s chance to pitch to the nation unhindered (for an hour at least) on prime-time television next week.

Budgets are always important, but the last one prior to an election is especially so as it can be a genuine vote swinger.

Pitch it right and the early election momentum swings in your favour.

Pitch it wrong and you are on the back foot before the race even properly begins.

From a business perspective the challenges facing the Chancellor are complex, but there are a few obvious lowhanging fruits which may be ripe for picking.

One populist, but potentially expensive, avenue Mr Osborne could take would be to cut or cancel air passenger duty (APD).

The levy on air travel is roundly loathed by the industry, which has long campaigned for its reform or abolition.

The move would also allow Mr Osborne to steal a march on the likes of the SNP, who have pledged to slash APD when they get the power in their hands to do so. So that’s potentially attractive.

Then there is the option of tinkering with the headline rate of corporation tax — the government’s levy on the profits made by private enterprise — to cheer up boardroom execs up and down the country, and he has myriad levers to pull to ease the burden on our hard-pressed SMEs.

There are also individual reliefs Mr Osborne has the power to introduce, at a relatively small cost, to make investment in risky sectors — think start-up tech firms — more secure and appealing.

Finally, a little help for firms to keep their fuel bills down would also play extremely well.

But let’s not kid ourselves, Mr Osborne’s biggest fight next Wednesday will be in currying favour with the oil and gas sector.

For years the prospectors who have made the North Sea their home have paid handsomely for the privilege.

As the good times rolled, billions poured into the Treasury’s coffers.

But as a cash cow it was always going to come to an end at some point. The dramatic fall in the oil price in recent months has simply brought that date forward.

What it has exposed is an industry in crisis: a sector where investment has dried up, new drilling activity has come to an abrupt halt, and costs of extraction have spiralled as output prices have slumped.

It may be hard to feel sympathy for an industry which has enjoyed such conspicuous wealth down the years, but the fact is that it is crying out for help.

Without major change to the tax regime governing the basin, the North Sea’s future appears bleak.

So, you can guarantee that right now there is a Treasury mandarin or two beavering away on the detail of a reform package that MUST hit the mark.

If it doesn’t, the Chancellor may swiftly find himself with more in common with your average roughneck than you’d think.

They will both be fearing for their jobs.