Darling concedes oil tax windfall

The chancellor again insisted there would be no VAT windfall

The UK Chancellor Alistair Darling has conceded high oil and gas prices could lead to a Treasury tax windfall.

Mr Darling said rising fuel costs "do generate greater receipts from North Sea corporation tax and petroleum revenue tax".

The comments came in a letter to Scottish First Minister Alex Salmond.

But Mr Darling said it was too early to tell how much extra tax would come in - and he again denied there would be any VAT windfall.

Details of the letter emerged as fisherman, farmers and road hauliers teamed up to gain Mr Salmond's support to press the UK Government for a fuel duty regulator to offset the cost of rising oil prices.

The Scottish Government has also announced it would commission a study on setting up an oil fund for Scotland - which Mr Darling described in his letter as "inappropriate".

The chancellor has already rubbished SNP claims of a �4bn VAT windfall from increased prices people pay at the fuel pumps, saying the UK economy and all its forms of tax had to be looked at as a whole.

Referring to alternative tax income, the letter stated: "Higher oil and gas prices do generate greater receipts from both North sea corporation tax and petroleum revenue tax, however the scale of additional receipts from the North Sea will depend crucially on the path of oil and gas prices over the remainder of 2008, which is uncertain given the volatility of oil prices so far this year."

Mr Darling also warned cost pressures on the industry - such as competition for skilled workers and equipment - had risen rapidly in recent years.

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