It is already investing £11bn in 2012, supports around 440,000 jobs, contributes more than £11bn in tax revenues and is helping keep the lights on across the country.

Many mistakenly believe the North Sea is on its last legs, but there remains up to 24bn barrels of oil and gas left to be extracted. However, these reserves are technically demanding and ever more expensive to extract, and as ever, investment in the UK has to compete against many other less costly regions in the world. Provided the oil and gas industry is nurtured by the Government, it can remain competitive and the sector an economic lynchpin for many decades to come.

The Chancellor’s announcement of a new tax relief to encourage investment in older oil and gas fields is welcome evidence of a new focus on British investment. These North Sea oil and gas fields typically have high running costs and are subject to up to 81pc tax on production. This initiative will have an immediate impact in that it will help to promote investment and sustain production from many such mature fields, enabling more oil and gas to be recovered and postponing decommissioning by a number of years.

We believe this announcement alone will, in the near term, rapidly lead to a number of new investments and send a strong signal that Britain is open for business. We estimate that this should quickly deliver a further £2bn of investment in our economy, creating and sustaining thousands of skilled jobs, add tax revenues of more than £1.5bn and increase oil and gas recovery by 150m barrels, and have a further long-term impact. In demonstration of this and as a result of the new allowance, one company, Talisman, has already announced a £1.6bn investment in the North Sea.

The oil and gas industry is vital to the UK economy and we must continue to engage constructively with the Government to safeguard its long-term future if we are to reap the rewards of this great industrial success story.