TENS of thousands of jobs could be saved in the North Sea thanks to a £1.3 billion support package for the beleaguered oil industry, a Lib Dem minister has said.
Scottish Secretary Alistair Carmichael made the forecast after the sector was offered a raft of new tax cuts and allowances - including a reduction in the controversial supplementary charge from 30 to 20 per cent.
The Treasury predicted the move would stimulate £4bn worth of investment and increase production by 15 per cent by the end of the decade.
The government will also invest in new seismic surveys of under-explored areas of the UK Continental Shelf, the Chancellor George Osborne said.
The changes were hailed by oil tycoon Sir Ian Wood as the "light at the end of the tunnel" for a struggling industry.
A dramatic slump in the international oil price, alongside falling production levels and rising overhead costs have seen the axe fall on hundreds of oil and gas jobs in recent months.
Sir Ian said the package could kick start a "regeneration" of the North Sea.
He said: "This is a step change Budget. It's not just meddling with small change - it is a significant change and an essential lifeline for an industry that is in a bad way.
"I think it sends a very important message that government does recognise that this is a very mature and expensive basin that has lost its international competitiveness.
"I think this does take us out of the watershed with some real light at the end of the tunnel.
"And it is a dark tunnel at the moment because who knows when the oil price is going to step up again."
The changes were also welcomed by industry leaders.
Oil & Gas UK's chief executive, Malcolm Webb said the moves would "lay the foundation" for the future.
But he called on the industry to build on the changes by reducing costs and improving efficiency.
Among the moves was a cut in the rate of petroleum revenue tax (PRT) "to support continued production in older fields".
Mr Webb said that the changes send the right signal to investors.
Sir Ian had warned that up to 80,000 jobs could be lost if sufficient action was not taken in the Budget
Asked how many jobs the package could protect, Mr Carmichael said: "I would certainly say thousands of jobs. Possibly tens of thousands."
The Treasury came under fire in the early years of the coalition for a £10bn raid on North Sea oil profits.
Senior Treasury source said that the latest measures "significantly exceeded expectations from the industry".
Mr Osborne said he was taking "bold and immediate action" in the wake of the difficulties facing the industry.
But he faced accusations that he should have acted sooner following a wave of redundancies earlier this year.
Deputy First Minister John Swinney said: "Measures to safeguard the North Sea are a step in the right direction for our oil and gas sector. The Scottish Government has been calling for such measures, along with the industry, for some time.
"Today's measures are a glaring admission by the Chancellor that his policy for the North Sea has been wrong and the poor stewardship by the UK Government has had a detrimental impact on our oil and gas sector and the many people who work in the industry.
"It has taken the Chancellor four years to admit the tax rise he implemented in 2011 was a mistake. A heavy price has been paid for this mismanagement.
"I cautiously welcome the U-turn by the UK Government to take action on the future of the North Sea. We will study the proposals in detail. It is now essential that work is focussed on boosting investment and growth in the North Sea sector."
Environmental Friends of the Earth criticised the decision to offer tax breaks to a fossil fuel industry.
But Liz Cameron, chief executive of Scottish Chambers of Commerce, described the move "the start of a process to develop a strong and coherent fiscal plan for the North Sea".
Mairi Massey, oil and gas tax director with PwC in Aberdeen, said: "Easing the very high tax regime won't deliver a complete remedy to the maelstrom going on across the UK continental shelf.
"Oil and gas companies have a significant role to play in securing long-term sustained efficiencies and opportunities for their business and the wider industry."
Unite's Scottish secretary, Pat Rafferty, said economic reform of the North Sea "must go hand in hand" with sustaining jobs and strengthening workers' rights.
He said: "What we cannot contemplate is a deregulated future for the North Sea - a race to the bottom on jobs and standards where workers will have to work longer for less.
"Our challenge to the industry is this: You have got what you asked for, so stop attacking your workers' livelihoods and working conditions."
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