George Monbiot is angry - and we’ll not like him when he’s angry - about the manner in which Shell and BP appear to be paying no taxes on their North Sea production. He’s right that they’re not paying but he has not noticed that the reason they’re not is that they already have.

In the UK, these companies have been granted a licence to print money. For the past three years, Shell and BP have paid no corporation tax on the oil and gas they extract from the North Sea and no production levies either. In other words, they have been given these resources by the government.

Whoops, I mean paid to take them away. Over the same period, they have been granted reliefs on the taxes they didn’t pay of almost £400m. This is because they can claim the cost of decommissioning their rigs and platforms against their nonexistent tax bills. But decommissioning should have been priced in when the contracts were signed. It’s a classic case of private profits, public liabilities. After being paid to take the gas away, these companies sell it back to us at mind-boggling prices.

You see, the costs of decommissioning were priced into those original contracts. Which is why no tax is being paid now.

Everyone does know, everyone did know, that there would be two grand lumps of costs in exploiting the North Sea fields. Putting up the rigs and pipelines to do the exploiting and then taking them down again 50 years later. OK, maybe 25 years later. The interim, the running costs, were minimal.

Any sensible business knows how to deal with this. In those years of minimal running costs but gushing revenues you put aside a certain portion of the income to build up a fund to pay that final bolus of costs.

This ran smack into the political desire to have the cash now. The tax revenues that is, the tax revenues that would be diminished by allowing anyone to put aside income now to be stored for future use. So, the British government banned the oil companies from creating sinking funds to pay those final costs. Instead, pay all the royalties, super-profits taxes, higher corporation tax rates, to the Treasury this year and in 15 years when you have to decommission we, the Treasury, will let you have back the tax you’ve already paid on the money you should have been saving for these expenses.

Decommissioning was priced into the original contracts, that’s why taxes aren’t being paid now. Because they were paid 15 years back and now need to be returned - because that’s what the original contracts said - as it’s the Treasury that has been enjoying that sinking fund, not the oil companies.

George Monbiot is complaining about the very solution to his complaint. The reason no tax is currently being paid on North Sea oil is that decommissioning was priced in when the contracts were signed.

We’ve no problem with people complaining about this system, of course we don’t, we’ve not been wholly in favour of it ourselves. We do think though that people who complain about it should know about it.