OIL and gas contractors in the North Sea plan to lay off almost one in five UK-based workers this year as industry confidence remains low, a new report has found.

The latest oil and gas survey is the most negative yet, according to a partner at its sponsors, law firm Bond Dickinson.

The report found three-quarters of North Sea oil and gas contractors are less confident about their prospects than they were a year ago.

However, confidence levels have marginally improved from their record low in November.

Firms surveyed reported a 15 per cent fall in UK staff in the past 12 months and expect a further 17 per cent of staff to lose their jobs this year – almost triple the six per cent predicted six months ago.

About one in four companies (24 per cent) said their top priority is cutting costs while 42 per cent cited increasing efficiency and productivity as their main concern.

The joint survey by Aberdeen and Grampian Chamber Of Commerce and the Fraser Of Allander Institute found 14 per cent of contractors reported working at or above optimum levels in the UK Continental Shelf.

This is compared to 79 per cent three years ago.

The level of demand, commodity price and economic climate are cited as the top factors limiting activity in the North Sea and 42 per cent of firms expect to reduce investment in the next two years.

Just 12 per cent plan an increase.