LABOUR’S proposed North Sea tax increases would place up to 100,000 jobs at risk, energy experts have warned.
Sir Keir Starmer hopes to raise an extra £10.8billion from the UK’s oil and gas industry by increasing and extending the windfall tax, with the funds invested in its green prosperity plan.
Subscribe to our daily newsletter
Why? Free to subscribe, no paywall, daily business news digest.
However, bombshell analysis released by investment bank Stifel last night estimates that the UK will lose £20billion in tax revenues, with up to 100,000 direct and indirect jobs at risk.
Aberdeen & Grampian Chamber of Commerce has described the move as a “betrayal” of the North-east’s companies and people which “cannot be allowed to go ahead”.
Should the party win the forthcoming election, Labour has proposed extending the windfall tax until 2029 and will increase the levy on profits to 78%. The party also plans to slash investment allowances and ban the issuing of new North Sea drilling licences.
The policy was announced as part of Sir Keir’s efforts to position his party as fiscally responsible – but Stifel estimates the plans will cost the country far more than they raise.
Chris Wheaton, an oil and gas analyst with Stifel, warned in a report: “We estimate the UK will lose £20billion in tax revenues, with maybe 100,000 jobs at risk, both directly and indirectly employed, and a £40billion reduction in investment between now and 2030.”
A separate report by Welligence, an oil and gas analyst, said key UK offshore operators such as Harbour Energy, the UK’s largest oil and gas producer, and TotalEnergies had already cut back investment and others were now likely to follow.
Mr Wheaton warned: “The uncertainty created by threatening new windfall taxes is as bad as the tax itself. The tax is already forcing cancellation of investments. For example TotalEnergies have cancelled drilling plans at the Elgin and Franklin fields, and Apache has cancelled investments at its Beryl fields.
“Already I see companies not planning beyond 2025 for the UK because they have no idea what the tax structure or rate might be.
“That means essential bits of kit like drilling rigs are leaving the UK. Overall it means faster declines in production, lower energy security and earlier decommissioning, all of which reduces tax take payable to the government.”
Ryan Crighton, policy director at Aberdeen & Grampian Chamber of Commerce, said: “We’re talking about redundancies on a scale not seen in this country since the pit closures of the 1980s. This despite repeated promises that what happened to energy communities at that time will never be repeated.
“This betrayal of our industry, our region, our companies and our people cannot be allowed to go ahead.
“Ahead of the 1992 General Election, there was a famous front-page headline which urged the last person to leave Britain to ‘turn out the lights’ if Labour won the election. This time around, the lights may go out themselves.”
