Nigel Farage’s Reform UK is making a bold play for the North Sea oil and gas sector, promising to slash taxes and regulation for energy giants – while floating the idea of taking taxpayer equity stakes in future projects.
The move signals a dramatic shift in the UK’s approach to its dwindling but still strategic fossil fuel reserves, and could have sweeping consequences for the region’s economy, energy transition, and climate commitments.
Reform UK has told oil and gas companies it would offer new North Sea licences “from day one” if elected, reversing current restrictions on exploration and scrapping net zero policies.
Richard Tice, the party’s deputy leader, outlined two routes for taxpayer equity: either requiring a government stake in exchange for licences, or investing “hard equity” upfront in riskier, untapped fields for a larger share of profits.
Tice told the FT there were two options a Reform government could take to secure an equity stake in oil and gas investment.
The first would be requiring a stake in exchange for granting a licence, and the second would be “investing hard equity”, for example by offering upfront investment to drill in riskier, untapped locations, in exchange for a larger stake.
“We can completely move away from the windfall tax idea because taxpayers will be getting a slug of the profits,” he said.
“We will be accused of picking winners, and yes I am picking winners. Oil and gas companies have been huge winners for decades.”
“We can completely move away from the windfall tax idea because taxpayers will be getting a slug of the profits,” Tice argued.
The party’s wider platform includes fast-tracking new oil and gas licences, scrapping net zero targets, and cutting fuel duty and VAT on energy bills. Reform also pledges to simplify the tax system, lower corporation tax, and abolish business rates for many firms.
What could this mean for the North Sea?
Lower taxes and looser regulation could attract fresh capital to a basin suffering from high costs and regulatory uncertainty, potentially safeguarding jobs and extending the life of existing infrastructure.
Direct equity stakes could, in theory, give the public a share of future profits if oil prices remain strong.
Conversely, scrapping net zero and ramping up fossil fuel extraction would undermine the UK’s climate commitments, risking international reputation and investor confidence in clean energy.
Also, regardless of approach, the North Sea is a mature basin in decline, where oil production has fallen by over 75% since 2000, and remaining reserves are costlier to extract.
Equally, while public ownership could share profits, it also exposes taxpayers to losses if projects fail or prices slump. There could also be concerns about the government “picking winners” and distorting the market.
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Reform’s message appears to be resonating with some in the sector, especially after recent job losses in Aberdeen blamed on high taxes and regulation. However, environmental groups and many economists warn that a pivot back to fossil fuels ignores both the climate imperative and the economic reality of a declining basin.
The party’s proposals could deliver windfalls for some, but may also leave Scottish communities and the UK taxpayer exposed to the long-term costs of a delayed energy transition.
