Labour plans ‘proper windfall tax’ on oil and gas industry

Labour Windfall Tax plans

LABOUR has published its plans for a “proper windfall tax” which will see the North Sea taxed at an eye-watering rate of 78% should Sir Keir Starmer become Prime Minster this year.

A General Election win for Labour will also see the Energy Profits Levy (EPL) extended to 2030 and investment allowances removed, making it one of the most punitive energy tax regimes in the world.

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Together the measures will raise £10.8billion in the five years from 2024-25, the party claimed.

Aberdeen and Grampian Chamber of Commerce (AGCC) chief executive Russell Borthwick said it was “a real kick in the teeth for Scotland’s world-class energy sector”.

In a briefing note for its “Prosperity Plan Policy”, Labour confirmed its manifesto would propose a hike to the tax rate from 75% to 78%, the same as Norway, and “end the loopholes in the levy that funnel billions back to the oil and gas giants”.

Sir Keir and Ed Miliband were in Aberdeen in November with the chamber of commerce, and it was hoped that Mr Starmer would reflect on the views heard at the meeting to inform policy.

Mr Borthwick said Labour has now “let us down badly”.

“This is a real kick in the teeth for Scotland’s world-class energy sector based here in Aberdeen,” he said.

“It’s ill-thought-through garbage dreamt up by detached politicians who clearly are not listening to a sector which is fighting for its very survival. 

“Most disappointing of all is that Keir Starmer came to Aberdeen last year, met with ourselves and key industry partners, looked us in the eye and promised to work in partnership to manage energy transition in a way that protects livelihoods and a future for the North Sea. 

“This plan feels like a betrayal — it treats Scotland as an afterthought and would tax our energy sector to death at the very time we need to be accelerating transition. 

“It’s an admission that the Labour Party is anti-jobs, anti-business and anti-energy security. 

“We’ve had a windfall tax in place for two years. Windfall profits vanished a year ago and so should this punitive tax. Meanwhile we’ve lost countless workers, vital investment and huge opportunities to overseas markets. 

“Labour has reneged on its plans for properly funded year-on-year investment to turbocharge our green future. Instead, they’re going to use the North Sea as a cash cow to subsidise ports in the Solent, industry in South Wales and steel plants in Sheffield. They’ve let us down badly.” 

Most North Sea operators have slashed spending as a result of the EPL, with Apache and Harbour Energy cutting jobs as a result.

Speaking on Times Radio, this morning, Chamber Policy Director Ryan Crighton said he fears more economic damage.

“We have a real concern about jobs,” he said.

“Already 1,000 jobs have gone at the likes of Apache, Harbour Energy and Pertroineos. If more investment moves overseas, the cliff edge end to oil and gas that all parties want to avoid becomes a real possibility.

“And this is not just a North-east issue – over 200,000 people are employed in the oil and gas sector throughout the UK. 45,000 are in the North-east, but the rest are spread throughout the UK.

“If we get this wrong, the economic and social damage will be enormous.”

He added: “This is not just about the money required to fund the energy transition, it’s about having the skills and the people to deliver it.

“If you wind down the North Sea too quickly – before jobs and opportunities are available at scale in the renewables sector – then you lose the world class work force and supply chain.

“We cannot allow that to happen.”

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