Chancellor Rachel Reeves has doubled down on her defence of the North Sea windfall tax during a visit to St Fergus, addressing concerns raised by energy sector leaders and insisting the levy is “the right thing” as the government moves forward with its investment in Scottish energy and jobs.
Reeves, speaking during her official tour of the St Fergus gas terminal and the region’s clean energy projects, gave her comments exclusively to the Press & Journal, highlighting the government’s commitment to “backing Scotland with billions of pounds of investment to grow the economy and create jobs.”
She underlined the importance of the windfall tax on North Sea oil and gas profits, amid mounting industry calls for its repeal and dismissed criticism that the windfall tax would jeopardise North Sea jobs, adding that the government is focused on ensuring a “fair return from extraordinary profits”.
The Energy Profits Levy, or “windfall tax,” introduced by the previous Conservative government and extended under Labour, has been attacked by industry leaders who say it will accelerate the decline of the North Sea, placing tens of thousands of jobs at risk while the UK imports record amounts of oil and gas from overseas. Sector critics argue its extension has pushed oil and gas companies’ corporate tax rates to more than three times those in other sectors, strangling investment and risking the UK’s energy future.
Despite this, Reeves remained resolute, maintaining that the windfall tax was “always designed to make sure that companies making extraordinary profits, through no action of their own, pay their fair share at a time when energy bills have soared for families across the UK.
“Energy prices are still very high compared to where they were a few years ago. I think it’s right we ask companies who have made big profits to pay a bit more. If you look at things like the Acorn investment, that money has to come from somewhere. We need carbon capture, one of the ways to pay for that is through the energy profits levy.”
Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, responded: “If the chancellor wants North Sea oil and gas for decades to come, then we need the Energy Profits Levy to be removed as soon as possible – we certainly cannot wait until 2030 for it to fall away. Sticking to the current path would halve production within five years and have a catastrophic impact on jobs and communities.
“Academics warn the UK offshore energy industry faces Grangemouth-scale redundancies every fortnight without intervention – primarily because the government is seeking to tax ‘windfalls’ which don’t exist. Oil prices are down 50% since the invasion of Ukraine in 2022 and gas prices are down 80% from their post invasion peak.”
The Chancellor’s St Fergus stop is part of a broader push to shore up Scottish support for Labour’s energy policies, with government figures highlighting their £200million investment in Aberdeenshire’s Acorn carbon capture project—set to create 15,000 new jobs and safeguard 18,000 existing roles, according to official estimates.
Meanwhile, industry voices, including the Aberdeen & Grampian Chamber of Commerce, have continued to press for the windfall tax to be scrapped to allow fresh investment and keep high-skilled roles in the region. But Reeves’s exclusive remarks to the Press & Journal indicate that her Treasury intends to hold the line, seeking a balance between supporting the sector and funding the UK’s wider transition to clean energy.
