The UK Government is facing renewed calls to accelerate reforms to its North Sea energy profits levy, after a Westminster committee insisted ministers “could have gone further” in addressing industry concerns.
While the government has reaffirmed its commitment to ending the Energy Profits Levy (EPL) by March 2030 at the latest, critics argue the timeline risks exacerbating a decline in oil and gas investment and job creation.
The EPL, often termed a windfall tax, was initially introduced in May 2022 at 25% to capture what the government deemed “extraordinary profits” by oil and gas companies amidst soaring global energy prices. Since then, the levy has seen multiple increases, reaching its current rate of 38% as of November 1, 2024. This is applied in addition to the existing 30% Ring Fence Corporation Tax and a 10% Supplementary Charge, bringing the total headline tax rate on UK North Sea oil and gas profits to a significant 78%.
In response to a report from MPs on the Scottish Affairs Committee, published in October 2025, the government reiterated its “clear path” for the levy to conclude by March 2030, or potentially earlier should oil and gas prices consistently fall below historical thresholds, under the Energy Security Investment Mechanism (ESIM). However, the committee’s chairwoman, Patricia Ferguson MP, welcomed the clarity but stressed that the government’s approach fell short.
“The UK Government could’ve gone further,” stated Ms Ferguson. “Keeping the energy profits levy in place for another four years risks accelerating the industry’s decline and job losses, even though it’s well known that the UK will need oil and gas in its energy mix for decades to come as we transition to net zero.”
The committee’s report itself had warned that a “lack of clarity” regarding the North Sea’s fiscal regime beyond the decade had “created uncertainty for industry.”
Industry bodies have consistently attributed the high tax burden to a significant reduction in investment and potential job losses. Offshore Energies UK (OEUK) warned in September 2024 that the tax system could lead to an 80% slump in capital spending on UK projects between 2025 and 2029, compared to previous estimates.
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For its part, the UK Government maintains that funds raised by the EPL are crucial for supporting the transition “towards cleaner energy” and “the funding of wider public services.” It highlighted its “Clean Energy Superpower Mission” and the “Clean Energy Jobs Plan,” published in October 2025, which aims to nearly double the clean energy workforce from approximately 440,000 in 2023 to 860,000 by 2030.
This plan details commitments to create new, skilled jobs across various sectors, including the establishment of five new Clean Energy Technical Excellence Colleges. The government has also pledged £20 million to aid the transition of North Sea workers into clean energy roles.
However, Ms Ferguson countered that while these commitments are “encouraging,” the “proof, of course, will be in the delivery.” She noted that the committee is yet to see “concrete evidence of delivery and implementation of these initiatives,” and vowed that MPs would “continue to monitor the UK Government’s progress closely to ensure it delivers for Scottish workers.”
