More than 7,000 companies, business leaders and workers have signed a letter demanding the UK Government changes course to save thousands of jobs in the oil and gas industry.
They want UK ministers to fast-track a substitute tax regime which is due to replace the 78% energy profits levy in 2030.
The letter, handed to the Treasury yesterday calls for the new regime to be brought in sooner amid continuing job losses which are outpacing those being created in the renewables sector.
It was delivered as UK Energy Minister Michael Shanks defended Labour’s policy on the North Sea transition.
In an interview he said the government’s North Sea Future plan “is the first time any government has pulled together a credible plan for managing the transition in the North Sea and to make sure we get the economic advantage of what comes next.
“The Energy profits levy was introduced by the last government to tackle excess profits. We’ve confirmed that in 2030 there will be a new regime in place that gives long term certainty to the industry about what the tax policy will be but it has brought in £11 billion to pay for public services and it will bring in billions more.”
He added: “There is work to do,” he said. “I’ve been to Aberdeen more than anywhere else as a minister because I want to understand the concerns of big and small companies and workers across the industry.”
Ben Martin, policy manager at the British Chambers of Commerce, said the North Sea Future plan “fails to address the elephant in the room, that investment and jobs are draining out of the North Sea at an alarming rate because of the crippling tax regime being imposed on the industry.
“Unless the recently announced Oil & Gas Price Mechanism (OGPM) is introduced at the earliest opportunity, all other efforts from the North Sea Future Plan will be significantly limited in their impact. This would be a travesty as many of the other proposals in the report have merit.”
The OGPM would only apply when prices are elevated, ranging from an oil price of $90 next year through to $97 in 2030.
Aberdeen & Grampian Chamber of Commerce is calling for this regime to be introduced next year. Support has come from across the energy sector, including Scottish Renewables.
Russell Borthwick, chief executive at the Chamber, said: “The North Sea is being taxed into decline, and it is workers and energy communities who are bearing the brunt. We now need swift, decisive action to prevent major job losses and the deindustrialisation of Scotland’s critical energy infrastructure.
“Even the UK Government accepts it is taxing windfalls that do not exist. There is simply no credible justification for persisting with the current regime.”
The letter to the Treasury:
Economic forecasts from the Office for Budget Responsibility, published alongside your Budget, highlight that UK Government revenues from the North Sea will fall by 93% between now and 2030, from £4.5billion to £0.3billion.
The OBR makes clear that a decline in domestic oil and gas production, driven by the continued application of the Energy Profits Levy (EPL), is to blame. That same decline in production is increasing reliance on imported energy, which cost the UK more than £60billion last year.
By producing more, and importing less, public finances would be significantly improved and the world-class workforce and supply chain we require to deliver a managed and just transition, repeatedly promised by your government, would be protected.
The government now faces a clear choice: keep the EPL in place to 2030 and precipitate thousands of further and avoidable North Sea job losses, or work with industry to safeguard employment and unlock investment by bringing forward the new Oil & Gas Price Mechanism (OGPM) to 2026.
HM Treasury stipulates a windfall only occurs at around $95 Brent – a price not seen in three years, since October 2022 – meaning the Energy Profits Levy is, by the government’s own determination, unwarranted.
By accelerating the implementation of the new OGPM, you would protect jobs, stimulate investment and deliver much needed energy and job security.
We the undersigned urge you to move to this proposed successor regime without delay.
#oil #tax #change #Shanks #defends #policy #Daily #Business