Labour windfall tax risks thousands of jobs, says oil and gas industry

The UK Government has been warned that its plans to raise and extend the windfall tax on energy companies could risk thousands of jobs and billions in investment.

Offshore Energies UK (OEUK), an industry trade group which sent the letter to the Treasury on behalf of 42 supply chain firms, said the sector supports 90,000 in Scotland alone and 200,000 across the wider UK.

It said it wanted to work with the UK Government on a transition to reach net zero but said “there is no simple choice between oil and gas or renewables”.

OEUK, which represents more than 400 firms, criticised Labour’s plans to increase the windfall tax – first introduced by the Tories – from 75% to 78% and extend it to 2030 while abolishing tax incentives for more fossil fuel investment.

The letter said many firms in the industry use cash earned through oil and gas to invest in renewables, which it said could be harmed as a result of the proposals.

It added that £200bn in investment in the UK energy sector by private companies could be put at risk.

“We look at proposals to increase the [energy profits levy]; extend its term; and reduce the rate of capital allowances with grave concern that these would be a blunt response which could undermine the levers to long-term solutions and jeopardise jobs in communities across the UK,” the letter said.

“For our companies, this surprise risks operators – big and small – further scaling back or postponing their investment plans in response.

“The ramifications will be felt throughout the supply chain, through jobs, and the communities this industry supports, both directly and indirectly.

“Time is running out to get this right. The role of the sector and its supply chain companies must be recognised with representation on the industrial strategy council and the supply chain task force.

“It is vital that the new government demonstrates actual commitment to working in partnership with the sector to secure continued investment and to deliver on promises to safeguard jobs.”

The UK Government said its energy plans, including GB Energy which will be based in Scotland, will help create new jobs and help the country reach its net zero targets.

A spokesperson said: “We are extending and increasing the Energy Profits Levy, and closing its core investment allowance, to ensure oil and gas companies contribute more towards our clean energy transition.

“We will work with the sector to ensure the transition over the next decades does not jeopardise workers, starting with Great British Energy, which is set to create thousands of jobs.”

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