Dozens of companies have signed an open letter urging the Energy Secretary to rethink the proposed windfall tax plans.
Industry leaders have warned that Ed Miliband and Rachel Reeves’ proposed tax on oil and gas could jeopardize thousands of skilled manufacturing jobs.
According to an open letter to the Treasury, signed by 42 companies, the tax plan threatens £200 billion in investment for domestic energy projects, including both renewables and fossil fuels. Notable signatories such as Bristow Helicopters, Wood Group, and Subsea7, which are involved in offshore green energy as well as oil and gas, have voiced their concerns.
Chancellor Rachel Reeves, supported by Energy Secretary Ed Miliband, has proposed increasing windfall taxes on oil and gas profits from 75% to 78%. The plans also extend the windfall tax until 2030 and eliminate tax incentives for further investment.
The letter, organized by Offshore Energies UK (OEUK), cautions that these measures could undermine long-term solutions and put jobs at risk across the UK. It notes that companies might delay or reduce their investment plans in response to these unexpected changes.
Miliband has stated that the UK will halt licensing for new oil and gas fields to promote a transition to lower carbon energies. The North Sea Transition Authority, a key industry regulator, has warned that without new fields, UK oil and gas production could decline significantly in the coming years.
Gas output could potentially decline by 80% by 2030, increasing the UK’s reliance on imports, critics argue. They contend that such actions are premature, given that oil and gas currently supply 75% of the UK’s total energy needs.
Approximately 25 million homes use gas for heating and hot water, gas-fired power stations generate about 35% of the UK’s electricity, and there are still around 32 million petrol and diesel cars on UK roads.
David Whitehouse, CEO of Offshore Energies UK (OEUK), emphasized that the UK will need oil and gas for many years. He pointed out that domestic supplies are more cost-effective, secure, and environmentally friendly compared to imports.
Whitehouse stated, “There is no straightforward choice between oil and gas or renewables. The reality is that we need both to support businesses, power the country, and drive economic growth. The level of concern expressed by supply chain companies in this letter highlights the potential impact of the government’s new tax proposals.”
He added, “If oil and gas operators reduce their activities due to the proposed windfall tax changes, it will directly affect our world-class supply chain.”
A Treasury spokesman responded, “We are extending and increasing the Energy Profits Levy while closing its core investment allowance to ensure oil and gas companies contribute more to our clean energy transition. We are committed to working with the sector to ensure that this transition does not compromise jobs, starting with the Great British Energy initiative, which aims to create thousands of new jobs.”
