The Treasury has assured the North Sea oil and gas industry that investment reliefs for low-carbon projects will be maintained, aiming to protect jobs and soften the impact of the energy windfall tax expansion. Chancellor Rachel Reeves announced plans to increase the levy on energy industry profits to address a £22bn deficit left by the previous Conservative government. However, industry leaders and unions warned about potential negative consequences, especially in Scotland, where the sector is significant.
In discussions held in Aberdeen, Treasury minister James Murray emphasized the government’s commitment to safeguarding jobs and investment in Scotland. The generous 80% decarbonisation investment allowance for the industry will be retained, despite broader measures to raise funds from energy firms. The energy profits levy, initially introduced in 2022 and extended to March 2030, will be increased from 35% to 38%, with the removal of a 29% investment allowance.
Offshore Energies UK CEO David Whitehouse highlighted the risks to jobs and economic value posed by the proposed changes. GMB trade union’s Peter Welsh urged the government to work collaboratively with workers and industries on policy changes. Labour’s plan to expand the energy windfall tax was aimed at raising £6bn to fund the establishment of Great British Energy, a state-owned clean power company in Scotland.
Murray indicated that further details on revenue generated by the tax changes would be provided in the upcoming budget on October 30. He warned of tough decisions on spending, welfare, and taxes due to the significant deficit inherited from the Conservatives. The government aims to ensure a smooth energy transition while protecting jobs and investments in the sector.
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