Labour's Windfall Tax Plans Could Put 42,000 Jobs At Risk In The North Sea

By Adeyemi Adekunle

Labour’s plans for a “proper windfall tax” on the North Sea have sparked backlash from the industry and raised concerns about the potential impact on jobs and investment.

The proposals to extend the energy profits levy to 2029, scrap investment allowances and raise the levy to 78% have been criticized by offshore energy groups, as well as the Aberdeen & Grampian Chamber of Commerce, which called the plan a “betrayal” of the North-east.

The Treasury’s costings also suggest that the revenue to the Exchequer over five years would only amount to £2.8 billion, leaving a black hole of £8 billion.

According to industry leaders, redundancies in the oil and gas sector could start as early as this year if Labour’s plans go ahead. The offshore energy group, OEUK, has warned that the plan will “wipe out” North Sea investment, while the Aberdeen & Grampian Chamber of Commerce has called the proposals a “betrayal” of the Northeast.

The industry has accused Labour of not consulting with them before announcing the plan and ignoring the concerns raised during discussions last year.

OEUK Chief Executive David Whitehouse said: “Labour either can’t do the maths or haven’t considered the alarming jobs impact that will be felt up and down the country. With no new investment, 42,000 jobs will go, and we could start to see the effects as early as this year.

These are not faceless numbers but decent, hardworking people working across the UK to provide the energy we will need today and in the future.”

The impact of no new investment will be felt across the whole economy. Today we estimate the UK will lose £26 billion of economic value. It will undermine the very industry which can and must play a critical role in delivering a homegrown energy transition.

Labour has dismissed the costings and argued that the windfall tax is necessary to fund its ambitious plans for public services, social care, and green energy. However, the industry and business groups have warned that the plan could have unintended consequences and undermine the UK’s energy security. They argue that the North Sea remains a critical source of energy for the UK and that investment is needed to transition to a low-carbon economy.

Chamber chief executive Russell Borthwick said: “Most disappointing of all is that Keir Starmer came to Aberdeen last year, met with ourselves and key industry partners, looked us in the eye and promised to work in partnership to manage energy transition in a way that protects livelihoods and a future for the North Sea.

This plan feels like a betrayal – it treats Scotland as an afterthought and would tax our energy sector to death at the very time we need to be accelerating the transition. It’s an admission that the Labour Party is anti-jobs, anti-business, and anti-energy security.”

The industry has called for a more constructive dialogue with Labour and urged the party to consider the long-term implications of its proposals. They argue that the UK needs a stable policy framework to attract investment and promote innovation in the energy sector.

They also warn that the windfall tax could discourage investment in the North Sea and lead to a decline in production, which would increase the UK’s dependence on imported oil and gas.

Labour’s windfall tax plans have sparked a heated debate about the future of the UK’s energy sector and the role of government in promoting investment and innovation.

While the party argues that the tax is necessary to fund its ambitious plans for public services and green energy, the industry and business groups warn that it could have unintended consequences and undermine the UK’s energy security.