Oil and gas industry in crisis talks over pledge to hike taxes on profits
Offshore industry leaders are set to hold crisis talks this week over Labour’s proposal to ramp up the windfall tax on UK production of oil and gas, citing fears that 42,000 jobs could be lost if the party wins power and the move was to go ahead.
Meetings will take place in London and Aberdeen to discuss “deep concern” over plans set out by labour, which include a rate increase on the windfall tax for energy companies and cuts to investment allowances.
In a briefing note for its prosperity Plan Policy, the party confirms its manifesto will propose raising the tax rate from 75 per cent to 78 per cent and end “loopholes in the levy that funnel billions back to the oil and gas giants”. It also intends to extend the sunset clause, currently planned for March 2028, until the end of the next parliament.
According to the party, the measures will raise £10.8 billion in the next five years.
The proposals come as international energy giants have continued to reap record profits from oil and gas, driven largely by instability caused by Russia’s invasion of Ukraine.
The latest results show the three largest producers, Shell, BP and Equinor, between them raked in £42.7 billion in annual profits in 2023 – the hottest year on record, attributed to climate change.
OEUK warned earlier this month that 42,000 jobs could be lost in the oil and gas sector as a result of the proposals.
The body contends that the confidence of energy producers to invest in the UK has come under “consistent challenge” in recent years, with industry cautioning that proposals to increase the tax further and remove vital allowances would deliver a “hammer blow” to homegrown energy now and going forward.
OEUK chief executive David White house will lead the talks.
He said: “We remain deeply concerned about what Labour’s proposals could do to our people.
“If we can’t get companies to invest here, there are no jobs. It’s that simple.”
Speaking at the Labour conferencein glasgow, party leaders irkeir st armer said oil and gas would be part of the energy mix for “decades to come” but highlighted opportunities to create a world-leading green energy industry.