Reeves announced a 3% increase in the top rate of the energy profits levy — a.k.a. the North Sea windfall tax—bringing it to a staggering 78% and stretching its tenure to 2030. On top of that, she’s stripping away the investment allowances. This policy will carve out a £5-7 billion gap in the national accounts as the regime loses £2.2-6.2 billion in annual income, while still bearing the £2-3 billion yearly cost of decommissioning existing projects. Reeves, naturally, is happy to blame the Tories for the black hole in the books, yet conveniently sidesteps the fact that she’s busy digging a fresh one…
Labour’s sheer ignorance in this climate-crusader policy may be linked to their dubious choice of tax advisor, named by City A.M.: Heather Plumpton, a rainforest historian under the employ of the Green Alliance, a group bankrolled by Greenpeace, Friends of the Earth, and renewable energy firms. Back in 2022, Plumpton pitched, on behalf of the ideological climate lobby group, a proposal to ramp up North Sea taxes to Norwegian levels (78%), sans the generous investment incentives that make Norway’s steep rates somewhat bearable. Now Labour have taken it on. Guido can’t help but wonder the lefty outcry over ‘Government being bought by corporate interests’ if it were oil companies lobbying to raise taxes on renewable energy sources instead…
According to The Telegraph Ed Miliband has today issued an order to immediately ban all new oil and gas drilling. Bids for 35 areas were meant to be up for grabs, confirmed by the North Sea Transition Authority (NSTA), and assured to The Telegraph as soon as yesterday. Those have been kiboshed by Red Ed – losing millions in bid preparation in the process…
Industry representative Offshore Energies UK’s response is not a happy one:
“We remain deeply concerned that some of the new proposals being put forward for our industry will undermine the energy transition we all want to deliver. Labour’s leadership has recognised that North Sea oil and gas will be with us for decades to come and they have committed to managing this strategic national asset in a way that does not jeopardise jobs. They now need to deliver on their commitment to support our industry.”
Companies affected are said to be considering “legal action for damages” after wasting time and cash. Meanwhile the policy itself will pump up C02 emissions and lose the Treasury billions in revenue. No wonder Miliband is so keen…
UPDATE: DESNZ issues a response to The Telegraph:
“This piece is a complete fabrication – it invents meetings and decisions that have not taken place. As previously stated, we will not issue new licences to explore new fields. We will also not revoke existing oil and gas licences and will manage existing fields for the entirety of their lifespan.” So what will happen to the 35 new bidding areas?
The chairman of leading oil and gas company Serica Energy, David Latin, has poured cold water over Labour’s energy plans. Ahead of Serica’s AGM today, he warned Labour spell disaster for UK investment and jobs in the energy sector. He said Britain is heading down a path of worrying reliance on foreign imports:
“The UK consumes almost twice as much oil and gas as it produces. This deficit will persist even as the country seeks to reduce its consumption of hydrocarbons… yet another increase in the tax rate to 78% is proposed by the Labour Party… would make investment in the vast majority of UK North Sea projects unprofitable”.
Latin exposes Labour’s catchy sound bites like ‘proper windfall tax’ and ‘oil and gas giants’ as misleading. Oil and gas firms already bear a hefty 75% tax burden—three times that of other sectors. Labour’s proposal to jack this up to 78% will sink profitability for crucial North Sea projects with tax revenue and jobs as collateral. Co-conspirators have already seen Labour won’t admit the hundreds of billions their energy plans will cost. Now it’s been said it could steer Britain towards deeper foreign dependence, undermining both economic and environmental goals in one fell swoop…
Labour’s plans for the oil and gas sector have gone largely unscrutinised – thanks to the sector being a piñata for quick revenue-hungry chancellors. There aren’t many sweets left in it as the sector reaches absolute breaking point…
Under climate zealot Ed Miliband, Labour is proposing an increase to the already eye-watering windfall tax to 78% (from 75%) until 2029, as well as blocking any new licences. American international investment bank Stifel has conducted research into the effects of the tax plans. They have found that:
- An increase in the windfall tax to 78% and the removal of investment allowances would yield an extra £6.5 billion by 2029, not the expected £11 billion.
- From 2030 onwards, tax revenue would drop significantly, with a projected loss of £20 billion in tax income over the remaining life of the North Sea energy fields.
- The industry is likely to see a £20 billion reduction in capital investment by 2035 which leads to a 50% drop in production by 2030.
- According to projections, around 100,000 jobs could be lost in the sector by the next general election in 2029.
- The UK would become increasingly reliant on imports, with 80% of its gas demand met by imports by 2030, up from the current 55%.
Apart from the loss to energy security, without the North Sea our Co2 emissions would be higher, because production of oil and gas is not highly carbon intensive. Transportation/importation of oil and especially gas (specifically LNG) is where carbon intensity rises. So carbon emissions across the world would rise. The story of net zero writ large…
Read the full report below:
Depressing news for fans of economic growth as Hunt claimed it’s “virtually impossible” to make any tax cuts until the economy improves on LBC’s Tonight with Andrew Marr. This is despite lower inflation and a stop to interest rate hikes. Who’s surprised?
Guido thinks its worth reminding the Chancellor and Number 10 what they said about tax when they were making “all the right noises.”
- Hunt graciously admitted that the “tax burden is too high. We would like to bring it down through growth.” In the meantime, Britain has the third highest integrated tax rate on corporate income in Europe. Singapore-on-Thames?
- The Chancellor said he was desperate to “unlock investment in the North Sea“ as his continuing windfall tax has led nine out of ten capital projects to be put on hold.
- Sunak told business leaders: “I’ve got your back“. At the same time as taxing them so highly they left to the United States…
- Rishi said he was “ready to listen” to calls to scrap the tourist tax, which he instituted and forfeits £3 billion of consumer spending annually. No movement there…
There used to be a time when Chancellors had the stomach to prioritise investment and growth despite loud calls from quangos, charities, and commentators to hike taxes ever-higher. Distant memories…
After yesterday’s announcement that the government would issue hundreds of new oil and gas licences in the North Sea, Guido wasn’t surprised to see outrage from Just Stop Oil and their political wing. Ed Miliband was quick out the gates: he slammed the “weak and confused policy” and promised a “phased and responsible transition in the North Sea”. In the same press release the Labour Party warned of the “dangers” of prioritising new oil and gas, warning that it would contribute to “climate disaster”. You would think reversing this “failed” policy would be the priority of any incoming Labour administration…
Yet, once again, Labour couldn’t back up their words were action. On Newsnight yesterday, Thangam Debbonaire was asked if a Labour administration would revoke the new licences. Thangam couldn’t commit to reversing the policy, only going as far as to say:
“We will grant no new licences”.
As Kirsty Wark put it, this leaves Labour pursuing “exactly the same strategy” as the government. The very same “weak and confused” strategy supposedly contributing to “climate disaster”…
