Chamber says chancellor must ‘wake up’ to windfall tax damage

A north-east business chief has urged Chancellor Jeremy Hunt to “wake up” to the damage caused by his oil and gas windfall tax policy.

Aberdeen and Grampian Chamber of Commerce (AGCC) policy director Ryan Crighton said Mr Hunt was yet to recognise the “corrosive impact” of the levy in the North Sea.

Meanwhile, trade body Offshore Energies UK (OEUK) has expressed disappointment at yesterday’s Spring Budget, saying it “misses the mark” on energy security.

We need the government to take a far-sighted approach focused on reducing investment risk if we are to build a secure, affordable, low carbon energy market in the UK.”

David Whitehouse, chief executive, OEUK

AGCC and OEUK have been seeking a price floor for the windfall tax; a mechanism where the levy would be removed should oil and gas prices drop.

Although the chancellor is said to be reviewing such a measure, he made no announcement in his Spring Budget.

According to OEUK, more than 90% of UK North Sea operators have slashed spending because of the windfall tax, which is officially known as the Energy Profits Levy

Energy Profits Levy ‘a tax too far’

The region’s largest producer, Harbour Energy, has blamed it for hundreds of planned job cuts in Aberdeen.

Mr Crighton said: “The Energy Profits Levy, as it stands, is a tax too far – and his (Mr Hunt’s) failure to implement a price floor continues to place major investments at risk.

“The government says it will set out further action later this month to ensure energy security in the UK – that action must reflect the explicit warnings coming from industry right now.

Political leaders need to ‘wake up’

“Shell has described the US as a more attractive investment, Harbour Energy is cutting jobs after its UK profits were wiped out by the windfall tax, and one of the North Sea’s biggest fields, Ninian, is being decommissioned due to the tough fiscal environment.

“Our political leaders must wake up to the damage being done to an industry which supports 200,000 before it is too late.”

OEUK chief executive David Whitehouse said the Spring Budget offered “some helpful support” for emerging technologies.

But he added: “We are disappointed that it has not removed obstacles for offshore energy firms, and the homegrown oil and gas producers keeping the nation’s lights on.

“We need the government to take a far-sighted approach focused on reducing investment risk if we are to build a secure, affordable, low carbon energy market in the UK.”

Meanwhile, the Office for Budget Responsibility has issued fresh guidance on Exchequer receipts from the North Sea.

The sector is expected to deliver £11 billion in taxes for the 2022-23 financial year.