Oil and gas body to hold ’emergency summits’ on Labour windfall tax plans

The body representing the offshore oil and gas industry intends to hold what it calls “emergency summits” this week in response to Labour’s plans for a windfall tax on profits.

Offshore Energy UK (OEUK) plans to hold “crisis talks” with operator and supply chain companies in Aberdeen and London.

Sir Keir Starmer promised a “proper” windfall tax earlier this month when he scaled back his party’s £28 billion-a-year green investment pledge.

A new energy profits levy for oil and pas production was introduced in 2022 after global energy prices shot up in the wake of Russia’s invasion of Ukraine.

Labour intends to extend the tax to 2029 if they reach government, with the energy profits levy rising to 78%, saying it would raise £10.8 billion over five years to help pay for their green spending plans.

Speaking ahead of the meetings, OEUK chief executive David Whitehouse 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.

“I’m already hearing from our supply chain and from energy producers that these proposals would deliver a hammer blow to the energy we need today and to the homegrown transition to cleaner energies that everyone in the UK wants to see.

“These meetings will allow us to gather more evidence from employers to put to Labour leadership.

“As a sector that supports 200,000 jobs, contributes over £20 billion a year to the wider UK economy and has the skills and infrastructure to deliver a homegrown energy transition, we have so much to offer.”

On Sunday, Scottish Labour leader Anas Sarwar was asked about concerns from businesses connected to the North Sea industry.

He said oil and gas companies “raking in billions of pounds in profit” should not pay less tax while noting the industry is important in building the transition to a green economy.

He told BBC Scotland’s Sunday Show: “I’ve been meeting many of these companies this week to have conversations with them.

“That’s why we’re really clear alongside a windfall tax, we will have GB Energy, a publicly owned energy generation company headquartered in Scotland, that will use the power of a UK Treasury to leverage in UK money, but also private sector money to manage that transition.”

Mr Sarwar said all of Labour’s energy policies would be driven by four principles, one of which was “more jobs, not fewer jobs”.

The party denied claims that the Windfall Tax will lead to 40,000 job losses, and said the proposal was to bring it in line with Norway while continuing to allow firms to claim back around 46p on every £1 of investment.

It also promised to retain the Energy Security Investment Mechanism, meaning if energy prices fell to historically normal levels, ending windfall profits, then the windfall tax would be lifted.

A Labour spokesperson said: “Labour is the only party ambitious for the future of our country and for the North Sea. Our plans will create good jobs in all parts of the country through our National Wealth Fund, cut people’s energy bills by up to £500 through insulating five million homes and switch on GB Energy, a new publicly-owned clean energy company.

“Labour is the party of business and stability for their investments. The Conservatives have chopped and changed with business taxes, creating an impossible environment for investors, which has cost the UK jobs.

“We have been consistent that a proper windfall tax means raising the rate of the windfall tax to match the rate in Norway, abolishing the investment allowances inside the windfall tax, and that these changes account for the vast majority we would raise from a windfall tax. Our windfall tax will only apply while there are windfall profits being made. This is fair and proportionate.

“Labour will work with the industry to match their ambition for Britain.”