Thousands of business leaders and energy workers have called on Prime Minister Sir Keir Starmer to end the North Sea windfall tax before it costs more jobs.
An open letter, signed by more than 2,500 energy workers, business leaders, supply chain employees and North-east community representatives, has highlighted the “absurd” situation of “bringing a premature end to the oil and gas sector” while importing increasing amounts of fossil fuels from overseas.
The letter - which will be handed over at Westminster this morning - comes as a new report warns that the Treasury will lose out on more than £3billion in tax revenues if it sticks with its plan to hold the Energy Profits Levy (EPL) until 2030.
'Devastating blow'
Initially introduced as a temporary tax on the profits of oil and gas companies operating in the UK, the EPL is currently a 38% levy on top of existing taxes, bringing the headline rate for producers to 78%.
In the open letter to the Prime Minister, led by Aberdeen & Grampian Chamber of Commerce, signatories cited the “devastating blow” of Harbour Energy’s announcement that it intends to cut its workforce by 25% in response to the damage of the government’s EPL.
The letter points to a further 300 job losses in the supply chain over recent weeks, contributing towards 10,000 job losses overall since the EPL was introduced by the Tories in 2022.
It warns that Aberdeen’s world-class energy skills base is at risk of being lost forever, putting the energy transition at risk.
You can view the full letter and all signatories here.
The lion’s share of those signing are ordinary members of the supply chain workforce, concerned for their future, as well as individuals from other industries across the North of Scotland whose fortunes depend on the future success of a vibrant energy sector.
Over 70 signatories to the letter are concerned employees of Harbour Energy, alongside a number of unemployed North Sea workers whose jobs have already been cut because of a 78% tax rate on energy profits.
More than 300 business leaders have signed the letter on behalf of their respective organisations, including City heavyweight Martin Gilbert and industry veteran Sir Ian Wood.
More widely, the letter has received support from Aberdeen Cyrenians and Cash for Kids charities, organisations supporting vulnerable people and tackling child poverty in the region, besides a range of businesses from the retail, construction, agricultural, food and drink, manufacturing and professional services sectors.
EPL 'could lose the UK £3bn'
Meanwhile, analysts have warned that the EPL is 'destroying' the country's North Sea oil industry, while undermining energy security and the economy.
The impact has been to see a collapse in North Sea investment, according to analysts at Stifel, and a sharp fall in the Treasury's total tax take as a result.
This has been exacerbated by a sharp fall in energy costs, with oil prices now down 50 per cent since the invasion of Ukraine in 2022 and gas prices 80 per cent below their post-invasion peak.
Stifel now estimates the 'self-defeating' tax will cost the Treasury £3billion in tax receipts between 2025 and 2030.
The broker wrote in a note: "The UK North Sea 'windfall' tax has not raised the additional revenue that was expected because there has not been a windfall to tax.
"The UK North Sea industry is being destroyed by taxes that are too high, taxes which threaten energy security, jobs, investment and economic growth. The impact of lower investment and production is already being felt through job losses, lower tax receipts, and more energy imports."
Reliance on overseas oil and gas imports not only hurt's the country's national security, Stifel added, it threatens the UK's carbon reduction goals.
Stifel wrote: "Without the UK North Sea, total CO2 emissions from the UK's energy mix would be higher, with UK exporting its carbon emissions (along with jobs and investment) to energy producers like Norway and the US. While shutting down the North Sea energy industry would make the UK's own emissions look better, this is merely because higher emissions are being produced elsewhere, outside the UK."
The broker called for the removal of the windfall tax. It estimates doing so will 'stimulate a recovery in investment in the UK North Sea', leading to an overall higher tax take across the next five years.
The UK Government spokesman said: “The government has reformed the Energy Profits Levy to support investment and give industry certainty and stability.”