There is a continuing Cabinet split over the UK Government's controversial windfall tax on North Sea oil and gas producers.

Business Secretary Kwasi Kwarteng stated in Parliament yesterday that he has always been opposed to such taxes on principle, and he expressed hopes that the huge cash raid does not discourage investment.

Chancellor Chancellor Rishi Sunak confirmed earlier this week that the new levy will remain in place until oil prices fall below $70 a barrel.

He had been under pressure to clarify his new tax after news it will remain in place until oil and gas prices "return to historically more normal levels" or the activation of a "sunset clause" in 2025.

With no signs of a significant drop in price of hydrocarbons on the horizon - Brent crude futures were still above $120 a barrel this morning - there are fears it could turn into a multi-year levy which could cost the industry up to £17.5billion.

There was one "sweetener" which came with the levy - North Sea producers will get a 91p tax saving for every £1 they invest in the basin.

The Treasury believes that the tax changes will actually increase investment in the North Sea in the short-term, not deter it.

But companies including BP and Shell have warned the levy creates significant uncertainty, with both now reviewing their plans for investment in the North Sea.

And EnQuest is reported to be preparing to invest in south-east Asia instead of the UK in the wake of the tax hike.

At Westminster yesterday, shadow Business Secretary Jonathan Reynolds asked Mr Kwarteng about the new levy.

Mr Reynolds said he welcomed the Government's U-turn to impose the extra tax last month, but added: "There is worry that the chaotic nature of the announcement could perversely incentivise investment in fossil fuels over renewables."

Mr Kwarteng said he had always been opposed to windfall taxes on principle, and continues to be opposed.

He added: "I hope that this energy profits levy does not discourage investment. Actually, it has features that do attract greater investment."

Aberdeen South MP Stephen Flynn took the opportunity to highlight that Scotland has 25% of Europe's offshore wind capacity and of its tidal capacity.

He added: "Now that the UK Treasury is going to be coining in some £13billion from Scotland's North Sea oil and gas sector this year alone, will it give a little bit back and match fund the Scottish Government's £500million just transition fund?"

The fund is a 10-year commitment that will support projects in the north-east and Moray which contribute towards the area's transition to net zero.

Mr Flynn went on: "The Government have £13billion in their ‘back hipper’, yet they will not even give £500million back.

“But we should not be surprised, because this UK Government are failing to fast-track the Acorn carbon capture and underground storage project; continue to preside over Scottish renewables projects paying the highest level of grid charging in the entirety of Europe; and confirmed just yesterday that big oil incentives will not be carried over to big renewables either. So may I ask the Secretary of State: is it not the case that, as ever, Scotland has the energy but we do not have the power?

Mr Kwarteng replied that Scotland has the energy, and, in the form of the UK Government, it has a strong supporter of renewables and energy.

The Business Secretary pointed out that Business Minister Greg Hands and he had negotiated the North Sea transition deal, and they had also announced the Energy Transition Zone in Mr Flynn's constituency which was funded by the Chancellor.

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