Aberdeen & Grampian Chamber of Commerce is seeking urgent assurances from the Chancellor following reports that the UK Government is considering another tax raid on the North Sea.
The intervention follows a report in The Independent yesterday suggesting John Healey is considering further increasing or extending the windfall tax on oil and gas companies already crippled by a headline 78% tax rate.
The Chamber has warned that such a move could accelerate job losses, drive billions of pounds of investment overseas and inflict lasting damage on an industry which remains critical to Britain’s economy and energy security.
In a letter sent to the Chancellor last night, chief executive Russell Borthwick argues the Government should instead bring forward its promised move to a permanent price-based mechanism, pointing to Offshore Energies UK analysis suggesting an early policy reset could unlock £50billion of additional oil and gas investment, increase tax receipts by more than £13billion over the next decade and support tens of thousands of jobs.
The warning comes just days after OEG, one of Aberdeen’s biggest energy services companies, questioned whether it would make sense to retain its global headquarters in the city if activity in the North Sea continues to decline. The company, which employs around 300 people in Aberdeen and works across both oil and gas and renewables, reported strong international growth but described its home market as “slow” and “difficult”.
Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, said: “These reports will cause enormous alarm across the North-east because the stakes could hardly be higher. We are already losing highly skilled jobs, investment is leaving the country and businesses which have spent decades building world-leading expertise in the North Sea are being forced to make incredibly difficult decisions about their future.
“The warning from OEG last week should set alarm bells ringing in the Treasury. This is a successful, growing company working across oil and gas and renewables, employing hundreds of people in Aberdeen, and its chief executive is openly questioning why its global headquarters should remain here if there is no longer enough work in the North Sea.
“That is the jeopardy here. These are not theoretical warnings about what might happen years from now. Investment and jobs are leaving now, as we’ve seen with BP, and we risk losing the companies, headquarters and supply chain which have made the North-east one of the world’s great energy centres.
“There is a better choice. An early move to a competitive, permanent fiscal regime could unlock £50billion of investment, support tens of thousands of jobs and ultimately deliver more money to the Treasury.
“You cannot tax revenues from investment which does not happen, production which has ceased or workers whose jobs no longer exist. We need the Chancellor to make clear today that these reports are wrong. The North Sea needs confidence and investment, not another tax raid.”
A Treasury spokesman said: “The Office for Budget Responsibility will publish its updated forecast alongside the Budget in October and we will not comment on rumour, speculation or proposals about its contents ahead of then.”