Rachel Reeves has claimed the windfall tax on North Sea oil and gas firms “remains fair” as she ignored growing calls from the sector to scrap it.
The chancellor defended the levy in an exclusive interview with the Press and Journal during a trip to St Fergus on Friday, insisting it strikes the "right balance".
She said: "The energy companies did make huge profits in the aftermath of Russia’s invasion. It is the same rate as the Norwegian tax, and there is a sunset clause so it finishes in 2030. I think that is the right balance.
"Energy prices are still very high compared to where they were a few years ago. I think it’s right we ask companies who have made big profits to pay a bit more. If you look at things like the Acorn investment, that money has to come from somewhere. We need carbon capture, one of the ways to pay for that is through the energy profits levy."
Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, responded: “If the chancellor wants North Sea oil and gas for decades to come, then we need the Energy Profits Levy to be removed as soon as possible – we certainly cannot wait until 2030 for it to fall away. Sticking to the current path would halve production within five years and have a catastrophic impact on jobs and communities.
“Academics warn the UK offshore energy industry faces Grangemouth-scale redundancies every fortnight without intervention – primarily because the government is seeking to tax ‘windfalls’ which don’t exist. Oil prices are down 50% since the invasion of Ukraine in 2022 and gas prices are down 80% from their post invasion peak.”
Click here to read more political reaction in the Press & Journal.