Labour’s plans for a “proper windfall tax” on the North Sea will put 42,000 jobs at risk, axe up to £26billion worth of investment and could raise just a quarter of the £10.8billion they expect.
Redundancies in the oil and gas sector could start as early as this year after Sir Keir Starmer and Ed Miliband vowed to extend the energy profits levy to 2029, scrap investment allowances and raise the levy to 78%, should they win the election.
Offshore Energies UK (OEUK) has warned the plan will “wipe out” North Sea investment, while Aberdeen & Grampian Chamber of Commerce has called the proposals a “betrayal” of the North-east.
And now Treasury costings suggest revenue to the Exchequer over five years would only amount to £2.8billion, leaving a black hole of £8billion.
Reacting over the weekend, Chancellor Jeremy Hunt said: “Try as they might, Labour can’t get their sums to add up. These official costings show that Labour would raise just a quarter of the money they claim. Once again Labour simply don’t have a plan and that can only mean one thing — higher taxes on hard-working families.”
Labour has dismissed the costings, but it's relationship with the industry lies in tatters following the announcement, which just like its drilling ban announced last summer was done without any consultation with industry.
OEUK Chief Executive David Whitehouse said: “Labour either can’t do the maths or haven’t considered the alarming jobs impact that will be felt up and down the country.
"With no new investment, 42,000 jobs will go, and we could start to see the effects as early as this year. These are not faceless numbers but decent, hardworking people working across the UK to provide the energy we will need today and in the future.
“The impact of no new investment will be felt across the whole economy – today we estimate the UK will lose £26 billion of economic value.
"It will undermine the very industry which can and must play a critical role in delivering a homegrown energy transition.
Aberdeen & Grampian Chamber of Commerce brought the Labour front bench to Aberdeen for talks with the sector last year - the concerns raised that day have been ignored.
Chamber chief executive Russell Borthwick said: “Most disappointing of all is that Keir Starmer came to Aberdeen last year, met with ourselves and key industry partners, looked us in the eye and promised to work in partnership to manage energy transition in a way that protects livelihoods and a future for the North Sea.
“This plan feels like a betrayal — it treats Scotland as an afterthought and would tax our energy sector to death at the very time we need to be accelerating transition.
“It’s an admission that the Labour Party is anti-jobs, anti-business and anti-energy security."