The UK’s biggest oil and gas producer has confirmed plans to axe one fifth of its workforce, blaming Jeremy Hunt’s windfall tax for deterring investment.

Harbour Energy said it planned to cut 350 onshore jobs following a review of its business, the majority of which are understood to be in Aberdeen.

The firm pointed to the expanded energy profits levy imposed by the Chancellor, which it said had squeezed cash flows and put off financial backers.

News of the job cuts came just hours after fellow North Sea producer Enquest said its Kraken field would face “natural decline” after the levy prompted bosses to delay further drilling.

In January, Harbour said it was preparing to cut hundreds of jobs and shift attention outside of the UK in response to the windfall tax on North Sea producers.

Then, last month, the company revealed that the controversial levy had virtually wiped out its profits for the last year. Profits after tax at were less than £7million on turnover of more than £4.5billion.

The vast majority of Harbour’s 1,200 UK onshore staff are based in Aberdeen.

As regards the job losses, the company said yesterday: "We are working hard to mitigate the impact of this reduction by, for example, a recruitment freeze and opening a voluntary redundancy scheme.


“These figures do not include UK-based corporate and international roles, which are still being reviewed.

"Nor do they include our offshore organisation, where we expect the impact to be significantly lower.

“We are very conscious of the impact of this news on our people.”

Trade body Offshore Energies UK said just last week that the North Sea’s future hangs in the balance.

This bleak assessment came as the government continues to hold off on offering relief on the windfall tax - despite the damage being done on an almost-daily basis to the sector.

There had been hopes that Westminster’s recent energy-security plan would contain details on a “price floor” for the levy to aid oil and gas producers, but no such announcement was forthcoming.

Massive deterrent

The prospect of the tax applying, even when hydrocarbon prices drop and there is no “windfall” profit being earned, has proven a massive deterrent to investment in the North Sea, with 90% of operators confirming that they are cutting back on investments.

Responding to the Harbour job losses, Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, said: “Our thoughts are with the 350 people who will be out of work because their industry has been used as a political football.

“Despite repeated warnings about the damage a windfall levy would cause, the UK Government, cheered on by the opposition, chose to take a gamble on the North Sea. Today it is the people and companies of Aberdeen that are paying the price.

“The chancellor must now wake-up and recognise the corrosive impact the windfall tax has had on jobs and investment - and urgently reform the levy to introduce a price floor.

“Failure to act now will result in this announcement becoming the tip of a terrifying iceberg for the North-east.”

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