Warning North Sea poised to miss out on 23,000 jobs as 110 firms demand windfall tax reforms
The North Sea could miss out on up to 23,000 jobs if windfall tax reforms are not brought forward, industry leaders have warned
More than 100 energy companies have called on the UK government to bring forward permanent reforms to the controversial windfall tax on oil and gas profits amid a warning over an “accelerated decline” that could see the sector miss out on 23,000 jobs.
The letter, signed by 110 companies, to the UK government’s new minister for industry Chris McDonald, comes after The Scotsman revealed calls by the CEO of Offshore Energies UK (OEUK), warning £40bn of North Sea is at risk without a rethink over the energy profits levy (EPL).
Under the plan, reforms earmarked for 2030 would maintain the 78 per cent headline tax, but would target the top slice of extraordinary profits with a trigger price for when the levy kicks in.
Now, OEUK’s supply chain champion, Steve Nicol, who is also the executive president of operations at Wood, has written a letter to Mr McDonald, warning the current arrangements are simply not working.
READ MORE: Rachel Reeves told to fast-track windfall tax reforms or risk losing £40bn North Sea investment
OEUK has stressed that if reforms are brought forward, the energy sector can add £137bn to the UK economy by 2050, support an extra 23,000 jobs by 2030 and unlock £12bn in additional tax receipts by 2050.
As first reported by The Scotsman, the industry is warning about the knock-on impact further delays to the EPL reforms could have on renewables such as floating offshore wind as well as carbon capture ambitions.
OEUK has warned the UK government that a predictable fiscal environment is needed to anchor those sectors in the UK.
In his letter, Mr Nicol warns that since appealing to ministers more than a year ago, “the situation has deteriorated further”, warning there has been “thousands more jobs lost across the sector”.
It adds: “The challenges have only intensified, as each week brings news of additional companies being forced to reduce their workforce and shift resources abroad to remain viable.
“These ongoing losses not only affect our employees but also threaten the resilience and competitiveness of the UK supply chain as a whole.
“We are witnessing an accelerated decline in activity that is undermining the value of the sector and the supply chain capability we need for our energy future. Job losses are occurring at an unacceptable scale, and there is an urgent need for supportive policy to unlock investment, drive economic growth, and safeguard the UK’s energy transition.”
Mr Nicol adds that bridging forward the reforms, scheduled for 2030 to next year, “alongside a pragmatic approach to licensing” could unlock “£41bn of investment over the next two decades, delivering an additional £12bn in fiscal revenue and supporting up to 23,000 jobs by 2030”.
He said: “This will help maintain a strong skills base within our UK supply chain, which is essential for the energy transition.
“To remain a viable investment destination, our order books need both the promised pipeline of energy transition projects and ongoing oil and gas and decommissioning work. Sufficient investment in the UK energy transition can only happen if we support, not undermine, our domestic oil and gas sector.
“Every week more and more companies are being forced to cut jobs and redirect resources abroad. As UK anchored businesses this is not a choice we wish to make – but a business imperative.”
But climate campaigners have hit out at the warnings from the oil and gas sector.
Rosie Hampton, Friends of the Earth Scotland’s oil and gas campaigns manager, said: “Supporting energy workers means that politicians should create credible, funded transition pathways into well paid, secure renewables jobs.”
READ MORE: Chinese firm piles pressure on UK government to approve massive wind turbine factory in Scotland
The UK government has been contacted for comment.
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