The North Sea oil and gas industry is lobbying the government to accelerate the replacement of its windfall tax, proposing that the levy be phased out by 2027 instead of the scheduled 2030. The industry group Offshore Energies UK (OEUK) argues that transitioning to a more targeted tax, applied only during periods of extreme price spikes, would stimulate as much as £50bn in regional investment and help safeguard industrial employment.
This request comes as Britain prepares for a difficult winter, with household energy bills projected to hit three-year highs. Wholesale gas prices reached 207p a therm on Monday, marking the highest level observed since the Russia-Ukraine crisis began. These volatile market conditions have reignited debates over the industry’s profitability, especially as major corporations like BP and Shell continue to report significant earnings following the Iran war.
OEUK chief executive David Whitehouse acknowledged the sensitivity of the proposal, noting that from a consumer perspective, the timing is difficult. However, he maintained that the current energy profits levy, established in 2022, acts as a permanent, long-term tax that hampers the economy. He argued that the proposed replacement, an oil and gas revenue levy of 35% triggered only above specific price thresholds, would better balance the need for government revenue with the necessity of encouraging sector investment.
The lobby group estimates that this policy change could yield £14.9bn more in tax revenue over the next decade than current plans. Notably, only £2.4bn of this sum would stem from direct taxes on producers, while the remainder relies on projected tax income from the jobs that OEUK claims this surge in investment would support.
Beyond tax reform, the industry is pressuring ministers to approve the development of the Rosebank and Jackdaw oil and gasfields. While a decision on the Jackdaw project was anticipated soon, it is now reportedly delayed until following the upcoming Holborn and St Pancras byelection. Supporters suggest these projects, alongside a pipeline of future developments, are essential to reducing British reliance on imported natural gas.
Critics, however, have strongly condemned the industry’s demands. Greenpeace campaigner Rudy Schulkind described the push for tax relief while companies record massive profits as “staggering audacity.” Global Witness has characterized the recent earnings of major firms as “cashing in on human misery,” further fueling the backlash from various unions and charities.
These opposing groups, including Tax Justice UK, have previously advocated for a strengthening of the windfall tax to fund cost-of-living support rather than a reduction. As the government faces pressure from figures like Andy Burnham to lower electricity generation costs for struggling industrial businesses, the debate over how to balance sector profitability with public affordability remains a central challenge for the administration.
Greenpeace further highlighted the timing of the demand, arguing that after a summer marked by record heatwaves and wildfires, rewarding the fossil fuel sector is inappropriate. Critics contend that as the public continues to bear the financial burden of energy crises, the industry should not be seeking to raid the public purse. The report also notes that the OEUK chief executive, David Whitehouse, admitted that “from the consumer’s point of view … you can argue that it is a difficult time to make these arguments”. The report also notes that however, he added that the new levy would “ensure that oil and gas companies pay high levels of tax when prices are high, but encourages investment”. The report also notes that “While working people across the country shoulder the cost of living and the growing fallout of extreme weather, big oil is trying to raid the public purse. The report also notes that “Households already absorb the financial hit during energy crises, even as the industry pockets multibillion-pound windfalls from each market spike. The report also notes that “Following a catastrophic summer of record heat, surging wildfires and tragic loss of life, now is the worst possible time to be rewarding the architects of climate breakdown.”.
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