The UK Government is facing furious accusations from industry leaders that its tax policy is deliberately killing off the North Sea oil and gas sector.
This follows Chancellor Rachel Reeves's decision in the recent Budget to refuse scrapping the controversial Energy Profits Levy (EPL), a windfall tax on the sector.
Industry Fury and Warnings of Job Losses
Russell Borthwick, Chief Executive of Aberdeen and Grampian Chamber of Commerce, did not mince his words in his reaction. He stated that the industry had presented a compelling case for a reformed EPL.
This reformed plan, he claimed, would have unlocked over 100 projects and £50 billion of investment, while also safeguarding approximately 160,000 jobs across the country.
He argued that this approach would have been more beneficial for the Treasury in the long run, generating an additional £10 billion in tax revenues over the next decade.
"Without so much as a mention in the Chancellor’s statement today, the UK Government has instead opted for a cliff-edge end to North Sea production and to tax the industry to death inside five years," Borthwick said. He warned that thousands of jobs would be lost as a direct result and vowed that Aberdeen is "not going down without a fight."
Political Disappointment Across the Board
The disappointment was echoed by political figures in Scotland. Scottish Finance Secretary Shona Robison labelled the continuation of the levy as "one of the biggest disappointments" of the Budget.
She emphasised the immediate consequences, stating it puts jobs at risk not just in the north-east of Scotland but also at locations like the Mossmorran plant in Fife.
Adding to the criticism, Scottish Tory energy spokesman Douglas Lumsden declared an "oil and gas emergency" was underway. He accused the government of a policy that is "completely wrong" and a "classic case of shooting ourselves in the foot," arguing the decline is politically driven and self-inflicted.
Government Defence and Future Plans
In defence of the decision, Chief Secretary to the Treasury James Murray stated that the government is asking the oil and gas industry to "make a fair contribution" to the transition towards clean energy.
He acknowledged the sector's critical role in the UK's energy mix for years to come but outlined the government's long-term plan.
The Energy Profits Levy is scheduled to expire by the end of the decade, and Mr Murray confirmed the government's intention to replace it with a stable oil and gas price mechanism by 2030 at the latest.
He described this as a move towards a "long-term, stable solution" developed in collaboration with the industry. This shift comes as revenues from the levy are projected to fall significantly, from £2.7 billion last year to just £1.1 billion in its final full year of operation.
