Businesses in final plea to Rachel Reeves - scrap the windfall tax and change course

They are demanding urgent reform of the windfall tax on the profits of oil and gas firms, amid growing warnings of a devastating impact on the sector – particularly in Aberdeen and the north east of Scotland.

However, they say there is also a chance to unlock billions of pounds of investment if the Chancellor makes good on promises not to jeopordise jobs.

Writing in today’s Scotland on Sunday, David Whitehouse, chief executive of Offshore Energies UK, writes: “The reality is stark: 1,000 jobs are being lost every month across the oil and gas sector. Friends, neighbours and colleagues are being made redundant, despite the Prime Minister stating that North Sea oil and gas will be produced for decades to come.

“Words need to be matched by action, which is why reform of the ‘windfall tax’ or Energy Profits Levy from 2026 is essential. It was introduced during a period of exceptional prices. They are long gone, yet the levy remains.”

He says reform of the Energy Profits Levy (EPL) could unlock £50 billion of investment across 111 projects, restarting activity in fabrication yards, engineering firms, ports and terminals and ensure the North Sea continues to meet at least half of the UK’s oil and gas demand in the years ahead

He adds: “What happens offshore does not stay offshore. It affects Scotland’s industrial spine and the entire UK energy system. Last week’s announcement of the closure of the Fife Ethylene Plant in Mossmorran, with the loss of hundreds of jobs, is another wake-up call.

“Numbers on a spreadsheet cannot capture the impact on communities and people. The government promised the North Sea would be managed in a way that does not jeopardise jobs. On Wednesday, the Chancellor must act on that promise.”

Meanwhile, Sara Thiam, chief executive of Prosper, writes for us today that the EPL “threatens an industry whose investments, skills and infrastructures are needed to make the transition to green industries”.

“Next week’s Budget offers Rachel Reeves a chance to change course and our advice is clear; scrap the EPL and replace it with a stable profits-based regime designed by industry experts that will encourage investment, promote jobs and promote the development of a clean energy industry.”

On Friday, two of the most respected businessmen in the north east of Scotland urged Rachel Reeves to scrap the windfall tax and the ban on new oil and gas licences. Martin Gilbert – the former head of Aberdeen Asset Management – and ex-Wood Group boss Sir Ian Wood released a joint statement saying the region has the ability to be “a genuine global leader” in offshore renewables.

But it added: “It is a future that can only be realised if we have a critical mass in companies located here to deliver them and, right now, we are losing them, and the people they employ, at an alarming rate.”

Responding, a Government spokesperson said: “We are taking a responsible approach that recognises the long-term role of the sector while exploring what follows the end of the energy profits levy, so firms continue to invest and pay their fair share of tax.

“The oil and gas sector will be with us for decades to come, as we deliver a fair and orderly transition in the North Sea to drive growth and secure tens of thousands of skilled jobs, with the biggest ever investment in offshore wind and three first-of-a-kind carbon capture and storage clusters.”