Chancellor Rachel Reeves defends windfall tax on oil and gas giants on visit to Scotland

The chancellor was visiting RAF Lossiemouth to highlight the UK Government’s defence investments when she made the comments.

Introduced by the last Conservative government, the energy profits levy on energy companies aims to generate funds for public services and support for energy bills.

When Labour won the general election last year, it was announced the levy would be increased to 78 per cent and extend to March 2030 unless oil and gas prices drop below a certain level for six months.

Ms Reeves said: “The oil and gas sector has an important role to play in our energy mix for decades to come.

“The sunset clause on the energy profits levy came about at a time when energy companies were making huge profits after Russia’s illegal invasion of Ukraine.

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“It is right we ask them to pay a little bit more and put that money into public services including the NHS.

“Parties like the SNP and the Conservatives who oppose those taxes, they need to say where they would get the money from - would they increase taxes on ordinary people? That’s not my priority.”

She said the windfall tax is “bringing in billions” to the Treasury which is being spent on public services.

She added the UK Government will continue to invest in the oil and gas sector as a “critically important” component of the Scottish economy, but said the government will also be looking to make new investments in carbon capture and renewables.

The SNP had initially supported calls for a windfall tax on energy profits. However shortly before the general election, First Minister John Swinney said the windfall tax had “gone too far”. His predecessor Humza Yousaf had also said he would oppose Labour’s plans for a windfall tax.

During her visit to the military base in Moray, Ms Reeves heard about the “huge transformation” RAF Lossiemouth had undergone, including the addition of three new E-7 Wedgetail aircraft. She was also shown the base’s efforts to keep fighter jets and sub-hunting aircraft in the air.

There were US, French and British aircraft at the base during the chancellor’s visit, some linked to the recent visit by US President Donald Trump and some as part of the Nato alliance.

This comes after the UK Government increased defence spending to 2.6 per cent of GDP.

After her visit to RAF Lossiemouth the chancellor travelled to the Acorn carbon capture and storage facility at St Fergus to hear about investments in clean energy.

She said: “We’re seizing the huge potential and opportunities that Scotland has on offer.

“Whether it’s in defence to keep the UK safe, or clean energy to power all corners of the country, this government is backing Scotland with billions of pounds of investment to grow the economy and create jobs.

Environmental campaigners Uplift have reacted to Ms Reeves’s comments, saying it “makes no sense” to allow profiteering companies to damage the planet.

Tessa Khan, executive director of Uplift, said: “As Rachel Reeves visits Scotland today, as always we are hearing from naysayers who are calling for an end to the windfall tax and for more drilling in the North Sea.

“They know full well that Scotland in particular, boasts some of the best wind resources in the world, which is increasingly providing us with an affordable supply of energy.

“Growing our renewables industry is also vital for the North Sea workforce, which has seen jobs supported by the industry more than half in the past decade, as the basin declines.”

Douglas Lumsden MSP, the Scottish Conservatives’ energy spokesman, said: “This is embarrassing nonsense from Rachel Reeves, who knows perfectly well that Labour’s policies on oil and gas are costing 400 Scottish jobs a fortnight.

“Just like the SNP, her party opposes all new North Sea development while imposing unrealistic green targets and huge energy bills on Scottish households.

“Her decision to renew the energy profits levy is a hammer blow to the sector, especially on top of tax rises and NI hikes from both governments.

“She should heed the calls from the Conservatives to scrap the EPL and allow new fields as part of a realistic and affordable energy policy.”

The SNP has also been approached for comment.