The UK oil and gas group has expressed its “concern” regarding the offshore windfall tax and ongoing licensing plans of the new government. In a statement released on its website, the trade group, representing the UK’s offshore energy industry, conveyed its worries and congratulated Labour leader Keir Starmer on last week’s election victory.
The group affirmed its commitment to collaborating with the new government to facilitate a homegrown energy transition, safeguard energy security, jobs and skills, and create an enticing investment environment in the UK. However, they also cautioned that many skilled individuals and investors in the industry are deeply concerned about Labour’s proposals for a further windfall tax on homegrown oil and gas production and to end new oil and gas licences in UK waters.
In its election manifesto, Labour proposed increasing the windfall tax on energy producers by three percentage points, which was first imposed in 2022. The current 35% tax, running until 2029, places the total tax burden on producers at 75%. The group added that such measures would not create the ideal investment conditions needed for the UK to deliver the homegrown energy transition essential for economic growth.
The UK offshore energy industry is expected to invest a substantial £200bn ($256.38bn) over the next decade in domestic energy projects. Despite these investment plans, the industry needs renewed confidence to invest, as it currently supports over 200,000 jobs across the country.
David Whitehouse, chief executive of OEUK, emphasised the importance of maintaining confidence in the industry to facilitate investment, particularly in light of the estimated £1.4trn transition costs, much of which will need to come from the private sector. He also stressed the need for the new Labour government to work in partnership with the sector, listen to skilled individuals, and ensure no one is left behind in the UK’s energy transition.
Ed Miliband, the newly appointed Secretary of State for Energy Security and Net Zero, has expressed his commitment to overturning an onshore wind ban in England and relaxing planning rules in the early stages of a Labour Government. With Miliband’s experience in energy-related roles and the government’s intention to work closely with the offshore energy industry, there is hope for a collaborative approach to addressing the concerns raised by the trade group.
In conclusion, the UK oil and gas group’s concerns about the windfall tax and licensing plans post-election underscore the importance of developing a balanced and well-managed transition in the energy sector. With the impending changes in government leadership and the industry’s significant investment plans, it is crucial for all stakeholders to work together towards a sustainable and prosperous future for the UK offshore energy industry.