Oil and gas industry in crisis talks over Labour pledge to hike taxes on massive profits by energy giants

Offshore industry leaders are set to hold crisis talks this week over Labour's proposal to ramp up the windfall tax on UK production of oil and gas, citing fears that 42,000 jobs could be lost if the party wins power and the move was to go ahead.

Offshore Energy UK (OEUK), the leading representative body for the sector, is convening emergency summits with operator and supply chain members at both its Scottish and UK headquarters in coming days.

Meetings will take place in London and Aberdeen to discuss “deep concern” over plans set out by Labour, which include a rate increase on the windfall tax for energy companies and cuts to investment allowances.

In a briefing note for its Prosperity Plan Policy, the party confirms its manifesto will propose raising the tax rate from 75 per cent to 78 per cent and end “loopholes in the levy that funnel billions back to the oil and gas giants”.

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It also intends to extend the sunset clause, currently planned for March 2028, until the end of the next parliament.

According to the party, the measures will raise £10.8 billion in the next five years.

The proposals come as international energy giants have continued to reap record profits from oil and gas, driven largely by instability caused by Russia’s invasion of Ukraine.

Labour is proposing to increase the windfall tax on UK production of oil and gas to 78% – the same as in Norway – if elected to government, but industry leaders have warned that 42,000 jobs could be lost as a result

The latest results show the three largest producers, Shell, BP and Equinor, between them raked in £42.7 billion in annual profits in 2023 – the hottest year on record, attributed to climate change.

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OEUK warned earlier this month that 42,000 jobs could be lost in the oil and gas sector as a result of the proposals.

The body contends that the confidence of energy producers to invest in the UK has come under “consistent challenge” in recent years, with industry cautioning that proposals to increase the tax further and remove vital allowances would deliver a “hammer blow” to homegrown energy now and going forward.

Scottish Labour leader Anas Sarwar and UK Labour leader Sir Keir Starmer have been addressing audiences at the Scottish Labour Party Conference in Glasgow

OEUK chief executive David Whitehouse will lead the talks.

He said: “We remain deeply concerned about what Labour’s proposals could do to our people.

“If we can’t get companies to invest here, there are no jobs. It’s that simple.”

Speaking at the Labour conference in Glasgow, party leader Sir Keir Starmer said oil and gas would be part of the energy mix for “decades to come” but highlighted opportunities to create a world-leading green energy industry.

He said the party would support the likes of carbon capture and storage development – “literally putting the carbon back in the ground it came from” – which would create new North Sea roles.

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Scottish Labour leader Anas Sarwar has also defended the plans.

“We will not turn off the taps,” he told conference attendees, “but we will also accelerate the transition to net zero.

“We will upgrade the UK energy grid, invest in Scotland’s ports, capitalise on new technologies and use Labour’s British Jobs Bonus to create quality supply chain jobs right here in Scotland.

"We will make our country the winner in the race for the next generation of clean energy jobs and cheaper energy bills.”

The party has said it will establish a new publicly owned energy generation company, GB Energy, to be headquartered in Scotland.

“That’s what change means,” Mr Sarwar said. “That’s why change matters.”