Open letter with more than 2,500 signatories warns there is a ‘grave risk’ of world-leading skills being lost

Thousands of business leaders and energy workers have called on Prime Minister Sir Keir Starmer to signal an “immediate end” to the controversial North Sea windfall tax - warning that the North East is “at grave risk” of losing world-leading skills.

The open letter, signed by more than 2,500 energy workers, business leaders, supply chain employees and North East community representatives, has highlighted the “absurd” situation of “bringing a premature end to the oil and gas sector” while importing fossil fuels from overseas.

There is a drive to reskill North Sea oil and gas workers to undertake renewables work.

Amongst the signatories are North Sea oil and gas billionaire businessman, Sir Ian Wood and City of London heavyweight Martin Gilbert.

The appeal comes after Aberdeen-based Harbour Energy announced plans that put 250 workers at risk of redundancy - with company chiefs pointing to the levy as contributing to the decision.

Labour energy minister Michael Shanks told The Scotsman last week that “there are a range of factors as to why companies have made commercial decisions” involving jobs, pointing to global oil prices and “companies’ own investment decisions”.

The UK government is under increased pressure to cancel the Energy Profits Levy which was intended to be a "temporary" levy on profits accrued from extracting UK oil and gas, also known as a windfall tax.

The levy was initially set at 25 per cent and was due to expire at the end of this year, while the tax was increased to 35 per cent in 2023.

The UK's GDP figures for April to June should shed more light on whether Labour's policies are the right ones for the economy (Picture: Peter Cziborra/WPA pool) | Getty Images

The new Labour government increased the levy to 38 per cent in November and it will remain in place until 2030 unless oil and gas prices drop below a certain level for six months.

Business and community leaders in the North East have pointed to around 10,000 jobs having been lost since the levy was introduced in 2022.

In the open letter, the signatories warn the news at Harbour Energy is “a devastating blow for the economy across the region”, telling the Prime Minister that “the Government should be concerned that with continued job losses in the North Sea, the UK’s long-term energy security is threatened”.

It adds: “We are at grave risk of losing the world-class company and skills base that will be required to deliver offshore wind, green hydrogen and carbon capture projects at pace at such time they are available commercially at scale.

“Regrettably, we find ourselves in the economically and environmentally incoherent position whereby government policy is bringing a premature end to the oil and gas sector whilst the UK simultaneously relies on increasing amounts of carbon heavy and costly imports from overseas to meet its energy needs.

“The situation is absurd, and we urge you to act now before it’s too late.”

The letter warns that the Government’s independent advisers, the Climate Change Committee has highlighted “the UK needs up to 15 billion barrels of oil and gas up until 2050”, adding that “our world-class oil and gas sector can meet almost half of this, unlocking £150 billion to the UK economy”.

As well as the energy profits levy, the North Sea oil and gas sector is poised for the Labour UK government’s incoming ban on new licences, a manifesto commitment. The Chancellor is believed to favour the economic benefits of being more flexible over offshore drilling, potentially putting her on a collision course with Energy Secretary Ed Miliband over climate and clean power commitments.

Experts have warned that global climate ambitions are not consistent with any expansion of oil and gas production.

The letter adds: “Please confirm an immediate end to the Windfall Tax and unlock the investment required to protect jobs, generate economic growth and greater energy and national security for the UK.

“The alternative, added to by the regrettable demise of Grangemouth refinery, is deindustrialisation and mass unemployment, something any responsible Government must avoid at all costs.”

Mr Shanks is expected to come under pressure on the energy profits levy and delays in the UK government confirming funding for the Acorn carbon capture and storage (CCS) project when he appears before Holyrood’s Economy Committee.

SNP MSP Audrey Nicoll said: “It's clear that Labour’s reckless windfall tax poses a real and present threat to prosperity and employment in Scotland’s Oil and Gas sector.

“As this letter rightly points out, the Windfall tax is already costing jobs in the North East and across the supply chain.

“The SNP Scottish Government has been warning the UK Government of the potential impact of a Windfall tax for months - the UK Government must now listen, and rethink this damaging policy.”

The UK government has been contacted for comment.

North Sea leaders and energy workers urge Keir Starmer to scrap oil and gas windfall tax

Comments