UK Government urged to do more to help businesses as North Sea tax receipts top £22 million per day

The UK Government has been urged to do more to support families, businesses and the energy transition after North Sea tax receipts reached an average of £22 million a day since the start of the year.

Research by the Aberdeen and Grampian Chamber of Commerce found offshore companies paid more than £4 billion in tax in just 181 days, according to receipt data from the Office for National Statistics (ONS).

This is a 662 per cent increase on the previous 12 months, when receipts for the six-month period totalled £526m.

The windfall tax will now rise even further following the start of the Energy Profits Levy (EPL), which increases the effective rate of tax paid by offshore energy firms to 65 per cent.

An oil platform in the North Sea. Picture: SWNS

Ryan Crighton, policy director at Aberdeen and Grampian Chamber of Commerce, said: “Our research shows that with increased receipts and its new profits levy, the Treasury is receiving a double windfall from the North Sea.

“On current trajectory, the tax take from the basin this financial year could be four times higher than the original forecasts done by the Office for Budget Responsibility in 2020.

“Clearly there is sufficient incremental tax revenues to fund the support to consumers and businesses, but also to go further and to inject real pace into the energy transition.

“Failing to include renewables in the Investment Allowance was a missed opportunity and we want to see it expanded to include investment in technologies such as offshore wind, hydrogen, carbon capture and storage and direct air capture – all of which are currently being developed in the North-East of Scotland.

“We need to deliver the reindustrialisation of Scotland to make sure we capitalise on our green energy potential. These tax receipts provide an opportunity to do just that.”

Scottish Lib Dem MP Alistair Carmichael praised the windfall tax, but suggested more should be done to ease the green transition.

He said: “The introduction of the windfall tax was the right thing to do in light of the unexpected and enormous profits seen by oil and gas companies in recent months. Even so, this should also be an opportunity and a spur to ensure the just transition, invest strongly in green technologies and to make use of the important base of skilled workers in the energy industry.

“Both the UK and Scottish governments need to recognise that North Sea industries will necessarily be with us for years and indeed decades to come and will continue to play an important role. There needs to be genuine engagement with industry by both governments so that we can see a real ‘just transition’.”

A HM Treasury Spokesperson said: “We expect the Energy Profits Levy to raise around £5bn in its first year from the extraordinary profits oil and gas companies are seeing, which will help pay towards our £37bn package to help households through these tough times.

“The levy’s investment allowance supports investment on activities to cut emissions, such as electrification, and we are continuing to support businesses through the super-deduction, the biggest two-year business tax cut in modern British history allowing companies to cut their tax bill 25p for every £1 they invest, and by increasing the Employment Allowance.”