© Supplied by Port of Aberdeen 
Businesses across the north-east of Scotland have raised concerns about the continued impact the windfall tax is having on the region’s employers.
In Aberdeen and Grampian Chamber of Commerce’s (AGCC’s) first Quarterly Economic Survey (QES) of the year, 83% of the 123 regional businesses that answered said ‘taxation’ is a bigger issue than it was three months ago.
Russell Borthwick, chief executive of AGCC, argued that the windfall tax, or, Energy Profits Levy (EPL), “was sold as a short-term measure – but its long-term effects are now being felt far beyond the offshore sector”.
He added: “The north-east is an interconnected economy. If exploration and production slow down, so does manufacturing, hospitality, transport, professional services – the whole regional supply chain.
© Supplied by AGCC“This survey shows that the EPL is no longer just a tax on oil and gas profits – it’s a tax on confidence, growth and jobs in the North-east.”
Only 32% of the businesses that answered AGCC’s questions are directly involved in the energy sector, the chamber said.
This was an issue raised by Big Partnership director Zoe Ogilvie in the back half of last year as she warned job losses will not be contained to oil and gas firms if fiscal policy in the UK doesn’t shift.
Profit forecast still gloomy as jobs stagnate
In January, AGCC’s last QES indicated that 51% of Aberdeen firms project reduced profits in 2025. The latest figures reveal that 46% of firms said profitability will “worsen” over the next 12 months.
The Q1 QES also showed that 61% of north-east businesses have not seen headcount grow over the last three months, and 23% saw headcount decrease.
At the time of the last survey, the AGCC boss said: “The Labour government came to power promising to grow the economy and be a friend of business.
“Six months in, the reality is feeling very different for firms across the UK, and many of the challenges appear to be magnified for companies operating in the north-east of Scotland.”
Borthwick and AGCC have long since rallied against the windfall tax, or energy profits levy, and the chamber was recently instrumental in bringing together the North Sea Transition Taskforce, which has also been anti-EPL.
It is “nearly but not quite” too late to improve the prospects of Aberdeen, Borthwick recently claimed, adding: “But it absolutely will require major surgery to current policy direction this year.”
‘Stop talking about skills and start creating work!’
Initiatives such as the long-awaited Skills Passport have seen an increase in pace since Keir Starmer’s premiership began in July.
Early this year, the initiative finally launched, which aims to ensure oil and gas workers can carry their relevant skills into areas like offshore wind without having to retrain and vice versa.
At the time, energy secretary Ed Miliband said: “Unlike the failed approach of previous governments, we won’t sit back and let good jobs go overseas instead of coming to our shores.”
© Supplied by James Veysey / ShuttHowever, Borthwick has said he fails to see how the skills passport will be beneficial if no new jobs are created.
He commented: “I’ve got a really simple response to the skills passport, the skills passport is a really good initiative, but if there’s no work, it doesn’t matter how many skills someone’s got or doesn’t have, they can’t put them to use.
“So stop talking about skills and start creating work! ”
This quote came from a wider conversation with the AGCC boss about the state of the region’s manufacturing sector as the UK moves towards greener energy sources.
“Because we have chosen, politically, to accelerate the decline of traditional North Sea activity more quickly than it needs to happen and before we’ve got scale, investment, projects and jobs in renewables, we are creating a void where people are going to lose their jobs and where companies are going to fail,” he said.
EPL rundown
Since its introduction in 2022 by then-chancellor Rishi Sunak, the windfall tax has been a pain point for the UK oil and gas industry.
Initially bringing the headline rate of tax imposed on North Sea operators to 75%, late last year the Labour government hiked rates by 3% as it closed investment incentives previously afforded to oil firms.
In the Autumn Budget, chancellor Rachel Reeves also extended the end date of the EPL to March 2030, something it has stuck to as the government launched a consultation on the country’s tax regime and licencing regulations.
In October, former British diplomat Greg Quinn OBE wrote for Energy Voice: “Confidence in the north-east is rattled as companies move their activities to other global markets.”
When it launched the consultation process, the government said that authorities will work with industry, communities, trade unions and wider organisations to determine what the new regime could look like to ensure it can respond to any future shocks in commodity prices.
However, oil bosses have said that “we need to make the changes now” and that waiting until the end of the decade is a bad move for the sector.
To find out more about the impacts of the windfall tax and the future of Aberdeen’s energy sector, sign up for the latest event from Energy Voice sister publication E-FWD here.
