Labour will introduce a “proper windfall tax” on the oil and gas industry if it comes to power at the election, including a rate increase and cutting investment allowances.
In a briefing note for its “Prosperity Plan Policy”, Labour confirmed its manifesto would propose a hike to the tax rate from 75% to 78%, the same as Norway, and “end the loopholes in the levy that funnel billions back to the oil and gas giants”.
The party also plans to extend the sunset clause, currently planned for March 2028, until the end of the next parliament.
Together the measures will raise £10.8bn over the next five years from 2024-25, the party claimed.
Aberdeen and Grampian Chamber of Commerce (AGCC) CEO Russell Borthwick said it was “a real kick in the teeth for Scotland’s world-class energy sector”.
“It’s a range of threadbare policies dreamt up by detached politicians who clearly are not listening to a sector which is fighting for its very survival.
“Most disappointing of all is that Keir Starmer came to Aberdeen last year, met with key industry representatives, looked us in the eye and promised to work in partnership to manage energy transition in a way that protects livelihoods and a future for the North Sea.
“This plan feels like a betrayal — it treats Scotland as an afterthought and would tax our energy sector to death at the very time we need to be accelerating transition. It positions the Labour Party against jobs and against energy security.”
Labour windfall tax: ‘They’ve let us down badly’
Labour leader Keir Starmer was in Aberdeen in November with the chamber of commerce, with Mr Borthwick saying a “frank and honest exchange” was had on the challenges facing the sector.
He said he hoped Mr Starmer would reflect on the views heard at the meeting to inform policy, but Mr Borthwick said Labour has now “let us down badly”.
It comes as Labour has ditched plans to invest £28bn a year in green investment, with Mr Starmer saying it wasn’t affordable due to the Tories having crashed the economy.
The windfall tax was introduced in 2022 following windfall profits of the sector brought on by a supply crunch following Russia’s invasion of Ukraine.
The oil and gas industry has been calling for an end to the windfall tax now that windfall profits have now ended.
Trade body Offshore Energies UK (OEUK) wrote to Chancellor Jeremy Hunt last month saying “the reason the windfall tax was there in the first place is diminishing”, adding that it makes the UK uncompetitive.
Mr Borthwick added: “We’ve had a windfall tax in place for two years. Windfall profits vanished a year ago and so should this punitive tax. Meanwhile we’ve lost countless workers, vital investment and huge opportunities to overseas markets.
“Labour has reneged on its plans for properly funded year-on-year investment to turbocharge our green future. Instead, they’re going to use the North Sea as a cash cow to subsidise ports in the Solent, industry in South Wales and steel plants in Sheffield. They’ve let us down badly.”