London (Parliament Politics Maganize) – Rishi Sunak advocates for North Sea energy in Aberdeen amid potential tax hike hints by Chancellor Hunt, sparking industry criticism.
PM Rishi Sunak will land in Aberdeen today to proclaim he wants more oil and gas from the North Sea – However, his Chancellor might be close to dealing the sector another hefty tax blow. Reporting in the Press & Journal ahead of his arrival at the Scottish Conservative conference, the Prime Minister stated he wants to boost domestic production from the UKCS.
However, industry executives have criticized reports that Chancellor Jeremy Hunt is viewing extending the life of the windfall tax during next week’s Spring Budget. According to a report from Energy Voice, the Chancellor is thinking of extending the levy, due to lapse in March 2028, by another year.
The same report stated the move is “low down the list of potential actions under consideration” – so it may not occur – and the Treasury didn’t answer to a request for comment. Holding the energy levy for an extra year would raise the tax take in 2028-2029, the important fifth year of the OBR’s forecast horizon during which Hunt’s fiscal regulations state that the national debt must be falling.
However, Mr. Sunak described the P&J: “Putin’s illegal invasion of Ukraine, and the elevated energy prices that followed, brought home the critical importance of energy security to our national security.
“Scotland is at the heart of that, with North Sea energy enabling us to power our homes and drive our economy. I don’t desire our young children to grow up to be dependent on foreign dictators for energy.
“I like more offshore wind, I want more nuclear power and, while we transition to more green energy, I want more oil and gas that arrives from home – relying instead on imported liquified gas comes with up to four times the carbon emissions.”
Russell Borthwick, Chief Executive at Aberdeen & Grampian Chamber of Commerce, expressed the “confused” interventions highlighted why there needs to be a seismic shift in how energy policy is drawn up in the UK.
“The energy industry needs stability and faith to invest — only under those conditions can we ensure a correctly managed and successful transition to net zero,” he stated.
“This incoherent position from the Conservatives does not help. On the one hand, we have the Prime Minister expressing ‘I want more oil and gas’, and on the other we have Treasury officials reporting that they might increase the windfall tax next week.
Earlier this week I reported to the Chancellor calling for the removal of the Energy Profits Levy altogether. A ‘windfall tax’ may have been explained while windfall profits were being made.
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However, profitability has since returned to regular levels and it is high time we lifted this supertax which is already costing jobs and carrying back investment just at the time we should be crowding it in to sustain carbon capture, offshore wind, and other clean energy technologies. Maybe he’s not reading his mail.”