Scrapping North Sea windfall tax could cost £8.6bn, government warned

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AXING the windfall tax on North Sea profiteers could open up a £8.6 billion black hole in government finances, campaigners have warned.

A plan is already in place to replace the tax on bumper profits with a new oil and gas revenue levy (OGRL) by 2030.

But with a budget looming, Chancellor John Healey is coming under increasing pressure to go early both not only from the industry but also from Tory and SNP politicians.

Research for Global Witness suggests that if oil prices remained at around 100 US dollars a barrel, the OGRL would raise £8.6bn less than the current windfall tax by 2030 and, if oil prices fell to 70 US dollars a barrel, the present windfall tax would net the treasury £4.6bn over the same period as opposed to zero under OGRL.

In a letter to Mr Healey, also signed by groups such as Greenpeace UK, the End Fuel Poverty Coalition, Stamp Out Poverty and Tax Justice UK, Global Witness urged him to resist calls for tax breaks for wealthy oil and gas giants.

End Fuel Poverty Coalition’s Simon Francis argued the tax cuts ”would be a betrayal,” while Global Witness’s Flossie Boyd said: “It’s been galling to see a few wealthy fossil fuel firms cashing in on fallout from the US-Israel war on Iran while families endure soaring energy bills, food costs and deadly heat extremes.

“The fact that these mega-wealthy oil firms, having cashed in on crisis, are now pushing for tax breaks is nothing short of scandalous.

“Now more than ever, we need strong action from Burnham to rein in the dangerous excesses of the fossil fuel industry.

“That means no new oil and gas drilling, and fair, robust polluter taxes which help fund the solar panels, flood defences and building adaptations we so desperately need.”

A government spokesperson said: “We’re giving the sector and its investors the long-term certainty to plan, invest and support jobs with plans to replace the energy profits levy when it ends by 2030, or earlier if its price floor is triggered.

“We are also making sure the North Sea has a prosperous and sustainable future through record investment that helps deliver the next generation of skilled jobs while growing the clean energy industries of the future.”

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