Failure to end profits levy will ‘sound death knell’ for North Sea oil – Tories

Rachel Reeves will “sound the death knell” for North Sea oil and gas unless she removes the energy profits levy (EPL) in the Budget, the Scottish Conservatives have said.

The levy was brought in by the former Tory UK Government as a temporary levy in May 2022 after companies recorded large profits due to a sharp rise in energy prices.

It was increased in last year’s budget and means oil and gas producers are paying a headline tax rate of 78%.

Chancellor Rachel Reeves had announced it had been extended until at least 2030.

Scottish Tory finance spokesman Craig Hoy said the end of the EPL is the “one non-negotiable” in this week’s Budget.

He said: “The EPL, along with Labour’s ban on new oil and gas projects, is costing an estimated 1,000 job losses every month.

“Unless the Chancellor removes it, she will sound the death knell for a sector that’s on its knees and devastation for communities across the north east.”

The UK Budget will be announced on Wednesday and the Scottish Conservatives will lead a debate on the economy at Holyrood on the same day.

Mr Hoy said he will call for a renewed focus on economic growth as he claimed the Labour and SNP governments are “hammering businesses and workers”.

He said: “Labour broke countless pre-election promises in last year’s brutal budget and all the signs from the chaotic Treasury briefings are that more pain is on the way in this one.

“Workers and businesses alike are paying the price for the disastrous doom loop of low growth and high taxes which both the Labour and SNP governments are trapped in.

“This failed left-wing consensus is hammering businesses and workers with ever-rising bills – especially in Scotland, where we’re the highest taxed part of the UK. It can’t continue.

“The Scottish Conservatives are focused relentlessly on growing the economy and reining in the unsustainable welfare bill. That’s the key to funding our frontline services and cutting household bills.”

A UK Government spokesperson said: “We are taking a responsible approach that recognises the long-term role of the sector while exploring what follows the end of the Energy Profits Levy, so firms continue to invest and pay their fair share of tax.

“The oil and gas sector will be with us for decades to come, as we deliver a fair and orderly transition in the North Sea to drive growth and secure tens of thousands of skilled jobs, with the biggest ever investment in offshore wind and three first of a kind carbon capture and storage clusters.”