Scrap windfall tax and lift ban on new oil, leading business figures urge Reeves

Two of the most respected businessmen in the north east of Scotland have urged Rachel Reeves to scrap the windfall tax and the ban on new oil and gas licences.

Martin Gilbert – the former head of Aberdeen Asset Management – and ex-Wood Group boss Sir Ian Wood released a joint statement on Friday ahead of the Chancellor’s Budget next week.

The pressure has been growing on Ms Reeves in recent weeks to scrap the windfall tax on the profits of oil and gas firms, with concerns raised about its continued impact on the sector – particularly in Aberdeen and the north east of Scotland.

But the pair have urged her to go further, by also cancelling the UK Government’s position against new oil and gas developments and approving “shovel ready” projects in the North Sea – presumably alluding to operations such as Jackdaw and Rosebank.

The statement said the region has the ability to be “a genuine global leader” in offshore renewables.

But it added: “It is a future that can only be realised if we have a critical mass in companies located here to deliver them and, right now, we are losing them, and the people they employ, at an alarming rate.

“This is, by and large, due to the punitive fiscal and regulatory regime endured by the oil and gas industry which is haemorrhaging investment in the North Sea with the UK relying ever more on carbon and costly imports from overseas.

“Given we are projected to need oil and gas in our energy mix up to and beyond 2050, a point recognised by the Government themselves, it is surely common sense to incentivise the production of our own domestic supply.

“Yet the windfall tax has achieved the exact opposite whilst simultaneously delivering a massive decline in revenues for the Treasury compared to what it was intended to raise.”

The statement added: “Put bluntly, the current position is economically and environmentally incoherent.

“We therefore urge the Chancellor to take three key steps in the upcoming Budget and the days that follow: bring an end to the unjust windfall tax in the next financial year, approve shovel- ready projects in the UKCS (UK Continental Shelf) in the coming weeks, and reverse the position on its ban on oil and gas licensing immediately.

“These measures would inject much needed economic growth in the UK economy and deliver the fair and just transition that has been promised for the very same workers who will be critical in achieving the UK’s energy security for generations to come.

“We must act now.”

A 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.”