Reeves to stress commitment to end windfall tax in talks with North Sea bosses

Rachel Reeves will reaffirm her commitment to “end” the windfall tax on North Sea oil and gas as she meets energy bosses.

The Chancellor is set to discuss the gas and oil prices sent soaring by the Middle East war in talks with firms including BP, TotalEnergies and Serica.

Ms Reeves came under pressure ahead of the Downing Street discussions from Scottish First Minister John Swinney to axe the charge, which is officially known as the energy profits levy.

Introduced by the Tory government in the wake of the war in Ukraine – which sparked a sharp rise in energy prices – the charge was brought in to claw back some of these unexpected profits for the Treasury.

The Prime Minister’s spokesman told reporters: “The Chancellor will convene a meeting with industry leaders from oil and gas firms today… including BP, TotalEnergies and Serica.

“And they’ll discuss the ongoing volatility in the oil and gas prices due to the conflict in the Middle East.

“The Chancellor will make clear that she remains committed to end the energy profits levy and replace it with a more permanent and predictable regime.

“She’ll be reaffirming her commitment to support jobs and investment in the industry and look at ways to protect everyday people from the downstream impact of these costs.”

Asked whether protecting the UK public could involve an energy bill relief package similar to the one introduced by Liz Truss in 2022, the spokesman declined to “get ahead of the meeting”.

Earlier, Mr Swinney again insisted it was “utterly essential” that the UK Government scrapped the windfall tax, which he said was impacting upon investment in the North Sea and costing jobs.

He said the current “uncertainty over energy supplies” as a result of the conflict in the Middle East was now a “material consideration” for the scrapping of the charge – which is officially known as the energy profits levy.

Speaking during a visit to Inverness, Mr Swinney said he had hoped the Chancellor would use Tuesday’s spring statement to axe it.

When that did not happen, Holyrood’s Finance Secretary Shona Robison said Ms Reeves must use Wednesday’s meeting with North Sea industry leaders to “announce an end to this tax on Scotland’s energy”.

Mr Swinney meanwhile insisted: “Now that we have the conflict in the Middle East I think it is utterly essential that the energy profits levy is removed.

“I had hoped it would be removed yesterday in the spring statement. It hasn’t been but the Chancellor is meeting the industry today.

“And I hope that results in the removal of the energy profits levy.”

Mr Swinney, speaking to the Press Association, added: “I’ve been saying to the UK Government for some time that the energy profits levy should be removed because it is hampering investment in the North Sea oil and gas sector, which is resulting in a loss of employment at a much faster rate than we anticipated.”

With the conflict in the Middle East leading to “uncertainty over energy supplies in the period to come” the First Minister said that was now a “material consideration in whether the energy profits levy should be maintained”.

He insisted however: “I don’t think there is a case for it and it should be removed.”

But Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “Conflict in the Middle East and rising global gas prices show exactly why the windfall tax remains necessary, not why it should be scrapped. When geopolitical tensions push up prices, energy companies and their shareholders benefit while households face another round of higher bills from July 1.

“Energy firms have made tens of billions in profits in recent years even with the energy profits levy in place, so the idea that removing it will suddenly make energy cheaper or more secure simply doesn’t stand up.

“The North Sea is declining because of the geology of an ageing basin, not because companies are paying a fair share of tax.

“Instead of handing the industry a tax break, governments should be using these revenues to cut bills, tackle energy debt, support workers through the transition and invest in warm homes and clean energy so households are protected from exactly this kind of global price shock.”