The oil and gas sector’s trade body, Offshore Energies UK, has made a formal request to the Labour government to accelerate the removal of the current windfall tax on energy producers. Rather than maintaining the existing framework until 2030, OEUK is advocating for the tax to be eliminated in 2027. The organization has proposed replacing it with a more targeted system that would only impose levies during periods of elevated prices rather than applying continuously.
The energy profits levy, introduced in 2022, was designed to capture extraordinary profits made by fossil fuel companies following price spikes triggered by Russia’s invasion of Ukraine. Under current plans, this tax would be replaced by the oil and gas revenue levy, which would apply a 35% tax on revenues when prices exceed predetermined thresholds. OEUK contends that the proposed replacement would better balance taxation with investment incentives while maintaining substantial government revenue from the sector.
The industry body has also requested government approval for two major North Sea projects—Rosebank and Jackdaw—and has called for broader deregulation of the sector. According to OEUK’s projections, accelerating the tax change could attract up to £50 billion in investment to the North Sea and create employment, though a significant portion of the projected £14.9 billion in additional tax revenue over the next decade would come from jobs supposedly generated by this investment rather than direct levies on companies.
The timing of this request coincides with expectations of elevated household energy bills this winter, with wholesale gas prices rising sharply and bills forecast to reach their highest levels since Russia’s invasion. The OEUK chief executive acknowledged the difficult optics of requesting tax relief during a cost of living crisis but argued the narrower levy would ensure companies pay more when prices are elevated while encouraging capital deployment.
The proposal has faced criticism from environmental and consumer advocacy groups. Greenpeace and other organizations have previously urged the government to strengthen rather than weaken the windfall tax to fund assistance for struggling households. A decision on the Jackdaw project approval has reportedly been delayed until after a scheduled byelection.
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