Offshore Energies UK, the industry’s main trade association, has urged the Labour government to eliminate the windfall tax on oil and gas producers in 2027 rather than 2030 and replace it with a narrower levy that only activates during price spikes. The group is also pressing for approval of the Rosebank and Jackdaw offshore developments as part of a broader call for reduced sector regulation.
The current energy profits levy was implemented in 2022 following record profits by fossil fuel companies after international energy prices increased due to geopolitical tensions. Under the proposed change, a new oil and gas revenue levy would impose a 35% tax on revenue exclusively when prices exceed predetermined thresholds. Industry leadership argues this modification would encourage investment and generate substantial tax revenue while maintaining taxation during high-price periods.
OEUK projects that accelerating the tax change would trigger approximately £50 billion in North Sea investment and create or protect jobs in the sector. The group estimates this could yield up to £14.9 billion in additional tax revenue over the next decade compared to current plans, though only £2.4 billion would derive from levies on operators themselves. However, the timing of such requests faces scrutiny as households anticipate sharply elevated energy bills this winter and major oil companies have recorded substantial earnings following recent energy market disruptions.
Opposition groups counter that the windfall tax should be strengthened rather than weakened. Environmental and social advocacy organizations contend that major energy producers are realizing record profits during a period of elevated living costs and climate concerns, and argue tax revenue should support household assistance instead. A decision regarding the Jackdaw project approval has reportedly been delayed pending completion of a forthcoming byelection.
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