MANY North Sea operators are “really worried” that a windfall tax could impact their investments, according to the head of the body which represents the UK offshore oil and gas industry.
Boris Johnson has come under pressure to introduce a one-off levy on firms which have benefited from globally high oil and gas prices and use the revenue to fund measures to ease the cost-of-living crisis on households struggling with rising bills.
Labour have argued that a windfall tax would be a practical step to tackle the cost-of-living crisis, and could fund a VAT cut on energy bills and an increase in the warm home discount for those on a low income.
But speaking to Times Radio, Offshore Energies chief executive Deirdre Michie said she believes a stable and predictable tax regime is needed to help confidence.
She told the broadcaster: “The supply chain relies on work from the operators.
“They are really concerned that if an investment from the operators starts to step away it will undermine the projects they are hoping to come through and that is where the jobs start to go.
“It is the supply chain that has the jobs. It also has the expertise and the skills that are going to underpin the energy transition.
“We should be in no doubt that it is the whole gas companies their supply chain that is going to drive the energy transition forward.”
The executive also argued that the current tax system works and should not be changed.
Michie said that the Treasury will get £8 billion from the sector and another £5bn next year, that is on top of £370bn which has been paid over the last decade.
She said: “The point is that the tax regime is working. The Government can use those monies to spend on helping consumers. We recognise the crisis is a massive and significant one which does need addressing.”
She added: “We need these companies to keep investing in oil and gas for security of energy supply but we also need them to invest in the energy transition.
“We have identified up to £250bn of investment opportunity over all of the energies but only a third of that is sanctioned, so that if people start to feel this is not a good place in which to invest they will take their investment elsewhere.”
On Thursday, Downing Street denied blocking the Treasury from imposing a windfall tax on oil and gas giants. The Prime Minister’s official spokesman said he had seen “lots of reports” on division between the departments, but insisted Johnson and Rishi Sunak are “aligned” on the issue.
Labour accused the Government of acting like “headless chickens” on the matter and suggested a U-turn is likely.
Ministers are “intrinsically opposed” to the levy, a senior member of Johnson’s Government said, although it has not been ruled out.
Asked if No 10 is blocking the Treasury from imposing the tax, the PM’s spokesman told reporters: “I have seen lots of reports overnight on this but the Prime Minister and the Chancellor are aligned. You’ve heard them both say effectively the same thing when it comes to these sorts of taxes.
“We want to see significant investment by these sorts of companies into British jobs to grow the economy, to secure our energy supply for the long term. We believe investment is the right thing to do in the first instance.”
