Tax plans spell trouble in the North Sea
Labour’s tax plans are whipping up a storm. Are the worries of opponents justified?
North Sea oil companies are "accustomed to political meddling", said The Times. But the new Government has made no bones of its desire to impose higher taxes and tougher environmental rules on producers in the forthcoming Budget – to tackle a regime that Environment Secretary Ed Miliband described before the election as having "more holes than Swiss cheese".
The next few months could prove "defining for Britain's oil and gas industry". Miliband has argued that revenue from windfall taxes could help finance Labour's much-vaunted £8bn GB Energy green investment vehicle, which will be headquartered in Scotland. But plenty of Scots are deeply concerned about a policy that threatens the local economy, said Ian McConnell in The Herald. Labour is charging into the sector "like a bull in a china shop". Ministers would "do well to exercise some caution".
On paper, the plans don't look too drastic. Labour aims to raise the windfall tax – introduced by Boris Johnson in 2022 as energy prices soared following the Ukraine invasion – from 75% to 78%, and scrap what ministers see as "unjustifiably generous" investment tax breaks. But according to industry body Offshore Energies UK, the move "will deal a £13bn blow to the economy", said John-Paul Ford Rojas on This is Money – jeopardising both UK growth and, ultimately, investment in the green economy if a "very short term" boost to tax revenues succeeds in throttling the North Sea tax goose. Around 35,000 jobs may be at risk.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Some firms are already retrenching, said Jasper Jolly in The Guardian: including Norwegian-owned Neo Energy, whose projects include the Buchan Horst oilfield off the Aberdeen coast, which was due to start production in 2027. Two more projects – the Rosebank and Jackdaw fields – are in doubt following Miliband's decision to not defend "against legal challenges" to their licences brought by environmentalist groups.
This is outrageous, said Matthew Lynn in The Daily Telegraph. Miliband has effectively "given Greenpeace control" over parts of our energy policy. What next? "Perhaps Greta Thunberg could be put in charge of the Bank of England." Of course, in an ideal world, "Britain could stop burning fossil fuels pronto and power the nation with windmills and sunbeams", said Alistair Osborne in The Times. But what if the Government's calculation that the UK can decarbonise electricity by 2030 turns out to be "wishful thinking", as many believe? If Keir Starmer is really serious about "enhancing our energy security", he might be well advised to "hedge his bets a bit" – and not go out of his way to kill off North Sea oil.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Today's political cartoons - October 13, 2024
Sunday's cartoons - the swing of things, fear of facts, and more
By The Week US Published
-
5 timely cartoons about climate change denial
Cartoons Artists take on textbook trouble, bizarre beliefs, and more
By The Week US Published
-
Kris Kristofferson: the free-spirited country music star who studied at Oxford
In the Spotlight The songwriter, singer and film-star has died aged 88
By The Week UK Published
-
Hyperbole and hatred: can heated rhetoric kill?
Talking Point Hypocrisy and double standards are certainly rife, but the link between heated political language and real-world violence is unclear
By The Week UK Published
-
On Leadership: why Tony Blair's new book has divided critics
Talking Point The former Labour leader has created a 'practical guide to good governance' but should Keir Starmer take note?
By The Week Staff Published
-
Why did the Secret Service fail to protect Trump?
Talking Point Secret Service under pressure to explain operational failures – and it's not the first time they’ve slipped up
By The Week UK Published
-
Iran: does Masoud Pezeshkian's election mark a turning point?
Talking Point New president is seen as a progressive but much will depend on how the US reacts
By The Week UK Published
-
The Trump immunity ruling: a licence to break the law?
Talking Point 'End of democracy' fears may be overblown, but the Supreme Court verdict is already having a noxious impact
By The Week UK Published
-
Showdown in New York: the most expensive primary in history
Talking Point Pro-Israel lobby poured funding into campaign against Jamaal Bowman, but don't count out his own contribution to his defeat
By The Week UK Published
-
Is Nigel Farage heading to the Commons?
Talking Point Reform UK leader looks on track to 'turn British politics upside-down' once again
By The Week UK Published
-
First-past-the-post: time for electoral reform?
Talking Point If smaller parties win votes but not seats, the 2024 election could be a turning point for proportional representation
By The Week UK Published