Hiking energy tax will hit growth, oil industry says

Mr Whitehouse said for more than two years, UK oil and gas companies had paid “three times” the rate of corporation tax of any other sector.

“Time is running out to mitigate damage that has already been done and to avoid further escalation,” he added. “The prime minister promised to manage the North Sea in a manner that does not jeopardise jobs.

“We now need an honest conversation on how we can do this and need government to work with the sector at pace.”

The Energy Profits Levy was first introduced by former Prime Minister Rishi Sunak in May 2022.

Oil and gas prices began to rise after the end of Covid lockdowns and surged following Russia’s invasion of Ukraine, resulting in bumper profits for energy companies.

With households being hit by soaring energy bills, the government came under pressure to help. It introduced the windfall tax to help fund a scheme to restrict gas and electricity bills, which has now ended.

Energy prices have fallen back since the peaks in 2022, but remain at a high level. The typical annual household energy bill will rise by 10% from October.

OEUK said the original EPL introduced was intended to be a “temporary tax in response to the economic environment at the time”.

“These unprecedented oil and gas prices have since returned to align with long- term real averages, and the windfall conditions that the EPL was designed to address have passed,” it said.

A spokesperson for the Treasury said: “We are committed to maintaining a constructive dialogue with the oil and gas sector to finalise changes to strengthen the windfall tax, ensuring a phased and responsible transition for the North Sea.

“Our plans for a new National Wealth Fund and Great British Energy will create thousands of new jobs in the industries of the future.”