(Bloomberg) – The UK authorities will keep on with a controversial windfall tax for North Sea oil and fuel producers till the top of the last decade, dismissing complaints that the levy hurts funding and jobs.
The Power Income Levy will stay in place till March 2030, in response to a leaked doc from the Workplace for Price range Duty. The choice comes as Chancellor of Exchequer Rachel Reeves seems to be to boost billions of kilos to shore up public funds, which have been squeezed by larger borrowing prices and U-turns over welfare cuts.
The EPL was launched by the earlier Conservative authorities greater than three years in the past when Russia’s invasion of Ukraine drove up power costs, swelling earnings for oil and fuel producers. Whereas costs have since retreated, the tax has remained in place — and even elevated — to buoy state coffers.
Final 12 months’s EPL hike to 38% introduced the headline tax fee for the oil and fuel sector to 78%, making Britain much less engaging for funding, producers mentioned. A lot of them, already struggling declines at mature North Sea fields, have reassessed their UK actions, opting to promote, merge or reduce operations.
See additionally: North Sea in danger except UK ends windfall tax, business veterans warn
The business has been urging the Labour authorities to not wait till 2030 to switch the EPL, saying quicker adjustments are wanted to unlock investments, which might assist enhance output, assist jobs and — in flip — yield extra tax income.
A statistical evaluation by Offshore Energies UK, a foyer group, confirmed this week that reforming the EPL in 2026 moderately than the top of the last decade may increase tax receipts by £15.7 billion ($20.7 billion) to £48.6 billion inside 10 years.
“Delaying reform till 2030 will speed up the decline of North Sea manufacturing, with output forecast to fall by 40% by 2030 except motion is taken,” OEUK mentioned Monday. “This may outcome within the lack of 1,000 jobs monthly, elevated reliance on imports, and a shrinking nationwide tax base from home oil and fuel manufacturing.”
Picture: OEUK