Badenoch: Scrap net zero windfall tax on oil companies

Telegraph

19 hours ago

Kemi Badenoch will call for the windfall tax on North Sea oil and gas to be scrapped.
The Conservative leader will say that the energy profits levy (EPL) on oil and gas profits could no longer be justified, and there would be nothing 'left to tax' if it continued.
In her keynote speech to the Scottish Tory conference in Edinburgh, Mrs Badenoch will accuse Labour of ' killing' the industry.
She will also warn that thousands of North Sea workers will be made unemployed under Government plans to keep the levy in place until 2030.
Mrs Badenoch will say in her speech that this would also mean importing more oil and gas from overseas, before concluding: ' Labour must remove the energy profits levy.'
She is also expected to repeat her demand for Energy Secretary Ed Miliband to lift his ban on issuing new exploration licences, amid warnings that 1.5 billion barrels of oil could be left under the seabed.
Her intervention comes ahead of next year's Holyrood election, with the Tories trying to woo thousands of North Sea workers based workers in Aberdeen, the oil capital of Europe.
They are facing a strong challenge from Reform UK, which has lambasted Labour's green energy agenda.
Nigel Farage visited the city last week, and said that efforts to achieve net zero were 'complete and utter madness'.
The windfall tax was first proposed by Labour in opposition, but was adopted by the Conservative government under Rishi Sunak in 2022 in response to the surge in oil and gas prices caused by the Ukraine conflict.
Mr Sunak initially said it would only remain in place while the windfalls lasted. However, he – and then Labour – subsequently decided to retain it, even though oil prices have fallen from a peak of $139 a barrel to about $70 now.
The EPL is currently a 38 per cent levy on top of existing taxes, bringing the effective headline rate for oil and gas producers to 78 per cent.
The North Sea transition taskforce, backed by the British Chambers of Commerce, warned in March that this was ' throttling' investment.
Analysts Stifel estimated that the 'self-defeating' tax will cost the Treasury £3 billion in tax receipts between 2025 and 2030.
Harbour Energy, the UK's largest independent oil and gas producer, announced 250 job cuts in Aberdeen last month. The firm blamed regulation and the Chancellor's 'punitive fiscal position'.
Mrs Badenoch admitted during last year's Tory leadership contest that her party's decision to extend the tax had been a ' mistake '.
However, she is expected to go further during her first speech to the Scottish Tory conference as UK leader by calling for the EPL to be scrapped immediately.
She will say: 'When the oil and gas windfall tax, the energy profits levy, was brought in, the oil price was near a historic high, at the exact time as energy bills for the British people were sky-rocketing.
'But there is no longer a windfall to tax. It has long gone. And the longer this regressive tax on one of our most successful industries remains, the more damaging it becomes.
'Labour have extended and increased this tax. They are killing this industry. And, frankly, if it is allowed to remain in place until 2030, as is Labour's current plan, there will be no industry left to tax.'
She is expected to conclude: 'Thousands will have been made unemployed, and all while we import more gas from overseas – from the very same basin in which we are banned from drilling. So today I say enough.'
Mrs Badenoch said Labour must 'speed up the process of replacing it with a system that rewards success and incentivises investment.'
The Tory leader will argue that the Government should instead 'champion our own industry' by overturning bans on further exploration, and supporting oil and gas technology exports.
'We must let this great British, great Scottish, industry thrive, grow and create jobs – ensuring our energy security for generations to come, driving growth and making this country richer in the process,' she is to say.
'Scotland at the heart of our energy future for the next generation as it has for the last.'
'A just transition'
Dame Jackie Baillie, Scottish Labour's deputy leader, said: 'The Tories are on the side of oil and gas giants rather than working Scots, but Scottish Labour will work with the UK Government and use devolved powers to deliver a just transition for the industry.
'With Kemi Badenoch desperately attempting to rally the few remaining Scottish Tories, it seems like it won't be long until they can fit all of their MSPs in a single taxi.'
Gillian Martin, the SNP Energy Secretary, said: 'The Scottish Government is clear in our support for a just transition for Scotland's valued oil and gas sector, which recognises the maturity of the North Sea basin and is in line with climate change commitments and energy security.
'We are deeply concerned at recent announcements of planned job losses in the North East and have called on the UK Government for the earliest possible end to the Energy Profits Levy (EPL) – which was supposed to be a temporary measure.
'We also continue to call on the UK Government to approach decisions on licensing and consenting for North Sea oil and gas projects on a rigorously evidence-led, case by case, basis – with climate compatibility and energy security as key considerations.'