Miliband urged to scrap windfall tax to avoid mass job losses in North Sea

Telegraph

31-03-2025

Ed Miliband has been urged to scrap the windfall tax and reopen the North Sea or risk wholesale job losses that could jeopardise net zero.
The North Sea Transition Task Force, a private sector initiative overseen by the British Chambers of Commerce (BCC), has told the energy secretary that the taxes and exploration bans imposed on the oil and gas industry have accelerated its decline to the point where it will be largely gone before renewables can replace it.
It follows new data showing that about 180 of the UK's remaining 280 active oil and gas fields will be forced to close down by 2030. That would mean a huge increase in reliance on imports from places like the US, as well as the loss of thousands of jobs in the industry and its supply chain.
'Companies are already giving up on the North Sea… confidence is at its lowest level for two decades and investment is declining at a faster rate than anticipated,' the North Sea Transition Task Force said in a report published on Monday.
'Simply put, there is a risk that oil and gas production will decline faster than anticipated, while wind and other renewable projects take longer to get established. If that gap is allowed to open, there will not be a viable industry left to transition to the renewable future.'
Allowing Britain's oil and gas industry to wither would see the loss of valuable skills and knowledge needed for the transition to renewable energy, the report added.
Philip Rycroft, a former permanent secretary who authored the report, said it was clear the Government needed to rethink its policy or risk losing the whole industry.
Referring to Mr Miliband's decision to ban any further exploration for new oil and gas resources, he said: 'It makes no sense. The UK still has a lot of need for oil and gas and while that need exists we should be getting it from our own resources, not from imports.
'Imported oil and gas has a higher carbon footprint while the fuels we produce here generate not just energy but also jobs and taxes. We should be focusing on cutting UK demand while also maintaining the North Sea supplies we still need.'
The report said Mr Miliband's ban on future exploratory drilling was 'more of a political than an economically rational decision'.
It said: 'The future is uncertain. Even the presumed limited resources currently untapped may at some point be essential to meet UK demand and energy security.'
The North Sea Transition Task Force is an independent body but set up in co-operation with the Government to oversee implementation of the North Sea Transition Deal, which encourages oil and gas companies to invest in renewables.
The report comes amid growing alarm from Britain's oil and gas industry at the pace of decline and furious lobbying to seek to change policy. Offshore Energies UK, which represents the North Sea oil and gas industry, last week claimed reserves in the area could power half of Britain's energy needs until 2050.
The North Sea Transition Task Force said three key measures were needed to protect the industry, the most important being to scrap the windfall tax.
It also called for changes in regulation to take account of court rulings around greenhouse gas emissions, and to clarify the rules around licensing for exploration
The report prompted a furious response from environmental groups campaigning to shut down the North Sea.
Robert Palmer, deputy director of Uplift, said: 'There is an urgent need for the Government to come up with a coherent plan for a fair transition for workers, supply chains and the communities they support. But that won't come from allowing more drilling and lowering taxes on oil and gas companies.
'Allowing new drilling would seriously undermine investor confidence in the Government's commitment to shifting away from oil and gas. Ministers should view this report as the oil and gas industry simply doing what it has always done: lobby for lower taxes.'
A government spokesman said: 'We have already taken rapid steps in delivering a fair and orderly transition in the North Sea– with the biggest ever investment in offshore wind and up to £21.7bn in funding over the next 25 years for carbon capture and storage and hydrogen projects.
'This comes alongside the launch of Great British Energy, headquartered in Aberdeen, and the creation of a National Wealth Fund, both of which will unlock significant investment in clean power projects across the UK and help create thousands of skilled jobs.'