Key facts
- Replacing the UK's current windfall tax on oil and gas firms could cost the country up to £8.6 billion by 2030.
- Energy firms are pushing for the replacement regime to start earlier than the planned 2030 date.
- Global Witness claims that if oil prices remain at $100 a barrel, the new oil and gas revenue levy would raise £8.6 billion less than the current tax by 2030.
- If oil prices drop to $70 a barrel, the new tax system would generate no cash, compared to £4.6 billion from the current tax.
- Several campaign groups, including Greenpeace UK and the End Fuel Poverty Coalition, have signed the letter to the Chancellor.
Campaigners have warned that accelerating the end of the UK's current windfall tax on oil and gas firms could cost the country up to £8.6 billion by 2030. The Westminster Government plans to replace the energy profits levy with a new oil and gas revenue levy in 2030, but energy firms are advocating for its earlier implementation.
Global Witness, along with other groups including Greenpeace UK, the End Fuel Poverty Coalition, Stamp Out Poverty, and Tax Justice UK, has written to Chancellor John Healey urging him to resist calls to end the windfall tax early. Research by Global Witness suggests that if oil prices remain around $100 a barrel, the proposed oil and gas revenue levy would generate £8.6 billion less than the current windfall tax by 2030. If oil prices fall to $70 a barrel, the new system would yield no revenue, compared to an estimated £4.6 billion from the existing tax over the same period.
Industry body Offshore Energies UK (OEUK) argues that an earlier introduction of the new tax system, combined with a more pragmatic approach to licensing, could unlock 111 projects in the UK Continental Shelf. However, Global Witness has described the push for tax breaks as "scandalous," given the profits energy firms have made during times of crisis, such as the recent rise in energy prices due to Middle East conflict. Flossie Boyd, a senior campaigner at Global Witness, stated that the UK's oil industry is a declining sector and that tax cuts would not generate significant jobs or investment.
Clare Aston, a tax expert involved in the research, noted that the design of the new windfall tax means it will collect billions less, and suggested that thresholds and rates need revision. Simon Francis of the End Fuel Poverty Coalition called cutting taxes for oil and gas giants "a betrayal," while Rudy Schulkind of Greenpeace UK criticized the industry for lobbying for tax breaks after profiting from global crises.