North-east businesses are piling pressure on Chancellor Jeremy Hunt to ditch the controversial windfall tax in his spring budget next week.
Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, wrote to the senior Tory minister to make the case for it to be urgently scrapped.
In his letter, he said the tax has “knocked investor confidence” and is “already costing jobs with tens of thousands more at risk”.
His appeal comes after a furious backlash from business leaders in the region to Labour’s plans to increase the levy from 75% to 78% and extend it to 2029.
The energy profits levy was introduced as a response to soaring profits in May 2022. Supporters say it is vital to help increase spending on public services and take pressure off struggling households.
The chamber is Scotland’s largest and represents more than 1,200 businesses in the north-east, collectively employing more than 100,000 people.
© Supplied by Michal WachucikMr Borthwick added: “A windfall tax may have had justification while windfall profits were being made by energy companies in the wake of Russia’s invasion of Ukraine.
“Profits have since returned to normal levels and this supertax on just one specific sector should be lifted as a matter of urgency.”
As well as risking jobs, the chamber boss claims the tax is likely to result in carbon capture and offshore projects being shelved.
Windfall tax row
More than 700 concerned voices, including Aberdeen oil tycoon Sir Ian Wood, recently wrote to Sir Keir Starmer demanding a U-turn on his windfall tax plans.
Analysts warned it could cost the UK £20 billion by deterring investment and put jobs at risk.
The policy follows Labour abandoning a pledge to spend £28 billion a year on green energy jobs.
But Sir Keir attempted to calm fears from the oil and gas sector at the party’s conference in Glasgow earlier this month.
He told party members that North Sea oil would “continue for decades”.
David Duguid, Tory MP for Banff and Buchan, supports moves announced by the UK Government to remove the tax when prices drop to a pre-determined price.
He said: “The Conservative approach to this has been far more sensible than Labour who want to make the windfall tax higher and longer.
© Ryan Duff/DCT Media“And the SNP, who are against new oil and gas exploration, were the first party to call for a windfall tax and it’s only a few months since Humza Yousaf was proclaiming the end of the industry in a speech in New York.”
The first minister last week visited Aberdeen to set out his opposition to Labour’s plans to increase the windfall tax and instead maintain it at current levels.
SNP MP Kirsty Blackman accused the Tories of using the north-east as a “cash cow”.
She added: “Today, both Labour and the Tories are looking to squander the north-east’s massive green energy potential by using North Sea revenues to prop up the failing Brexit Britain economy and fund pet projects south of the border.”
The chamber has four further demands of the chancellor including designing immigration policy around the needs of specific sectors and regions.
© Supplied by ShutterstockMr Borthwick said that since the UK left the European single market, businesses across the region have found it “increasingly hard” to recruit the people and skills they need.
Other asks include further cuts to National Insurance to boost consumer spending, further targeted cuts to VAT, and incentives to encourage entrepreneurship.
A UK Treasury spokesman said: “The Energy Profits Levy on oil and gas producers helped us pay around half of the typical household’s energy bill between October and June 2023, while more than £375 billion has been raised in taxes from the sector to date, helping to pay for our public services like schools and the NHS.
“We seek to attract environmentally friendly investment in the North Sea. That is why the levy has a higher allowance for decarbonisation investments than more traditional projects when companies reinvest their profits in the UK.”
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