The energy industry is responding to the Government’s plan to increase windfall taxes and cut investment incentives. In an open letter to the Treasury, 42 manufacturing, engineering, and technology companies that form part of the gas and oil supply chain have expressed ‘grave concerns’ about government proposals that could cost £200 billion across the industry, including renewables. The industry represents 200,000 jobs.

The Treasury has responded saying that its plan will allow the creation of ‘thousands of new jobs in the industries of the future.’

The current plan, as laid out in the Labour manifesto, is to increase windfall tax on gas and oil to 78% from 75%, extended until 2030, alongside abolishing tax incentives aimed at attracting further investment. The rise matches the tax structure applied in Norway. The Treasury claims this is to ‘ensure North Sea Oil and gas producers contribute their fair share towards our energy transitions.’

But Offshore Energies UK, who issued the letter, points out that Norway has a stabler tax and regulatory system which also offers investment incentives. They claim a ‘hostile tax environment’ threatens stability throughout the supply chain, ‘through jobs and the communities the industry supports.’ It would also undermine the industries’ ability to fund renewable energy projects undermining long-term efforts to transition to more environmentally friendly energy. They are asking for a role on the government’s industrial strategy council to protect the industry. On BBC Today, David Whitehouse, Offshore Energies Chief Executive was quick to point out that the majority of companies who had signed the letter were smaller, local businesses. ‘They are not the energy giants that people talk about… they are the lifeblood of the UK economy.’

The energy industry is not the only sector concerned with the impact the new government’s tax strategy could have. Chancellor Rachel Reeves has made no secret of her plans to increase taxes in the next budget, but has promised this will not affect ‘working people’. Lucy Coutts, investment director at JM Finn, has claimed that many industries are concerned about where those increases are going to come from – ‘everyone is a little bit nervous’.