Remove windfall taxes on North Sea oil, bosses tell Rachel Reeves
Chancellor Rachel Reeves should abolish windfall taxes on oil and gas producers in the North Sea, top bosses have said.
In a new report setting out UK businesses’ proposals for the Budget, the Chancellor has been urged to focus on cutting energy costs for firms and set out a clearer plan for the North Sea’s transition to supporting renewable energy.
The British Chambers of Commerce, one of the UK’s largest and most influential industry groups, said the energy profits levy hitting giants including BP and Shell had reduced investment and knocked business confidence.
It said the levy put the UK at a “competitive disadvantage” and job cuts among North Sea oil producers showed that it was “too long to wait” for its end in 2030.
Bosses called on the government to replace the levy with a “new, stable fiscal regime that is proportionate to changes in the prices of oil and gas”.
A clearer regulatory regime for extraction and drilling should also be laid out but the report stopped short of calling for a reversal of a ban on new drilling licences.
Energy secretary Ed Miliband is reportedly looking over plans to encourage more drilling in the North Sea at existing sites to boost industry.
BCC researchers made a raft of other proposals, including a commitment not to raise taxes that add to firms’ labour costs at this year’s Budget as well as doubling down on trading relationships through more “economic diplomacy”.
Shevaun Haviland, director general of the BCC, said the government had to focus on making the UK more competitive and “make the most” of talent and expertise already available in the country.
“We are not currently the sum of all our parts,” Haviland warned.
“Our message to the rest of the world has been inconsistent. If we want the UK to be more productive and to grow our economy, then we must take action to become more competitive internationally.
“That means a focus on cutting costs, supporting innovation and taking a more strategic approach. The UK’s soft power is the envy of the world, but it is rarely used with precision as an economic tool to exploit the many advantages we have.”
“Adopting even a few of this report’s recommendations will make a positive difference but delivering all of them would power the economic growth our people and businesses deserve.”
Reeves told to save UK’s competitiveness
The BCC pointed to data by the International Institute for Management Development showing that the UK had dropped from 9th in competitiveness in 1996 to 29th now.
It said Labour officials should focus on changing business rates, streamlining regulations and making the wider tax regime more competitive by international standards, a move which would help draw further investment.
Its main recommendations include expanding airport capacity at Heathrow, Gatwick and Luton, plus introducing a review of air passenger duty rates across the country focused on supporting the needs of the country as a “global commercial centre”.
In a separate announcement on Thursday, the Conservative Party said it would replace the climate change act, which sets out net zero targets for the government to meet, with an energy strategy that prioritises “cheap and reliable” energy. The original act was amended under Theresa May in 2019 to bind net zero targets into law.
Now the Tories say the replacement of the act would protect the energy industry form legal challenges and “eco-warfare” as well as ensure local producers of cement or chemicals would not be replaced by imports.
Kemi Badenoch, leader of the Conservative Party, said: “We want to leave a cleaner environment for our children, but not by bankrupting the country.
“Climate change is real. But Labour’s laws tied us in red tape, loaded us with costs, and did nothing to cut global emissions. Previous Conservative governments tried to make Labour’s climate laws work – they don’t.”