North Sea oil producer Harbour Energy has slashed another 250 jobs as the windfall tax hits its UK operations.
The company said the latest cull means it has cut around 600 jobs since the so-called ‘energy profits levy’ was introduced in 2022 – underlining its damage to the economy.
Pressure is mounting on Chancellor Rachel Reeves to scrap the windfall tax in the Budget his month given the slump in the oil price from around $120 a barrel following the invasion of Ukraine to nearer $60 today.
While this would be welcomed by the industry and Labour politicians in Scotland, where the job cuts are taking place, it would risk a major row with Energy Secretary Ed Miliband, the Cabinet’s most enthusiastic supporter of net zero and green energy.
Tory leader Kemi Badenoch has called for Britain to ‘get drilling again’ and warned of an oil and gas emergency in the North Sea.
Laying bare the damage the windfall tax is doing, Harbour Energy told shareholders on Thursday that the jobs cull ‘aligns with significantly lower anticipated UK investment driven by the continued punitive domestic fiscal regime’.
Harbour Energy is instead investing heavily in countries such as Norway, Mexico and Argentina.
UK North Sea producers first warned they will reduce investments after the previous Conservative government introduced the 25 per cent levy in May 2022 in the wake of soaring energy prices following Russia’s invasion of Ukraine.
The tax was subsequently increased to 35 per cent in November 2022, and extended by one year in March 2024.
The new Labour government increased the windfall to 38 per cent in November, bringing the headline tax rate on oil and gas activities to 78 per cent, among the highest in the world. Its duration was also be extended by a year to March 2030.
Industry experts have warned that the levy has made the North Sea ‘un-investible’ – hitting investment, jobs and the wider economy and depriving the UK of a vital source of energy.
Speaking in Aberdeen as Sir Keir Starmer jetted to the Cop climate summit in Brazil, Mrs Badenoch warned that Labour’s net zero policies were endangering jobs and livelihoods and putting the sector ‘at serious risk’.
Urging the Prime Minister to champion homegrown energy, she told him to ‘find the backbone to ditch Ed Miliband’s net zero fanaticism’.
She called for the windfall tax to be scrapped at the Budget and said Britain was facing an oil and gas ‘emergency due to the anti-growth policies’ of Labour and the SNP.
She warned the offshore oil and gas sector ‘risks disappearing altogether’, triggering job losses and leaving the country reliant on overseas energy imports.
‘Scotland, and the whole United Kingdom, faces a growing oil and gas emergency thanks to Labour’s inability to put our national interest first,’ she said.
‘By the end of Labour’s first term in office, it’s not inconceivable that Scotland’s oil and gas sector will be at serious risk, with domestic production currently set to half by 2030.
‘That would be a shocking indictment of Labour’s energy policy, and a dangerous act of economic self-sabotage.
‘Enough is enough. Keir Starmer must find the backbone to ditch Ed Miliband’s Net Zero fanaticism, which is forcing up bills and driving away industry.’
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