Offshore Energies UK has urged Chancellor John Healey to use Wednesday's Budget to unlock £50 billion of investment in domestic energy production, arguing that an earlier switch to a permanent new tax regime for the North Sea would support jobs, growth and energy security.
The trade body, which represents more than 400 organisations across oil and gas, offshore wind, carbon capture and hydrogen, wants the planned Oil and Gas Revenue Levy brought forward in the 2026 Finance Bill so that it could take effect as early as January 2027, replacing the Energy Profits Levy.
A permanent framework for windfalls
The industry says the new levy would offer a more predictable investment regime while still taxing windfall revenues when commodity prices are high. The current Energy Profits Levy carries a headline rate of 78% regardless of market conditions, which OEUK warns is making it harder for internationally mobile companies to raise capital for UK projects.
OEUK has identified more than 100 North Sea oil and gas developments awaiting a green light. Under the Treasury's own proposed levy mechanism, it estimates these could attract £50 billion of capital investment between now and 2035, along with almost £15 billion in additional tax revenue and 1.3 billion barrels of additional domestic production.
Keeping the Energy Profits Levy in place until 2030, the trade body argues, would accelerate the decline of domestic production and increase reliance on imports, which it says can carry up to four times the greenhouse gas emissions of fuel produced at home.
Wind and carbon capture
OEUK is also calling for continued use of the Contracts for Difference scheme for offshore wind, reform of transmission charges that penalise wind projects in remote areas such as northern Scotland, and a sustained commitment to carbon capture and storage to keep net zero targets on track.
Whitehouse: 'Back homegrown energy and British jobs'
OEUK Chief Executive David Whitehouse said: "This Budget is an opportunity to send a clear message that Britain is serious about growth, the energy transition and investment in its own energy future. The government has said that reindustrialisation is a key priority. The Budget is an excellent opportunity to show that Britain will support industrial communities and back UK industry, not imports."
"Businesses need certainty to invest. Bringing forward the OGRL to January 2027 would create a permanent framework that taxes windfalls when prices are high while creating the confidence needed to invest when prices are lower."
He added: "But this is about more than oil and gas - Britain needs investment right across its offshore energy mix. Continued support for offshore wind and sustained deployment of carbon capture and storage can help turn our world-class energy expertise into jobs, growth and greater energy security as we confront risks to imported supplies from conflicts around the world. The choice for the Chancellor is clear. Back homegrown energy and British jobs and keep more investment here in the UK."
