Copyright scotsman
More than half of the UK’s offshore energy companies have cut their staffing levels in the past year, a new study suggests. Publishing its latest “pulse” survey, Offshore Energies UK (OEUK) said the findings showed that reform of the energy profits levy was urgently needed. The “temporary” windfall tax was introduced in 2022 on the extraordinary profits of oil and gas companies operating in the North Sea. Its rate has increased from an initial 25 per cent to the current 38 per cent and the additional levy is scheduled to end in March 2030. OEUK said its findings came from a survey of 97 companies and business units across the offshore energy sector. They are included in the organisation’s Budget representation, submitted to the UK Treasury on behalf of industry to inform policy decisions ahead of the Chancellor’s fiscal statement on November 26. The proposal to reform the levy in 2026 is a key part of the group’s submission and is said to be supported by its membership of more than 400 companies spread across the UK. It argues that under the current fiscal regime, the oil and gas industry is losing 1,000 jobs a month. OEUK said the outlook remained “challenging”, with nearly half (45 per cent) of surveyed companies expecting to cut jobs further over the next 12 months if the current policy environment continues. About 55 per cent of the UK’s offshore energy firms have reduced their headcounts in the past year, according to the survey. The survey also reveals a growing trend of companies shifting focus overseas. Sheena McGuinness, co-head of energy and natural resources at RSM UK, the audit, tax and consulting firm, said: “I welcome Offshore Energies UK’s proposal to reform the energy profits levy from 2026. This tax is not fit for purpose and is damaging UK business investment and jobs, which means lower revenues to the Exchequer. “The UK is the only country that continues to levy a windfall tax on energy profits, where there is no windfall left to tax. We must reset this tax so firms have the confidence to build our integrated energy future at home rather than looking overseas.” Katy Heidenreich, OEUK’s director of supply chain and people, said: “This survey underlines that the energy profits levy isn’t working for government, industry or consumers and needs urgent reform. The government’s Office for Budget Responsibility has revised down its forecast revenue from £41.6 billion in November 2022 to £17.4bn for the period 2022-23 to 2027-28. This is less than half what was forecast. “But if this tax is reformed as OEUK proposes, the sector can add £137bn to the economy by 2050, secure £41bn of extra investment in UK energy by 2050, support 23,000 additional jobs by 2030 and unlock £12bn in additional tax receipts by 2050. So, it’s not just offshore energy firms, our industrial heartlands and their skilled people that need this tax to change - it’s the whole economy.” Warning North Sea poised to miss out on 23,000 jobs as 110 firms demand windfall tax reforms
