Chamber warns against extending North Sea energy tax

The Aberdeen and Grampian Chamber of Commerce has urged the UK Chancellor to abandon plans to extend or increase the energy profits levy, warning that further fiscal pressure will continue to damage the sector. In a letter addressed to John Healey, the chamber’s chief executive, Russell Borthwick, sought assurance that recent reports suggesting the government intends to expand the tax are incorrect. Borthwick described the current 78 percent rate as crippling and argued that it has already resulted in reduced investment, stalled projects and the loss of thousands of skilled jobs in the region. He specifically attributed BP’s decision to put its North Sea assets up for sale to the financial burden imposed by the levy, which was originally introduced by the Conservative government and subsequently extended by former Chancellor Rachel Reeves. Borthwick stated that the recent asset sale should serve as a wake-up call for urgent policy change rather than a continuation of the current approach.

This intervention follows comments from senior accountancy figures who have challenged the Labour government’s assertion that the decline in North Sea production is primarily due to the basin’s maturity. Martin Cowie, office senior partner for PwC in Aberdeen, told The Press and Journal that the sector is declining largely because of government policy over several years. He argued that a shift in both fiscal and regulatory frameworks is necessary to make the region attractive for investment. Cowie noted that industry clients require a stable and understandable regime to encourage capital expenditure. This view contrasts with official claims that lower production, revenues and employment levels are natural consequences of the area’s geological age.

Recent tax data indicates that revenues from the energy profits levy experienced a slight increase in July, driven by higher oil prices resulting from the conflict in the Middle East. However, this uptick does not reverse the broader two-year downward trend in collections. According to HMRC monthly receipts, the levy generated 762 million pounds in July 2026, a decrease from 928 million pounds in the same month of 2025, though an increase from 716 million pounds in January 2026. Sheena McGuinness, co-head of energy and natural resources at RSM UK, explained that the recent rise is attributable solely to price movements rather than increased volumes or production. She noted that the revenue remains below the six billion pounds Labour pledged to raise for the establishment of Great British Energy. McGuinness added that while the figures move closer to Office for Budget Responsibility forecasts, they fall short of earlier predictions. She also highlighted that a decision on further North Sea drilling licenses, including for the Rosebank and Jackdaw fields, is expected to be delayed until autumn, with potential tax revenues playing a role in that policy determination.