Major trade body Offshore Energies UK (OEUK) has released new data suggesting that the government’s proposed changes to the Energy Profits Levy (EPL) could reduce the UK’s economic value by around £13 billion.
The analysis, shared with the Treasury, indicates that the government‘s planned tax policy would likely result in a significant cut to investment by oil and gas producers in UK projects.
Capital investments over the period from 2025 to 2029 are expected to fall to £2 billion, compared to an estimated £14 billion under the current rules.
OEUK states that this would harm the UK offshore energy sector’s ability to support the government’s aim of fostering economic growth.
The report shows that although tax revenue from UK oil and gas producers might increase in the short term, a reduction in production due to lower investment could lead to a £12 billion loss in receipts over time.
It also suggests that approximately 35,000 jobs could be at risk due to halted projects and that a large portion of additional potential production would become unprofitable, making the UK more dependent on foreign energy supplies.
The findings come ahead of the Chancellor‘s Autumn Statement in October.
David Whitehouse, OEUK Chief Executive Officer, said: “The Prime Minister has said that the Budget will be painful.
“This industry recognises that difficult decisions will need to be made. This is a government that has made economic growth its main priority and yet our analysis shows that its policy will ultimately reduce this sector’s contribution to the UK economy.”
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