Scottish oil and gas sector 'losers' in his Budget, says chancellor

Jeremy Hunt's comments could cause more tension between the UK and Scottish Tories, who oppose the windfall tax.

Scottish oil and gas sector ‘losers’ in Budget after windfall tax extension, says chancellor Jeremy Hunt Future Publishing / Contributor via Getty Images

Scotland’s oil and gas industry was one of the “losers” in the Spring Budget, the chancellor has said.

Jeremy Hunt announced on Wednesday that the windfall tax on North Sea firms will be extended by another year to 2029.

He told the House of Commons it would raise £1.5bn. That money could help pay for the 2p cut to National Insurance he announced.

The decision to continue the windfall tax prompted backlash from Scottish Conservative leader Douglas Ross who had pled with the chancellor not to go ahead with it.

A number of Scottish Tory MPs have said they would vote against the UK Government in the Commons on the issue.

Speaking to BBC Radio 4’s Today programme on Thursday, Hunt was asked who the “losers” of the Budget were.

He said: “Foreigners who were residents in the UK who were able to pay a cheque and avoid paying tax at the same rate as everyone else, so-called non-doms, they are going to be paying significantly more tax.

“I’ve also asked the Scottish oil and gas industry to pay an additional contribution because the war in Ukraine is lasting longer, oil and gas prices are going to be higher for longer.

“I think it’s fair they can make an additional contribution to the cost of living.”

Hunt had preivously denied he had thrown his Scottish Tory colleagues “under the bus” but said he understood the extension of the windfall tax was a “difficult decision”.

The 35% surcharge on energy profits will see oil and gas firms pay an effective tax rate of 75%.

The policy has been met with criticism from industry leaders, who say it will put thousands of jobs at risk and cause uncertainty througout the sector.

Chief executive of Industry body Offshore Energies UK (OEUK), David Whitehouse, said: “We have identified £200bn of investment in oil and gas and the UK’s wider energy transition awaiting the green light which will not happen with such globally uncompetitive taxation in place.”

Scottish secretary Alister Jack dismissed the concerns, telling journalists: “The profits levy being extended for another year, I don’t believe will have any impact on jobs.”

UK energy minsiter and Scottish West Aberdeenshire and Kincardine MP Andrew Bowie branded the move “deeply disappointing”.

Bowie said he will look to work with the chancellor to “resolve this”.

Ross conceded the chancellor had had “some tough decisions to make” in the Budget, but added he too is “deeply disappointed by his decision to extend the windfall tax for a further year”.

The Scottish Conservative leader said: “The SNP and Labour have abandoned 100,000 Scottish workers by calling for the taps in the North Sea to be turned off now.

“Although the UK Government rightly oppose this reckless policy – and have granted new licences for continued production in the North Sea – the Budget announcement is a step in the wrong direction.”

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