Does collapse in revenue mean North Sea windfall tax has backfired?
An Aberdeen business chief says the national asset is being pushed into "terminal decline".
An Aberdeen business chief has claimed the North Sea windfall tax is “backfiring” on the Treasury after a dramatic slump in revenues.
New HMRC figures show total tax revenue from oil and gas fell from £6.1 billion in 2023-2024 to £4.5bn in 2024-2025, a drop of 27%.
Receipts from the Energy Profits Levy (EPL) itself fell to £2.9bn, down £700 million (20%) over the same period.
The figures come amid growing concern for the North Sea.
Industry body Offshore Energies UK (OEUK) warns the sector is losing almost 1,000 jobsevery month.
A trend that was confirmed yesterday by leading operator EnQuest in a shareholder briefing.
North Sea windfall tax ‘failing’
“These numbers show the Energy Profits Levy is failing on its own terms,” said Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce.
“Instead of raising more money, it is accelerating decline in a vital UK industry and costing the Treasury billions in lost revenue.
“Government policy – not geology – is pushing this national asset into terminal decline – with a thousand livelihoods being lost every month and a £50 billion economic hit already locked in.”
He said decisive Government action was needed now.
“Unless the government moves quickly to remove this windfall tax, the damage will become irreversible,” he added.
“Baby steps in the right direction on tiebacks, however welcome, won’t stem the horrifying pace of decline unless coupled with removal of punitive taxes on the industry.
“This is about far more than one region. A weakened North Sea means greater reliance on imports, less energy security, fewer tax revenues, and a harder path to net zero.
“The case for removing the EPL is now indisputable.”
‘Too much is at stake’
The North Sea Transition Authority has also cut production forecasts to 2050 by almost one billion barrels of oil equivalent.
The downgrade will cost the UK economy £50.6bn, according to OEUK.
Meanwhile, the long-term cost of decommissioning North Sea assets continues to mount.
The North Sea Transition Authority estimates total decommissioning costs at £41bn, with HMRC forecasting £11.7bn in lost tax take.
Mr Borthwick said: “Not only is the tax take falling, the government is also bringing forward a huge decommissioning bill.
“The UK is on course to pay a high price for short-term political decisions unless there is an urgent reset of policy.
“The Chancellor must act in the Budget, as this cannot be allowed to continue – too much is at stake.”
[Source: Press and Journal]
