Healey tax grab ‘would inflict lasting damage on North Sea’, business chiefs warn

Healey tax grab ‘would inflict lasting damage on North Sea’, business chiefs warn

Jonathan Leake

Sun, August 30, 2026 at 5:12 PM GMT+3 4 min read

• BP +1.71%
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A fresh Labour tax raid on the North Sea would cause "lasting damage" to Britain's oil and gas industry, bosses have warned.

John Healey, the Chancellor, is facing backlash over plans to extend a windfall tax on UK oil and gas profits, with energy chiefs claiming this would destroy investment and accelerate job losses.

Russell Borthwick, the chief executive of the chamber of commerce in Aberdeen, which represents the likes of BP and Shell, said another tax raid would cripple an industry "which Britain cannot afford to lose".

Labour already taxes oil and gas profits at 78pc under an existing windfall levy which Rachel Reeves, the former chancellor, previously extended from 2028 to 2030.

Under a more punitive regime, Mr Healey could increase the levy and extend it beyond 2030, as reported by The Telegraph.

This is alongside a possible windfall tax on banks as he seeks to raise billions of pounds for a public spending spree in his first Budget.

A windfall tax on either sector would be designed to target inflated profits generated from the Iran war, which has sent the price of oil and gas soaring and increased borrowing costs.

However, Mr Borthwick wrote to the Chancellor warning that "the stakes could hardly be higher" for UK's struggling offshore sector.

He said: "We are already losing highly skilled jobs, investment is leaving the country and businesses which have spent decades building world-leading expertise in the North Sea are being forced to make incredibly difficult decisions about their future."

He urged the Chancellor to immediately quash speculation of a tax raid, which he said "risks doing lasting damage to an industry which Britain cannot afford to lose".

Enrique Cornejo, the policy director at oil and gas trade body Offshore Energies UK, also warned against piling more pressure on the oil and gas industry.

He said: "Any further changes to the fiscal regime would severely undermine investor confidence and energy security, accelerate job losses and create a damaging cliff edge for domestic production."

Mr Healey's plans for a possible windfall tax have emerged amid the ongoing licencing battles for the Jackdaw gas field in the North Sea and the Rosebank field west of Shetland, which could together boost UK gas production by nearly 10pc.

The decision to approve the projects will be made by Miatta Fahnbulleh, the Energy Secretary, who succeeded Ed Miliband after Andy Burnham came to power.

The new Prime Minister has promised a "pragmatic" approach to new drilling in the North Sea.

Meanwhile, the prospect of a new tax grab will raise questions over the sale of BP's North Sea business.

A tougher levy risks damaging the asset's profitability, industry sources said, which in turn could reduce the value of the planned sale. It had been expected the package would be sold for up to £2.5bn.

BP declined to comment but a senior industry source said: "It would make the BP sale very difficult. Who wants to put billions into such a punitive, unpredictable system?"

The prospect of a new windfall tax triggered an immediate political reaction, split between Left and Right.

Claire Coutinho, the shadow energy secretary, said higher taxes on the North Sea would effectively sign "the death warrant of our oil and gas industry".

However, Labour's Barry Gardiner, who served as Jeremy Corbyn's shadow energy secretary, said he supported tougher taxes on the oil and gas industry "in recognition that this industry owes a debt to society".

He added: "Before the energy profits levy was imposed in 2022, the UK had the lowest rate anywhere in the world at 37pc. Today, at 78pc, we only just exceed the global average."

Richard Tice, Reform UK's energy spokesman, said: "The oil and gas industry is already in turmoil with jobs being destroyed and firms pulling out.

"Labour must understand that the main reason is over-taxation and that taxes need to come down, not go up. Investment is already being cancelled, showing how raising taxes further will lead to lower revenues."

A Treasury spokesman said: "The Office for Budget Responsibility will publish its updated forecast alongside the Budget in October and we will not comment on rumour, speculation or proposals about its contents ahead of then."

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