Offshore Energies UK said Tuesday the UK could raise about £15 billion more if Prime Minister Andy Burnham's government accelerates the new regime to next year. The plan swaps the current windfall tax for a price-based mechanism in 2027 rather than March 2030, which the group says would spur spending and keep more people working in the industry.
In its annual economic report, OEUK breaks the total into two streams: £2.4 billion in extra taxes paid by oil and gas producers through 2035, plus £12.6 billion in additional payroll receipts if activity picks up. The group links the gains to a setup that nudges investment and output higher.
OEUK says the North Sea needs "a competitive, progressive and stable regime that promotes investment," and warns that the longer the successor to the Energy Profits Levy takes to arrive, "the less impact fiscal change will have." It adds that faster reforms, alongside "a pragmatic approach to licensing" that prioritizes domestic supply, could open up 111 initiatives and £50 billion in private investment, an outcome that would almost double UK oil and gas output over the next 25 years.
On Monday, Ben Ward, OEUK's market intelligence manager, told reporters, "These additional revenues will provide the Exchequer with greater flexibility, offering sufficient funding to eliminate fuel poverty across the UK or support household adoption of low-carbon technologies." He also said, "Our operators have clearly shown a willingness to invest, with projects that could begin delivering new domestic oil and gas within months should we see an announcement" in the next budget.
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With borrowing costs rising, boosting tax revenue has climbed the government's to-do list, even as the new prime minister's spending plans face scrutiny and there are concerns about inflation linked to the Iran war. Chancellor of the Exchequer John Healey may confront some tough choices in his debut budget, slated for the end of October.
The Energy Profits Levy was introduced in 2022 in the wake of Russia's invasion of Ukraine, which sent energy prices soaring, and it was later extended and raised by the Conservatives and again when Labour took office in 2024. The industry says the EPL, plus Labour's ban on new exploration drilling, has chilled North Sea investment, pushing several companies to reassess their UK positions and either sell, merge or scale back. BP Plc, the only global oil major still running a dedicated North Sea operation, stated last month that it is in the process of exiting the area.
OEUK's faster-switch scenario indicates the UK might generate up to 288 billion cubic meters of gas between 2025 and 2035, a level 64% higher than current projections. That would meet roughly half of home demand and reduce the proportion of liquefied natural gas imports, which the report notes have been heavily influenced by geopolitical uncertainty. For households, that path influences everything from energy bills to the broader inflation pulse.
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