After disappointing Budget, here's what North Sea energy industry needs from Labour
The North Sea has powered this country for decades and can underpin the next chapter of our energy transition too – if governments make the right decisions
As the fallout of last week’s UK Budget continues to land, Chancellor Rachel Reeves’ decision to leave the windfall tax unchanged is coming into sharp focus. A temporary measure created during a moment of exceptional global prices has now been locked in until 2030, even though those prices have long since passed.
For Scotland, where tens of thousands of jobs depend on offshore energy, that decision carries real and damaging consequences. It brings uncertainty at the very moment that the country needs stability and a practical plan for the future of the North Sea.
For the people working across the North-east, Fife, Shetland, Orkney, Moray and the Central Belt, this is not a debate about fiscal policy. It is about livelihoods and stability, and whether the communities that powered the UK for 50 years will be supported to build a new future or left vulnerable to decline through short-term decisions and unclear policy signals.
Damaging uncertainty set to continue
The Budget did not change the reality that three-quarters of Britain’s energy still comes from oil and gas. Nor did it change the fact that between now and 2050, the UK will still need about ten to 15 billion barrels of oil and gas.
What matters is where that supply comes from and whether the economic and environmental benefits stay here, anchored in Scottish jobs and Scottish communities. It is Scotland’s skilled workforce and supply chain – and not foreign importers – who can deliver the offshore wind, carbon capture and hydrogen projects that are central to the UK’s energy transition.
READ MORE: 'This is a call to arms to ensure North Sea remains an energy powerhouse long into the future'
Yet the decision to keep the windfall tax unchanged long after the conditions that justified it have passed sends a signal that the current uncertainty will continue. And certainty is what attracts investment first.
The consequences of that uncertainty are already visible. Production in the North Sea has fallen by 40 per cent in five years. Without reform, the number of active fields will be reduced from around 240 today to roughly 80 by 2030.
That is not the result of geology. It is the result of a political choice that makes long-term commitments harder to justify. And, as the looming closure of the Fife Ethylene Plant shows, industrial capacity can disappear quickly once investment begins to hesitate.
A real opportunity
That is why Offshore Energies UK (OEUK) has moved quickly. We have written to the Chancellor requesting an urgent meeting. On Monday, we brought together our members, from more than 450 companies across oil and gas, wind, carbon capture and hydrogen, to decide how we push forward from here.
Our message is united and clear. The future of the North Sea will not be determined by a single Budget, but by the choices taken in the months and years ahead, and Scotland must be central to those choices.
Legislation for next year is now being shaped. This is a real opportunity to put in place a permanent and profits-based fiscal system, the same approach as proposed by our sector.
Such a system would reward investment, protect jobs and give workers and communities a sense of long-term security. The North Sea has powered Scotland and the UK for decades. With the right decisions, it can underpin the next chapter of our energy transition too.
Our sector put forward a serious and constructive offer: replace the energy profits levy in 2026 with a permanent, profits-based structure – and unlock £50 billion of UK projects. Protect jobs across Scotland and the UK. Strengthen energy security. And deliver £15.7bn more for the Treasury over the next decade.
This approach would pay for itself within this parliamentary term through wider tax receipts. Unions agreed. Industry leaders across renewables agreed. The case for stability rather than drift is broad and well-founded.
Scotland’s economic identity
The UK’s energy transition is not an abstract environmental goal. It is an industrial and an investment challenge. Scotland sits at the heart of it. Offshore energy supports 90,000 Scottish jobs and underpins sectors from engineering to chemicals, from ports to advanced manufacturing.
It sustains communities in the North-east, powers activity in the Central Belt and provides the skills base required for offshore wind, hydrogen and carbon capture.
Lose that, and Scotland will not simply lose an energy sector. It will lose part of its economic identity. And the UK will become more dependent on imported energy that is up to four times more carbon intensive than our own.
The Chancellor spoke of pride in Britain’s industrial heritage. Pride in the past is welcome, but it must be matched by commitment to the future.
Scotland’s offshore workforce is not asking for special treatment. They are asking for a fair fiscal regime, predictable rules and the opportunity to compete for investment on a level playing field.
That is what we will continue to push for. We will be on the front foot in the days and weeks ahead, demanding clarity from ministers and officials and putting forward clear, practical alternatives.
Above all, we will ensure Scotland’s energy workforce and communities are not drowned out by the post-Budget spin. The Budget may have been disappointing, but it has brought clarity. It has shown what must be done and why delay is not an option.
Offshore energy has powered the UK for 50 years. With the right choices, it can power its future for 50 more. Now these choices must be taken with our sector’s people, not for them.
David Whitehouse is chief executive of Offshore Energies UK (OEUK)
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