‘If nothing happens, it will be too late’. That’s the dire warning from an academic I spoke to recently in Aberdeen about Britain’s energy independence. He’s right to worry: last year, 44 per cent of the energy used in the UK last year was imported. This month’s Budget could be one of our final chances to save the UK from becoming increasingly reliant on energy from overseas, and to improve the lot of Britain’s suffering energy firms.
One quick solution Rachel Reeves should reach for is scrapping the Energy Profits Levy (EPL). A windfall tax brought in by the Conservative government in 2022, the EPL was intended as a temporary tax on oil and gas in the face of a large spike in energy company profits, but the Labour government has done three things to make it worse. First, it put the rate up; second, ways to reduce the tax were taken away; and third, its end date was pushed back to 2030.
The tax sums up the government’s disdain for Britain’s oil and gas firms. But the truth is that Labour needs energy – and relying on renewables just won’t do.
The cessation of new exploration licences in the North Sea has also hurt these firms. Production is going down and jobs are being lost in places such as Aberdeen, the energy capital of the UK. The Treasury currently doesn’t believe there is a problem in Aberdeen because they aren’t seeing an uptick in benefits claims. That’s no surprise: people with skills in that sector are moving out of the UK to ply their trades elsewhere. We are experiencing a brain drain that will be difficult to reverse.
The danger is that as we produce less oil and gas in the UK, we have to import even more. Usually this will incur a higher carbon footprint than if we had produced the energy domestically. Renewables are nowhere near where they need to be to replace what we get from oil and gas, nor to maintain the jobs that these non-renewables give us. Current policy makes no sense either economically or environmentally.
This isn’t a left-right issue – it’s one of existential importance to the future of the country. Read this: ‘Our North Sea is in decline – let’s protect it during the transition and optimise our use of the resources that are left. We should scrap the windfall tax and protect the industry and its workers – we need to avoid the destruction of the industry, or we will see a repeat of what happened to our coalminers.’
Do you know who said those words? It was Dale Vince, the green energy entrepreneur who has donated money to Just Stop Oil, Extinction Rebellion and Greenpeace over the years. People on all sides of the political spectrum are beginning to understand just how important it is to get energy policy right.
What’s on the line here are at least 200,000 jobs – although it’s almost certainly more than that when you consider the derivative sectors. In Aberdeen, hotels, restaurants and retail will all suffer if the energy sector is hit worse than it has been already. The Budget needs to either change or withdraw the windfall tax on UK oil and gas, and to begin to fix our energy mess. If that doesn’t happen, as my academic friend in Scotland says, we might soon find we’re too late. Too late to save jobs; too late to regain energy independence; too late to avoid the cliff edge.
Nick Tyrone is producing a report for the Jobs Foundation on energy sector jobs in Aberdeen. It will be released in January 2026.
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