Following the introduction of the oil industry’s windfall tax, BP stated last night that it would reconsider its investment plans.
The warning calls into question the company’s promise to invest up to £18 billion in the UK by 2030, which it pledged earlier this month.
Rishi Sunak’s oil and gas levy tax of 25% was meant to be one-time only, but he stated it would be prolonged until 2025.
BP stated, “We recognize the Government’s need to take action because we realize how terrible circumstances are for people across the UK.”
But it added: ‘Today’s announcement is not for a one-off tax – it is a multi-year proposal. Naturally we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans.’
Offshore Energies UK (OEUK), a trade body for the British offshore energy industry, said the tax was ‘a backward step’ and warned it would ‘discourage UK offshore energy investments’ and increase the country’s reliance on oil and gas imports.
Chief executive Deirdre Michie added: ‘This is a disappointing and worrying development for industry, the shockwaves of which will be felt in offshore energy jobs and communities, and by consumers, for years.’ Rain Newton-Smith, chief economist at the Confederation of British Industry, said: ‘It sends the wrong signal to the whole sector at the wrong time against a backdrop of rising business taxation elsewhere.’
Derek Leith, oil and gas tax expert at accountant EY, said it was ‘worse than many may have anticipated’. Mark Littlewood, director general of the Institute of Economic Affairs think-tank, said is was ‘a policy victory for Labour’, adding that the Tories’ default setting was now ‘to respond to virtually any problem by increasing taxes’