Sir Keir Starmer is under pressure to clarify his plans for the windfall tax after a report claimed three-quarters of all new North Sea oil and gas projects could become economically unviable under Labour.
A combination of the existing windfall tax and uncertainty over a Labour government’s policies could mean sanctioned investment across the North Sea will fall to levels not seen since the 2016 and 2020 downturns, according to a report by analysts Wood Mackenzie.
The report examined pledges set out by Ed Miliband, the shadow energy secretary, which include imposing a “proper windfall tax” that would raise the current levy by a further 3%.
This would mean UK oil and gas producers would pay a total of 78% tax on any profits.
Mr Miliband has also said a Labour government would backdate the windfall tax, halt tax breaks on new investment and halt licensing for further exploration and drilling.
The report said: “The Labour party currently has a healthy lead in the polls. But it will certainly come under pressure to define what it currently means by a “proper windfall tax”, a phrase often repeated throughout 2023.
“Our analysis shows that only a quarter of all new projects in the North Sea would be economically viable under Labour’s earlier proposals. Many operators may wait and see, unless they are confident that returns on investment can withstand further shocks.”
Responding to the report in The Telegraph, a UK Government source said: “Labour are not providing the certainty that the oil and gas sector needs. Instead of making the most of what we can produce here they would rather ship in more fuels from foreign regimes with higher emissions.
“Sir Keir Starmer’s irresponsible plans to turn off the taps too soon would kneecap the British oil and gas sector, sending 200,000 British jobs abroad.”
A Labour spokesman said: “Labour will ensure a balanced transition in the North Sea - using oil and gas for decades to come, and not issuing licences to explore new fields as we accelerate to clean power, with a resolute focus on cutting bills for families.
“We will not grant licenses to explore new fields.”