There has been no U-turn from Chancellor Jeremy Hunt on his highly-controversial tax grab from North Sea oil and gas producers.
The sector had highlighted to him on Friday the adverse impact that the much-harsher windfall levy was already having on the UK's energy security and economy.
But it later emerged that the British Government had stood firm on its tax plans at the meeting in Edinburgh – very disappointing news for the thousands of businesses up and down the country dependent on the offshore industry.
Two sources said Mr Hunt had rebuffed requests to include a mechanism in the tax to reflect falls in oil and gas prices - although a future revision was not ruled out should prices slump.
The chancellor’s recent Budget targeted offshore producers, as he decided to hike the existing windfall tax by another 10% to 35% - bringing the overall tax rate from January to an eye-watering 75%.
He has also extended the lifespan of the levy until March 2028 from the previous date at the end of 2025.
£80billion tax
The government expects the windfall cash move to raise a total of £40billion - double the previous figure of £20billion. The total tax take from producers operators in British waters in the next six years will hit a staggering £80billion.
At Friday's meeting, Offshore Energies UK requested that Mr Hunt:
- Scrap the windfall tax on homegrown energy when oil and gas prices fall back to normal levels - as originally pledged by the Treasury when the windfall tax was first introduced.
- Rebuild confidence - the industry and its investors need the confidence to invest in the UK's long-term future.
- Put in place better taxes - deliver a long-term sustainable and competitive fiscal regime that supports consumers and industry.
Deirdre Michie, chief executive of the trade body, said later: "This was a constructive meeting where the chancellor heard concerns from industry as to why the extension of the Energy Profits Levy is a tax too far.
Undermine
"We told him that the 75% tax rate will undermine the ability of energy-producing companies to invest in the homegrown oil, gas and wind supplies we need.
"Without this, we will be less secure and will import more energy - while losing the benefits provided by the domestic industry in terms of taxes paid, jobs supported and investment in the wind and hydrogen projects.
"The offshore energy industry recognises these are tough times with many people feeling the impact of the energy price crisis. The chancellor committed to reflect further on the proposals put forward by industry, including our call to remove the windfall tax when oil and gas prices fall back to normal levels.
"Continued discussions with government are essential if we are to having any hope of restoring confidence to the companies we need to help protect UK energy security and boost economic growth."
Energy security
A statement from the UK Government said that Mr Hunt had highlighted at the meeting the importance of energy security in the aftermath of Russia's war in the Ukraine, and said that the government continues to recognise the importance of the sector and the value of its investments.
It added: "He stressed that this was both as a key asset for supporting UK energy independence and ensuring a sustainable transition to net-zero. He explained that is why the more investment a firm makes into the UK, the less tax they pay.
"The chancellor emphasised that the autumn statement
was focused on securing fiscal sustainability after the two economic shocks of a global pandemic and a war in Europe. It required difficult decisions, and meant he was asking those with the broadest shoulders to contribute more."