Tens of thousands of oil workers will lose their jobs over the next few years as a result of the Chancellor’s £2bn windfall tax on North Sea producers, the industry has warned.
The surprise levy, which was announced by George Osborne in Wednesday’s Budget, was designed to fund a fuel duty cut of one pence for motorists. But Mike Tholen, economics director of Oil and Gas UK, the trade association for the offshore industry, told the BBC that it would put off overseas investors who were needed to finance the extraction of new oil and gas reserves.
The last big "tax hit" on the industry five years ago had likewise stifled investment, which had only just begun to pick up again, but "our big concern is that investment will collapse again as a result of what he’s done", Tholen said.
"We will see jobs go and we will see technology lost, and we will undoubtedly see our nation less well off when it comes to energy security in the years ahead,” he warned. “As an industry, at the minute we are responsible for employing nearly half a million people across the UK, and there will be tens of thousands of those who will not now have jobs in the future because of this."
But a Treasury spokesman dismissed Tholen’s concerns. "We do not expect this tax change to have a significant effect on production and investment – and therefore on jobs – in the coming years as profits are expected to remain high because of the oil price."
Even with the change, average post-tax profits per barrel were forecast to be higher over the next five years than the last five, he added.