Chancellor Rachel Reeves is considering ending the energy profits levy a year earlier, in March 2029, after Prime Minister Keir Starmer signalled he wants to “double down” on North Sea extraction. People briefed say the Treasury is testing whether scrapping the windfall tax sooner would unlock fresh investment, jobs and higher receipts.
Under pressure to find growth-friendly measures for her Budget, Reeves has asked operators to set concrete plans. Officials remain sceptical, but bringing forward the expiry is “on the table”, according to one Government source.
The move would shift emphasis from a Government that prioritises the renewables transition. However, Labour still plans to ban new exploration licences while allowing existing fields to run their course. Industry body, Offshore Energies UK, argues that replacing the levy with a stable, permanent profits regime could trigger £40 billion of spending across 90 projects, warning that the current system costs around 1,000 jobs monthly.
The Office for Budget Responsibility previously put the extra year of levy, to March 2030, at roughly £1bn in revenue, though with wide uncertainty. If Reeves reverses course, she will seek to reflect any North Sea growth effects in the OBR’s forecasts.
Brent prices have fallen to $65 a barrel since the levy was introduced in 2022. The effective rate on upstream profits is 78%. Smaller operators and suppliers say investment is drifting to friendlier regimes.
The Treasury declined to comment. Ministers insist UK remains on track to meet carbon budgets.
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