“It would be beyond irresponsible to turn off the North Sea taps overnight. That’s why it’s so important that we secure investment in our own domestic supply, protecting the tens of thousands of British jobs that come with it. “While we stepped into help, never again can our energy supplies be at the whim of petrostate despots like Putin. Thanks to the revenue raised from windfall taxes on energy profits, we will have helped save the typical household £1,500 on their energy bill by July.

“It is right that we recover excess profits resulting from Putin’s war and use the money to help people with their energy bills. Gareth Davies MP, Exchequer Secretary to the Treasury, said: In October 2022, the industry regulator the North Sea Transition Authority (NSTA) opened applications for oil and gas licences to explore and potentially develop 898 blocks and part-blocks in the North Sea which may lead to over 100 licences being awarded from later this year. In light of Putin’s weaponisation of energy, the UK government is taking concrete steps to accelerate home-grown sources of energy to reduce the UK’s reliance on foreign imports. Based on the independent Office for Budget Responsibility’s forecast the Energy Security Investment Mechanism won’t be triggered until before the tax’s planned end date in March 2028. It will mean that if prices fall to historically normal levels for a sustained period the tax rate for oil and gas companies will return to 40%, the rate before the Energy Profits Levy was introduced. In response to this, the Government has today announced an Energy Security Investment Mechanism to give the oil and gas sector certainty to raise capital and invest in new and existing projects, securing affordable and reliable domestic energy supply and protecting some of the 215,000 British jobs the sector supports.

This puts the long-term future of the UK’s domestic supply at risk, meaning we would be forced to import more from abroad at a time when reliable and affordable energy is a focus for families and businesses. While the levy included an investment allowance to encourage firms to continue to invest in oil and gas extraction in the UK, industry has warned that companies are cutting back on investment. Put in place to tax extraordinary profits made by industry following record high prices of oil and gas driven by Putin’s invasion of Ukraine, the levy has raised around £2.8 billion to date and is expected to raise almost £26 billion by March 2028 – helping to fund the measures to help with the cost of living, such as the Energy Price Guarantee. The Energy Profits Levy has raised around £2.8 billion to date, helping the Government pay just under half the typical household energy bill last winter.This forms part of the Government’s strategy to support households with energy bills whilst providing certainty to investors to secure the long-term future of domestic energy production.The Energy Profits Levy will remain in place until March 2028, and the Government will introduce a new Energy Security Investment Mechanism to protect domestic energy supply and help safeguard some of the tens of thousands of jobs reliant on the sector.

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