FIRST Minister John Swinney has warned the UK Government risks causing “irreversible” damage to the Scottish economy if it does not lift the controversial Energy Profits Levy.
He has also raised concerns over the UK Government’s approach to key economic infrastructure like Grangemouth, Mossmorran and the Acorn carbon capture project.
The windfall tax is currently set at 38% after rising from 35% last month and taxes oil and gas firms on their profits. When combined with other levies, the tax rate paid by oil and gas companies in the UK is now 78%.
In 2022/23, its first year of operation, the tax raised £2.6 billion, followed by 3.6bn in the following 12 months.
Following a meeting with Starmer ahead of the British-Irish Council, Swinney said: “I was clear with the Prime Minister – act now or run the risk of delivering irreversible deindustrialisation and decline in Scotland’s economy.
READ MORE: Keir Starmer gets John Swinney's name wrong during Scotland visit
“The energy industry is facing an existential threat unless it gets the support it needs from the UK Government – including removing the Energy Profits Levy – to help ensure there is a just transition from oil and gas to renewables that protects skills and delivers a pipeline of future investment.
“We have a moral obligation to deliver on our climate commitments but must ensure we do not leave communities behind. Scotland still suffers the scars of deindustrialisation from previous UK Governments and unless there is action now from UK Ministers, we run the risk of repeating the mistakes of the past.”
The UK Government has been lobbied by oil and gas firms to cut the windfall tax, but Labour have refused to remove it, instead introducing reforms to drilling regulation which allows new small-scale drill sites to operate within 50km of existing infrastructure.
The Scottish Greens have condemned this decision and have called for stricter regulation of the oil and gas industry, with MSP Patrick Harvie saying: “Any move to allow more new drilling will have a devastating impact for people and planet. It is a U-Turn that will have catastrophic consequences for our climate.
“There is no environmentally friendly way to expand drilling in our North Sea, and it is utterly reckless for Labour to be backtracking like this.
“The climate crisis is getting worse, but our governments are retreating and doing even less to stop it. We’ve seen nothing but climbdowns, U-turns and backtracking from both Holyrood and Westminster.”
The First Minister also pressed the Prime Minister for an update on UK-US trade relations, citing concerns that Scotland’s whisky industry is being hurt by sanctions.
He said: “I also pressed the Prime Minister for an update on the UK-US trade negotiations – specifically whisky – and reinforced my determination to ensure there is mutually beneficial deal for Scotland.
“This follows my earlier discussions with President Trump about the tariffs impacting Scotch whisky and the symbiotic partnership which exists between the Scotch and US whisky industries.
“Scotland’s whisky industry is a cornerstone of our economy and without those trade exemptions – which are for the UK Government to secure – the industry will not have the protection and support it needs. It is in the economic interest of both Scotland and the US to reduce tariffs for Scotch whisky.
“Scotland’s economy is at its best when we focus on securing investment in the jobs and industries of tomorrow. That ambition is matched by our commitment to ensuring we do not repeat the mistakes of the past – a commitment I pressed the Prime Minister to follow.”
Share