Former Prime Minster Tony Blair’s think tank has urged Keir Starmer’s Government to abolish the windfall tax imposed on oil and gas companies and lift its prohibition on fresh North Sea drilling licences.
A sharply critical report from the Tony Blair Institute contends that Labour’s clean energy strategy is steering Britain down the wrong path, with the Energy Profits Levy discouraging investment in the sector.
Tone Langengen, the TBI policy adviser who authored the paper, argues ministers should reconsider the exploration ban to safeguard supply chains.
The levy, standing at 38 per cent, was first implemented by the previous government in May 2022 following soaring profits triggered by energy price surges after Russia invaded Ukraine.
Tony Blair think tank calls on Keir Starmer to axe the energy profits levy
|
GETTY
The Government has launched a consultation on replacing the levy, which is scheduled to expire in 2030, with a new system designed to offer greater certainty for the industry whilst shielding consumers from future price shocks.
Industry representatives have been pressing hard for reforms, arguing the tax is strangling investment and causing job losses.
The TBI report states that repeated changes to the energy profits levy have “materially increased policy risk, raised hurdle rates and deterred long-term investment in mature assets that already face geological decline”.
Furthermore, the think tank recommends bringing the levy to “an orderly close” and establishing a predictable fiscal framework that limits sudden rate changes and provides clarity on capital allowances.
Keir | KEIR STARMER
Net zero policies are under fire
|
GETTYThe report also takes aim at the Clean Power 2030 plan, describing it as an exercise in “measuring the wrong achievements” by tracking “capacity, contracts and milestones” rather than prioritising affordability and “political durability”.
With Britain accounting for under one per cent of worldwide emissions, the TBI argues this approach amounts to “climate theatre” rather than genuine climate leadership.
“Clean Power 2030 is leading the UK in the wrong direction,” the report declares, insisting that a shift towards “cheaper, abundant power” represents the sole viable path to sustaining economic growth, advancing electrification and retaining public backing for climate initiatives.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The Tony Blair Institute’s so-called ‘reset’ looks less like a fresh start and more like a defence of fossil fuels and an energy industry that has made over £125billion in UK profits since 2020
“Energy Owls” actively manage their energy usage, check tariffs, and track their bills. | Uswitch“For the Institute to call for the windfall tax to be scrapped, while energy giants post extraordinary profits and millions live in cold, damp homes, is staggering. That tax exists because companies benefited from a crisis that devastated household finances.
“Removing the Windfall Tax would reward profiteering and shift the burden back onto households that are still paying the price of Britain’s over-reliance on gas. It was exposure to volatile global fossil fuel markets that sent bills through the roof, not climate targets and doubling down on new North Sea exploration will not lower bills.
“Gas is sold at international prices and the North Sea is a declining geological resource that cannot meet the country’s heating needs in the long term. The answer to high bills lies in accelerating homegrown renewables, reforming electricity pricing and investing in energy efficiency, not returning to the solutions of the past.”
A Department for Energy, Security and Net Zero spokesperson defended the Government’s approach, stating: “Our clean power mission is the only way to bring down bills for good.”
The spokesperson warned that alternative strategies would leave Britain reliant on “petrostates and dictators whose control of fossil fuel markets helped drive the cost-of-living crisis.” Such dependence, the Government argues, runs contrary to British interests.
