Chamber calls on Chancellor to scrap windfall tax in Spring Budget

Ahead of the Spring Budget on Wednesday, Chancellor Jeremy Hunt is being urged to scrap the windfall tax on oil and gas companies as a new analysis shows Aberdeen has 'paid the price'.

New data from accounting firm EY claims Aberdeen is predicted to be the slowest-growing economy in Scotland over the next three years with an average GVA growth rate of 0.8%. The UK economy is set to grow by 1.9% over the same period.

The forecast states the Energy Profits Levy (EPL) has a part to play in this, acting as a barrier to investment within the sector.

Aberdeen and Grampian Chamber of Commerce (AGCC) says "enough is enough" amid speculation the Chancellor could extend the policy even further on Wednesday.

Policy director at AGCC, Ryan Crighton, said: "The windfall tax needs to go - it is not acceptable for Aberdeen to pay the price for economic problems it did not create.

“The North Sea is being used as a cash cow to plug financial holes created by the financial mismanagement of others – and Aberdeen is clearly paying the price.

"Businesses in the North-east are watching through their fingers as politicians of all parties fall over themselves to make things worse.

The chamber has long called for the EPL to be removed - highlighting energy prices have normalised but the tax has not, which is draining investor confidence in the North Sea.

It also fears more jobs could be lost if the tax is extended.

Mr Crighton continued: “After years of stagnation, the UK economy desperately needs investment to grow. North Sea firms are standing by ready to invest £200billion – but they need the right conditions.

"Jeremy Hunt has the chance to put that right on Wednesday.

"This saga again highlights why we need a seismic shift in how we draw up long-term energy policy in this country.

“Right now, we are at risk of the North Sea oil and gas industry being wound down through rhetoric, rather than strategic policy. If we simply tax it to death, it will be as chaotic as it will be economically damaging.

“We need a new body, entirely independent of government, to set a policy direction for the next 40-years.

"Like the Bank of England – which has maintaining monetary and fiscal stability as its central mission – the new body should be charged with developing recommendations which could command cross-party consensus and insulate the sector from political policy shocks in the future.

“If nothing changes, and we get five more years of the same muddled policy, discretionary capital will continue to move overseas, the transition will stall, and a world class supply chain built up over decades will go. We can – and must – do better.”