Britain’s energy sector is facing a critical juncture, with thousands of jobs at risk and investment draining away due to the government’s windfall tax policy. Offshore Energies UK (OEUK), representing over 110 companies, has issued a stark warning that the Energy Profits Levy (EPL) is “not working for government, industry or consumers” and must be replaced by a fair, permanent tax regime by 2026.
The sector is currently shedding 1,000 jobs every month, affecting not just offshore roles but also engineers, technicians, and manufacturers across the supply chain. Steve Nicol, OEUK’s Supply Chain Champion and Executive President of Operations at Wood, described the situation as critical. “We are witnessing an accelerated decline in activity that is undermining the value of the sector and the supply chain capability we need for our energy future. Job losses are occurring at an unacceptable scale,” he said.
The EPL, introduced in 2022, was intended to raise billions from record profits during the energy crisis. However, revenue projections have collapsed, with the Office for Budget Responsibility cutting its forecast from £41.6bn to just £17.4bn—less than half the amount ministers expected. OEUK argues that reforming the tax could inject £137bn into the UK economy by 2050, generate £41bn of new investment, and support 23,000 additional jobs by 2030. It would also deliver £12bn more in tax receipts.
The warning comes as companies increasingly shift operations overseas to survive. Many operate “multi-revenue” models, where oil and gas earnings fund renewables such as hydrogen, offshore wind, and carbon capture. Fiscal uncertainty, the group says, is destroying that balance. “Our businesses and manufacturing bases stretch from Grangemouth to East Anglia,” the letter states. “Since we first warned ministers last year, the situation has deteriorated further. Thousands more jobs have gone, and each week brings more cuts as firms move resources abroad.”
OEUK insists that a stable, long-term tax regime is vital to protect energy security, investment, and growth. Without it, Nicol warns, the UK faces a future where “the resilience and competitiveness of our entire energy supply chain” is lost—along with the skilled workers needed to build Britain’s low-carbon future.
This crisis could reshape the energy sector’s trajectory. If the government fails to act, the UK risks losing critical infrastructure and expertise, undermining its ability to transition to a low-carbon economy. Conversely, a reformed tax policy could unlock significant investment, secure jobs, and bolster the country’s energy security. The choice, it seems, is between decline and renewal.