David Whitehouse, chief executive of Offshore Energies UK (OEUK), is set to tell MPs that accelerating changes to the North Sea tax regime could unlock billions for the UK economy and provide the government with the means to tackle fuel poverty.
Giving evidence to the House of Commons Energy Security and Net Zero Select Committee on Wednesday 17 June, Whitehouse will argue that bringing forward the Treasury’s proposed Oil and Gas Price Mechanism (OGPM) to April 2027 rather than its planned 2030 introduction would significantly boost investment, production and tax revenues.
According to OEUK analysis, early implementation of the OGPM could generate an additional £2.8 billion in direct taxes from the oil and gas sector over the next decade, alongside a further £10.6 billion in payroll taxes from the workforce. In total, this would deliver £13.4 billion in extra revenue to the Treasury.
The industry body believes this increased revenue could play a critical role in addressing fuel poverty, with around 3 million UK households currently unable to afford to heat their homes or cook regular hot meals. Government estimates suggest that an average annual payment of £380 per household would be sufficient to lift all affected households out of fuel poverty, a cost OEUK argues could be fully covered by a more stable North Sea fiscal regime.
Whitehouse is expected to warn that the current Energy Profits Levy is discouraging investment, rendering some projects uneconomic and accelerating the decline of domestic production. He will tell MPs this is ultimately reducing the long term tax take available to government.
In contrast, OEUK’s analysis suggests that a more competitive tax framework, combined with support for key developments such as Rosebank and Jackdaw, could deliver substantial economic and energy security benefits. These include an additional 1.1 billion barrels of production by 2035, enough to meet around half of UK demand during that period, and more than £60 billion in added value to the UK economy over the next decade.
The organisation also highlights the risk of increasing reliance on imported liquefied natural gas (LNG) if domestic production continues to decline at its current rate of 30 to 40%. Without policy change, LNG imports could account for up to 50% of UK gas demand within a decade, largely from suppliers such as the United States and Qatar.
By contrast, strengthening domestic production could limit LNG dependency to around 4% by 2030 and 6% by 2035, according to OEUK estimates. The group also points to the environmental implications, noting that imported LNG has approximately four times the carbon footprint of UK produced gas.
Ahead of the committee session, Whitehouse said: “Domestic oil and gas production doesn’t just supply energy, it gives the Chancellor choices. It generates tax revenues, supports jobs and strengthens the economy. Those are the levers government can use to support households, including those in fuel poverty.
“Our analysis shows that a stable North Sea tax regime coupled with supportive policy could generate enough additional tax revenue to eliminate fuel poverty altogether.
In Case You Missed It:
“It is estimated that approximately 50% of the UK energy demand to 2050 will be met by oil and gas. The choice is whether we produce it ourselves with all the benefits for UK jobs, economic value and taxes, or rely on imports with none of those benefits.
“Accelerated production decline in the UK is a policy choice not a geological inevitability. It leaves us poorer, less able to support vulnerable communities, more exposed to geopolitical risk and reduces energy security for the UK and our European partners.”
