The UK’s North Sea oil and gas industry has powered the nation for over 50 years. Yet theGovernment’s decision in the November Budget to maintain the Energy Profits Levy (EPL) at 78% threatened that resource in minutes.

As domestic production falters under restrictive licensing policies and the damaging EPL, thousands of skilled workers are losing jobs, public revenues are shrinking, and the energy security is becoming alarmingly fragile. The North Sea Transition Authority’s (NSTA) revised forecasts (Nov 2025) speak volumes: predicted 2030 output of oil and gas is 33m tonnes (mtoe), down from 74m tonnes (mtoe) in 2022. That’s a halving of production in only eight years.

The Government is leading by ideology without debate or logic. Restoring North Sea investment does not mean abandoning climate commitments; it is necessary to safeguard jobs, stabilise the economy, and maintain a bridge to a cleaner energy future. How can businesses invest in that future if they are being driven to ruin?

Ignoring these realities risks further loss of industry expertise and surrendering Britain’s energy independence to volatile global markets, with no environmental gain, as we continue to import oil and gas from overseas.

UK domestic production is critical - debunking the 'Price Taker’ myth

Opponents of new licensing in the North Sea claim that the UK is merely a "price taker", suggesting that UK domestic production cannot meaningfully affect prices or security. This is a short-sighted and dangerously narrow view of energy economics.

Domestic production reduces exposure to global supply shocks, transport bottlenecks and hostile suppliers – Germany’s reliance on Russian gas should be a warning enough. It insulates the UK against price volatility and strengthens its international bargaining power. The European scramble for LNG cargoes in 2022 after Russia’s invasion of Ukraine underscores that energy independence is a matter of national security.​

It also keeps profits, jobs, and taxes in Britain. And it’s greener: the NSTA itself confirmed that imported gas carries more than twice the carbon footprint of UK-produced gas.

We have a wealth of resources on our doorstep. Offshore Energies UK (OEUK) estimates up to 7.5 billion barrels of oil and gas remain untapped in UK waters, worth £165 billion to our economy. Shutting this down whilst relying on more expensive, higher-carbon imports is economic and environmental lunacy.

How Restoring Investment and Removing the EPL Would Boost Revenues

The EPL, introduced in response to a temporary post-covid oil prices spike, is now undermining the revenue it was meant to raise. Tax receipts have fallen from £9 billion in 2022-2023 to £4.5 billion in 2024-2025, despite the punitive rates.

The levy has driven cancellations, pushed companies and their supply chains towards insolvency and forced major investors overseas. OEUK estimates that reforming the EPL and re-opening the sector to investment could generate an additional £12 billion in tax receipts by 2050 and support 23,000 more British jobs.

The reality is that the UK will need oil and gas for decades, even in rapid net zero scenarios. Blocking new production simply hands jobs, investment, and taxes to foreign producers while we still pay global prices for energy.​

A Pragmatic Path for Britain

The real choice is not oil and gas versus renewables. It is between a strong, well-regulated domestic sector that supports British workers, energy security and the public purse, or a shrinking industry exporting its profits and expertise abroad.

The Government missed the chance to show confidence in UK manufacturing. Urgent tax reform is now essential. If the EPL remains until 2030, the investment exodus will be irreversible.

Solutions exist. As the first step, the UK government could immediately replace the EPL with the proposed Oil and Gas Price Mechanism. This would tax only genuine windfalls, capturing revenue on exceptional profits whilst restoring stable, predictable and viable fiscal terms for the industry in normal conditions.

Britain must act decisively: reform tax policy, unlock investment, retain skills and give the energy sector the certainty required to deliver a secure and managed transition.