Energy experts warn plans to increase windfall taxes will cost far more than they raise.

Labour’s proposed North Sea tax increases would drive out investment, destroy up to 100,000 jobs and cost the Treasury £20bn in lost revenues, energy experts have warned.

Analysis by investment bank Stifel suggests Sir Keir Starmer’s plans to increase and extend windfall taxes on the industry will cost the country far more than they raise. The Telegraph has the story.

A separate report by Welligence, an oil and gas analyst, said key UK offshore operators such as Harbour Energy, the UK’s largest oil and gas producer, and TotalEnergies had already cut back investment and others were now likely to follow.

It follows the launch of Labour’s Green Prosperity Plan last week in the wake of the party’s decision to scrap a pledge to invest £28bn a year in clean energy.

Under the new proposals, Labour hopes to raise an extra £11bn from the UK’s oil and gas industry by increasing and extending the windfall tax, with the funds invested in “clean power to cut bills for families.”

However, Chris Wheaton, an oil and gas analyst with Stifel, warned in a report: “We estimate the UK will lose £20bn in tax revenues, with maybe 100,000 jobs at risk, both directly and indirectly employed, and a £40bn reduction in investment between now and 2030.”

Labour’s proposals for the UK’s oil and gas industry generated little discussion because the media and political focus was on the cancellation of its £28bn green investment pledge.

Sir Keir Starmer has proposed adding 3pc to existing offshore production taxes, slashing investment allowances, banning new drilling licences and extending the windfall tax beyond its current cut-off date of 2028.

Labour said: “Together, these changes would raise £10.8bn over the next five years from 2024-25 to help fund the Green Prosperity Plan.”

However, Mr Wheaton said the overall economic impact would be negative.

He warned: “The uncertainty created by threatening new windfall taxes is as bad as the tax itself. The tax is already forcing cancellation of investments. For example TotalEnergies have cancelled drilling plans at the Elgin and Franklin fields [in the North Sea], and Apache has cancelled investments at its Beryl fields.

Read the full story here.