Levy puts BP’s £18bn investment plan in doubt

BP may rethink investment plans following news of the windfall tax on energy firms, the company suggested last night.

The threat throws into doubt its promise this month to invest up to £18billion in Britain by the end of 2030.

Rishi Sunak’s 25 per cent levy tax on oil and gas firms was expected to be a one-off, but he said it would remain until 2025.

BP said: ‘We know just how difficult things are for people across the UK and recognise the Government’s need to take action.’

But it added: ‘Today’s announcement is not for a one-off tax – it is a multi-year proposal. Naturally we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans.’

Offshore Energies UK (OEUK), a trade body for the British offshore energy industry, said the tax was ‘a backward step’ and warned it would ‘discourage UK offshore energy investments’ and increase the country’s reliance on oil and gas imports.

Chief executive Deirdre Michie added: ‘This is a disappointing and worrying development for industry, the shockwaves of which will be felt in offshore energy jobs and communities, and by consumers, for years.’ Rain Newton-Smith, chief economist at the Confederation of British Industry, said: ‘It sends the wrong signal to the whole sector at the wrong time against a backdrop of rising business taxation elsewhere.’

Derek Leith, oil and gas tax expert at accountant EY, said it was ‘worse than many may have anticipated’. Mark Littlewood, director general of the Institute of Economic Affairs think-tank, said is was ‘a policy victory for Labour’, adding that the Tories’ default setting was now ‘to respond to virtually any problem by increasing taxes’.