Labour announces tax on oil and gas companies to create a Just Transition Fund for a green economy
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At the launch of Labour's manifesto, Jeremy Corbyn announced a
radical plan to tax oil and gas companies to fund the Green
Industrial Revolution. The Labour leader said “it isn’t fair to
heap the cost of the climate emergency onto the nurse, the builder
or the energy worker” so under Labour “the big oil and gas
corporations that profit from heating up our planet will shoulder
the burden and pay their fair share”. The next Labour government
will create a Just...Request free trial
At the launch of Labour's manifesto, Jeremy Corbyn announced a radical plan to tax oil and gas companies to fund the Green Industrial Revolution. The Labour leader said “it isn’t fair to heap the cost of the climate emergency onto the nurse, the builder or the energy worker” so under Labour “the big oil and gas corporations that profit from heating up our planet will shoulder the burden and pay their fair share”. The next Labour government will create a Just Transition Fund, paid for by a new windfall tax on these corporations. The Fund will, in particular, provide an expected £11 billion support package for nearly 37,000 oil and gas workers, the 126,000 people in jobs dependent on the sector and their communities to make the transition to a clean economy. North Sea oil and gas production has been hugely profitable for UK continental shelf oil and gas companies which, between 1997 and 2018, made a net operating surplus of £273 billion. But North Sea production peaked in 1999 and has been declining ever since, leaving oil and gas workers and their communities vulnerable. Action is needed now to manage the transition and adapt the skills and experience of these workers to develop green technologies. Jeremy Corbyn said these workers “powered this country for decades” and will be helped through transition and guaranteed retraining and a new, unionised job on equivalent terms and conditions. The Fund will also pay for a major programme of investment and retraining across the country, helping to drive a Green Industrial Revolution that will decarbonise our economy and make Britain a world-leader in the green industries of the future. It is only right that the big oil and gas corporations should pay for the necessary transition from North Sea oil and gas production, rather than enjoying windfall profits that do not reflect the true cost of their activities. The size and precise scheme of the tax to pay for the Fund will be determined after consultation and a comprehensive assessment of what is necessary. The tax will have no effect on prices for consumers at the pump as oil prices are determined by a global market. Speaking at Labour’s manifesto launch, Jeremy Corbyn, Leader of the Labour Party, said: “We can no longer deny the climate emergency, we can see it all around us, as the recent floods in Yorkshire and the East Midlands have shown. We have no time to waste. The crisis demands swift action, but it isn’t right to load the costs of the climate emergency onto the nurse, the builder or the energy worker. “So a Labour government will ensure the big oil and gas corporations that profit from heating up our planet will shoulder and pay their fair share of the burden with a just transition tax. “North Sea oil and gas workers have powered this country for decades, often working under dangerous conditions. We won’t hang them out to dry. This fund will safeguard a future for their skills and communities with new careers and secure, well-paid jobs.” Ends Notes Fossil fuel production is set to exceed safe climate crisis. https://www.independent.co.uk/environment/climate-crisis-fossil-fuels-un-report-oil-gas-coal-carbon-emissions-a9210276.html
Oil and gas production in the UK is highly profitable. Between
1997 and 2018, UK continental shelf companies made a net
operating surplus of £273 billion. ONS, Profitability of UK
Companies Time Series, UKCS companies net operating surplus in
£million.
BP, Shell, Chevron, ExxonMobil and Total registered spending €123
million between 2010 and 2018 merely to lobby EU
institutions.
Oil and gas production is also highly localised, which has
created local economic dependency. For example, the employment
rate in Aberdeen City correlates with the price of Brent
Crude.
Between 2014 and 2016, the downturn in the oil price led to
100,000 job losses in North Sea oil. Calculating the level of the tax
A comprehensive bottom up assessment of the just transition needs
of oil and gas workers and affected communities in England and
Scotland will be conducted once Labour is in Government. However,
based on just transition schemes in Germany and Spain, and
academic research on the cost of a just transition for fossil
fuel workers in the USA, This will cover support like training, new qualifications and relocation grants for the 36,800 workers employed directly in the UK’s offshore oil and gas sector, but also larger community-level investments to support regions indirectly reliant on offshore oil and gas. Collecting the tax The tax will be raised on UK-based oil and gas companies that have extracted oil and gas from the UK continental shelf. The UK has collected far less tax per barrel than other North Sea countries like Norway and the Netherlands. Had the UK charged the same effective tax rate as the average rate charged by North Sea countries from 1992 to the present day, it would have collected an additional £117 billion in taxes. The National Audit Office estimate that the UK government is on the hook for at least £24 billion to clean up and decommission North Sea oil rigs, and this figure could rise to almost £60 billion. And the UK has also provided very generous subsidies to North Sea oil companies. In 2015 and 2016, North Sea oil actually cost the Treasury more than it received due to large subsidies paid out. |