Institute responds to potential premature removal of Energy Profits Levy

Bob Ward, Policy and Communications Director at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, said: “The National Audit Office has revealed that the Government spent £44 billion of taxpayers’ money in 2022 and 2023 on schemes to protect consumers from high energy prices after Russia’s invasion of Ukraine. The Energy Profits Levy was introduced to try to offset some of this expenditure.

“However, the most recent figures published by the Government show that the total tax revenues collected from oil and gas production in the three years from 2022-23 was £19.6 billion, less than half the outlay on protecting consumers against high energy prices. With oil and gas producers now set to make windfall profits due to the conflict in the Middle East, and the Government needing to consider new protections for consumers, it would be premature to remove the Energy Profits Levy. It should also be noted that the current tax rate for UK producers, including the Energy Profits Levy, is 78 per cent, the same as the marginal tax rate faced by producers in the Norwegian sector of the North Sea.”

The report on ‘Energy bills support: an update’, published by the National Audit Office on 14 November 2024, can be accessed at: https://www.nao.org.uk/reports/energy-bills-support-an-update/

The latest figures on ‘Government revenues from oil and gas production September 2025’, published by Hm Revenue & Customs on 24 September 2025, can be accessed at: https://www.gov.uk/government/statistics/government-revenues-from-uk-oil-and-gas-production–2/government-revenues-from-oil-and-gas-production-september-2025