A windfall tax on North Sea oil firm profits will not be passed on at the petrol pump, the industry said after Chancellor George Osborne warned he is watching “like a hawk”.
But industry officials said the £2 billion charge – which will fund a 1p per litre drop in fuel duty announced in the Budget – would cause cutbacks including job losses. Labour claims the Chancellor’s headline-grabbing initiative to reduce duty risks being wiped out by oil companies passing on the impact of the higher levy to motorists.
But Mr Osborne said the Government would be “watching like a hawk to make sure that motorists get the benefit of the Budget changes and make sure that there’s no funny business”.
Speaking on ITV’s Daybreak, he added: “I’m not pretending that this is going to transform the situation overnight for families who are feeling the squeeze, but it helps.”
Oil and Gas UK chief executive Malcolm Webb said the windfall tax was a “direct squeeze” on the industry - which operated in a global market - but would not lead to higher pump prices.
“It won’t affect the consumer at the pump at all,” he told the BBC Radio 4 Today programme.
But he warned that there would, however, be a “depressant” effect on operations – 45 per cent of which involved gas not oil – apparently at odds with the Chancellor’s efforts to stimulate economic recovery.
“It is going to have a depressant effect in our basin, we are going to lose jobs, we are going to lose production. That means we will be importing more oil and gas over time too.
“Here was an industry that was going to be very positive for recovery – it won’t be anywhere near as positive now,” he said.