Oil tax threatens to sap green power

Pre-budget lobbying is a predictable affair. Who yet knows if Offshore Energies UK, the campaigner for the oil and gas industry, is right: that Britain will lose £13 billion of “economic value” from Labour jacking up the windfall tax from 75 per cent to 78 per cent on North Sea producers and cutting their investment allowances.
But it makes a plausible case: that whatever the short-term gains, there’ll be a longer-term loss of tax revenues as companies switch off North Sea projects. Of course, in an ideal world Britain could stop burning fossil fuels pronto and power the nation with windmills and sunbeams, plus all sorts of untried tech: carbon capture, hydrogen, small modular nuclear reactors. But for a government elected on a growth mandate, what if its calculation that the UK can decarbonise our electricity by 2030 turns out to be wishful thinking?
Few believe it possible. When the Ineos boss Sir Jim Ratcliffe was asked whether he thought Britain could hit that target, he burst out laughing. “I’m sorry but that’s absurd. Where’s it all going to come from?” he said, pointing out that last year 32 per cent of UK electricity came from gas. He could be wrong. Yet shouldn’t Sir Keir Starmer hedge his bets a bit and not go out of his way to kill off the North Sea — not least if he’s actually serious about also enhancing our energy security?
Bit by bit, the industry is giving Starmer little way back. The £900 million Buchan project, developed by Serica Energy, Jersey Oil & Gas and Neo Energy is the latest to be delayed, raising doubts over whether a production date of late 2027 will be met. That’s on top of Deltic Energy pulling out of the Pensacola project with Shell and Harbour Energy, the UK’s biggest producer, cutting jobs and redirecting its focus to Europe, Mexico and Africa. Not to mention fresh doubts over the Rosebank and Jackdaw fields, with Labour opting not to fight green legal challenges over those projects.
On the industry’s own figures, the UK spent almost £27 billion on imports of crude oil last year, £6 billion more than the receipts from exports of the stuff, and £21 billion bringing in gas, £17 billion more than from gas exports. Can that gap really be plugged quickly with clean domestic energy?
There’s another risk, too: that in nixing North Sea projects, Labour eviscerates a UK offshore supply chain with the best skills and engineering clout we’ve got for the energy transition. A report from Rystad Energy reckoned that the oil and gas supply chain had at least a 60 per cent capability overlap with the one for green energy technology. Perhaps Starmer thinks such figures overblown. But he needs to wake up to the risks of putting the North Sea over a barrel.
Noise was the one guarantee when Robert “Scrappy Doo” Naylor and Christopher “Megaphone” Mills switched their focus to PRS Reit. The drummer and lead vocalist from the Hipgnosis Songs Fund band have already proved what a racket they can make — not least with their regular blasts at Merck Mercuriadis, the former investment manager of the music rights group later sold to Blackstone for £1.27 billion.
So no surprise to see them cranking things up at the listed property rental group, which since 2017’s float has been spending the £560 million raised from shareholders on developing 5,400 family homes. Five shareholders speaking for 17.3 per cent of the shares, including Mills’ Harwood Capital, pitched up on Thursday to requisition an EGM with the aim of booting out PRS chairman Stephen Smith and non-exec Steffan Francis. And, predictably, despite attempts by a PRS sub-committee of the three remaining non-execs to tone things down, a deafening showdown looms — unless PRS simply caves in to the revolting shareholders’ demands.
Already backed by two other shareholders, the rebels say they have now raised the size of the group to big band status — 16 investors holding 30 per cent of the shares. All back the attempt by Naylor and Mills to clamber aboard at PRS as chairman and loudest non-exec. Opinion among them seems aligned. First, that the business, now priced at 93.9p a share, has for too long lagged its net asset value of 123.6p. And, second, that Smith was wrong to sign off an extension to the contract for investment manager Sigma to June 2029 when the estate’s all but built and, thanks to the discount, PRS cannot raise fresh equity to develop more houses. His denials that the new contract is a “poison pill” and arguments that he cut Sigma’s fees by £460,000 a year have fallen on deaf ears.
Running up extra costs to hire Rothschild as a third banking adviser has only inflamed tensions. And, amid the war of words, something has to give. Scrappy Doo and Megaphone are ready for a full thrash-metal finale.
So much for the Gen Z slackers. Apparently, nothing delights them more than going to work in an office. It’s the old codgers on the roster who can’t get enough working from home. Who says so? Some think tank, Centre for Cities, whose survey of work habits in London, Paris, New York, Sydney, Singapore and Toronto found the Canadians’ office attendance the worst, followed by the Brits.
Still, property developers shouldn’t get too excited. It’s not that the youth squad love offices. They just have nowhere else to work, apart from bed or a shared kitchen table. Contrast the oldies, with their shepherd’s huts or mansions. Just walking to their own front door can add half an hour to the commute.