A Labour government would put an £11bn windfall tax on oil and gas companies to create a “just transition fund” and help shift the UK towards a green economy without creating mass job losses, Jeremy Corbyn has said.
The one-off tax would be calculated according to an assessment of each firm’s past contribution to the climate crisis, Labour said – and could be paid over years.
The total is 10 times the £1.1bn that the Treasury expects to raise from the oil and gas sector this year.
In his speech to launch the Labour manifesto in Birmingham, Corbyn says: “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 on to 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.”
The windfall tax is one of the most striking policies in Labour’s manifesto, and follows a string of significant announcements during the general election campaign, including:
With Boris Johnson pressing home the Tories’ message that he will “get Brexit done”, Labour has been keen to shift the election debate to domestic policies – including its determination to tackle the climate crisis.
Corbyn has also repeatedly underlined his determination to take on big business, deliberately putting himself on the side of “the many”, against “the most powerful people in Britain”.
The proceeds of the new tax would be devoted to adapting the economy to tackle the climate crisis, including retraining for workers from the oil and gas industries and investing in green technologies.
Labour’s trade union supporters have insisted that its ambition of making progress towards net zero carbon emissions by 2030 must be backed by strong protection for workers – including the creation of a million jobs in green industries.
The windfall tax may prove controversial in Scotland, where Labour faces a tough battle against the SNP, and where many voters have long felt they never benefited sufficiently from the country’s natural resources.
The decision to focus the “just transition fund” partly on retraining oil and gas workers appears to be aimed at assuaging some of those concerns. Corbyn says: “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.”
In 1997, the New Labour government imposed a windfall tax on utilities companies, which were perceived to have made excess profits in the years after privatisation. The proceeds were used to fund welfare-to-work policies.
Labour said £11bn was an estimate and the final figure would be based on an assessment of the cost of the retraining and investments in green technologies.
Output from the North Sea peaked in 1999, but the industry is likely to argue that the tax would accelerate its decline.