Ineos Responds to UK Budget

SUBSCRIBE SEARCH ARTICLES NEWS The UK's Autumn Budget was described by global chemical company Ineos as 'a major missed opportunity to save British manufacturing'. Image by Max Zolotukhin via iStock

The UK’s Autumn Budget was described by global chemical company Ineos as “a major missed opportunity to save British manufacturing”.

“The government knows that Britain’s industrial base is being destroyed by some of the highest energy costs in the world, yet it has failed to take the decisive action needed to stop it,” an Ineos statement sent to Rigzone late Wednesday noted.

Ineos highlighted in its statement that “reducing electricity costs is welcome” but warned that “it barely scratches the surface”.

“British chemicals manufacturers are being crippled by punitive gas prices and carbon taxes that their overseas competitors simply do not face,” the company said.

“Factories are closing, thousands of skilled jobs are being lost, and investment is moving abroad. This is not a warning about what might happen. It is happening now,” it added.

Ineos went on to note in its statement that the approval of the Jackdaw project “is very welcome and a victory for common sense”.

“But what about Rosebank?” the statement queried.

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“Britain will need oil and gas for decades. Producing our own resources rather than importing them from overseas is better for British jobs, investment, tax revenues, and energy security,” it added.

Ineos warned, however, that approving new fields “is pointless if a punitive 78 percent tax regime prevents companies investing in them”.

“There is an opportunity to unlock GBP 50 billion [$67.1 billion] of investment in British energy,” Ineos highlighted.

“The government must urgently bring forward the replacement of the Energy Profits Levy and create the conditions for investment in the North Sea,” it added.

Ineos said in its statement that it is “economic madness to penalize British energy production and burden our manufacturers with excessive costs while allowing imports from countries with lower environmental standards to take their place”.

It noted that the Chancellor of the Exchequer, John Healey, “had an opportunity” to “reverse Britain's industrial decline”.

“Instead, this Budget risks accelerating it,” Ineos warned.

“Britain needs to back its own energy resources and its own industries, not imports. Otherwise, we will continue to lose factories, investment, and skilled jobs that will never come back,” it continued.

In another statement sent to Rigzone on Thursday commenting on the UK’s Budget, Charlotte Sallabank, Tax Partner at Katten Muchin Rosenman LLP, said energy companies “continue to be targeted”.

“The Electricity Generator Levy (EGL) rises from 45 percent to 55 percent until 31 March 2028, and the levy will be extended beyond 2028,” Sallabank highlighted.

“A new permanent Oil and Gas Revenue Levy of 35 percent on exceptional oil and gas revenues will take effect when the Energy Profits Levy ends, on 1 April 2030 or earlier if the price floor is triggered,” she added.

“Although intended to provide certainty for the sector, it makes a windfall-style charge a permanent feature of the regime,” Sallabank continued.

Rigzone contacted HM Treasury (HMT) and the Department for Energy Security and Net Zero (DESNZ) for comment on Ineos and Sallabank’s statements. DESNZ directed Rigzone to Healey’s Budget speech, which was transcribed on the UK government’s website. At the time of writing, HMT has not responded to this Rigzone request.

In another statement sent to Rigzone on Wednesday, industry body Offshore Energies UK (OEUK) said the 2026 UK Budget “missed bigger opportunities”. George Morrison, CEO of Aquaterra Energy, said in a separate statement sent to Rigzone yesterday commenting on the Budget that, “if the government wants North Sea revenues to help fund the UK’s energy future, its tax policy needs to support the investment that generates them”.

HMT’s Budget document, which is hosted on the UK government website, states that the government is legislating for the Oil and Gas Revenue Levy in Finance Bill 2026‑27 “to ensure it is ready to take effect immediately after the Energy Profits Levy ends, which will be 1 April 2030 or earlier if the price floor is triggered”.

“This legislation will provide the oil and gas sector with the certainty and predictability it needs to keep investing in the North Sea, while ensuring it pays its fair share of tax on excess revenues in times of unusually high oil and gas prices in future,” the Budget document notes.

The document also states that, “as previously announced, the government will extend the EGL past 2028”.

“The EGL will remain for the lifetime of the longest Wholesale Contract for Difference (WCfD), on which DESNZ is launching a consultation,” it adds.

“The exemptions for new investment and CfDs will remain, and CfDs will include WCfDs. A consultation on future EGL policy design will follow next year, and changes will be made in a future Finance Bill,” it continues.

In his Budget speech, Healey highlighted that, last week, the UK Energy Secretary approved the Jackdaw gas field, “boosting our energy security”.

“This will protect hundreds of jobs and adding an estimated GBP 2.9 billion [$3.8 billion] to the UK economy. A pragmatic, common-sense decision,” he said. 

“And alongside that, I launched a new Energy Wealth Fund for the UK … I’m setting a new course on energy: to get UK energy costs down in line with Europe,” he continued.

“From this point, our … government priority is first and foremost cheaper energy, with clean power key to achieving this,” he went on to state.

“This is possible because of the progress we’ve made towards clean power over the last two years, and this government remains unshakably committed to Net Zero by 2050,” Healey stated in his speech.

The UK Chancellor of the Exchequer also noted in the speech that, in the first week of the new UK government, “we took VAT off electricity for 29 million households” and added that he was “extending that VAT cut through the winter and spring to July, taking GBP 50 off the annual price cap”.

“And for business, our new British Industrial Competitiveness Scheme, will take 25 percent off electricity bills for 10,000 firms at the heart of British industry,” he highlighted in the speech.

“It will go live in April, and I confirm that we will make backdated payments for energy costs this year too,” he said.

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MORE FROM THIS AUTHOR Andreas Exarheas
Editor | Rigzone