Keeping windfall tax was 'right choice', insists Anas Sarwar amid industry backlash

The decision to retain the windfall tax on oil and gas companies was the “right choice” because it freed up money for cutting energy bills and reducing child poverty, the leader of Scottish Labour has insisted. Anas Sarwar defended the move following a huge backlash from the North Sea sector, which has warned 1,000 jobs are being lost every month as a result of the energy profits levy. Chancellor Rachel Reeves maintained the charge at its current level in her Budget on Wednesday, despite intense lobbying from the industry and Aberdeen business leaders. A replacement for the tax regime will come into force from 2030. Ms Reeves told BBC Radio Scotland: “I do believe it is right to ask those companies to continue paying a little bit more, the same tax rate that Norway applies of 78 per cent to profits, and use that money to fund public services in Scotland.” READ MORE: Oil and gas sector warns it will be 'taxed to death' after Rachel Reeves extends windfall tax Aberdeen & Grampian Chamber of Commerce has accused the Chancellor of seeking to “tax the industry to death inside five years”. First Minister John Swinney has warned the policy will have “disastrous consequences” for the north east of Scotland. Speaking to journalists in Holyrood, Mr Sarwar said it was necessary to take “a balanced approach to make sure we recognise the important role that oil and gas has to play for decades to come, while also making the key investments we have to make in the transition”. He added: “If others want to suggest that oil and gas giants should get a tax cut, and not put the money into cutting people’s energy bills, and not reduce child poverty, then I think that’s a really hard argument for the SNP to make.” Asked if he lobbied the Chancellor over the windfall tax, Mr Sarwar said he made representations on lifting the two-child benefit cap and reducing energy bills. Elsewhere, SNP Finance Secretary Shona Robison said there would be no changes to income tax rates and bands at the Scottish Budget on January 13. READ MORE: 'Chaotic' Budget nevertheless sparks optimism for Scottish Labour Ms Reeves froze income tax thresholds until 2030/31 in her Budget, which will result in around 1.7 million earners paying more tax in England, Wales and Northern Ireland in 2029/30. Scotland has a separate income tax system, with sevens bands compared to the UK’s four. Speaking to the BBC, Ms Robison said: "I've already set out in the tax strategy the position we wanted around stability with no changes to rates and bands. That is the position we had and that is the position we maintain." The Scottish Government’s tax strategy, published at the end of last year, says it will uprate the starter and basic rate bands by at least inflation, while maintaining the higher, advanced and top rate thresholds “at current levels in nominal terms”. Ms Reeves insisted the tax burden on working people was being kept to a minimum. She told Sky News: “I do recognise that that will mean that working people pay a bit more. But I’ve kept that contribution to an absolute minimum by closing … a number of tax loopholes and also bearing down on Government spending, on waste and inefficiency.” The Chancellor accepted that on oil and gas, her Budget statement “wasn’t everything the industry wanted”. However, she said the levy “continues to bring in substantial revenues based on the high profits these companies still continue to earn after Russia’s invasion of Ukraine”. Ms Reeves insisted the oil and gas sector “is going to remain an important part of the energy mix in the UK for decades to come”. But she added that energy prices “are still elevated compared to a few years ago” and the levy “taxes the excess profits”. The Chancellor said: “While large profits are still being earned from the exploration of oil and gas, it is right that we ask the energy companies to contribute a little bit more to be able to fund the public services that people use in Scotland and around the country. “Yesterday in the Budget I was able to announce £150 off people’s energy bills from April next year. But that money has to come from somewhere and the profits that the energy companies are making, they also need to contribute toward reducing people’s energy bills.” While the Chancellor promised action on energy bills, Ms Robison said in the wake of the Budget on Wednesday that under Labour, energy bills were £340 higher than the Prime Minister promised even after the announcement. Ms Robison saidthe Scottish Government had wanted to see a “step change” in the Budget, with support for public services, jobs and industry. But she said: “Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employers’ national insurance contributions brought in this year.” The Conservatives claimed Ms Reeves was putting the country through her own version of Groundhog Day by continuing to destroy the economy. Shadow chancellor Sir Mel Stride told the Commons the Budget would leave people worse off and claimed Labour was “making poverty worse”. He said Labour’s “ruinous taxation policy”, which he said was to “load up taxes on people who are in work”, was “making poverty worse by making sure that work does not pay to the degree that it should”.