Labour's Corbyn announces new £11bn tax on oil and gas

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Britain's Labour Party leader Jeremy Corbyn holds up a copy of their general election manifesto as he arrives for a manifesto launch event in Birmingham, northwest England on November 21, 2019. Photo: OLI SCARFF/AFP via Getty Images

The Labour Party have announced plans for a new ‘windfall’ tax on oil and gas companies that would be used to fund investment in green jobs and fight climate change.

The new oil and gas story was included in Labour’s 2019 manifesto, published on Thursday. The tax means that fossil fuel company “that knowingly damaged our climate will help cover the costs,” the manifesto said.

The exact details on the new levy are not spelled out but the Financial Times reported it would involve bringing oil and gas taxes in line with nations like Norway and the Netherlands and could raise as much as £11bn.

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“A Labour government will ensure the big oil and gas corporations that profit from heating up our planet will shoulder the burden and pay their fair share through a Just Transition Tax,” Labour leader Jeremy Corbyn said in a speech announcing the manifesto on Thursday morning.

Shares in oil and gas companies were largely unmoved by the announcement. BP’s (BP.L) stock was down 0.6% at 11.45am UK time but had already been trading lower. Shares in Royal Dutch Shell (RDSB.L) were down 0.4% but had also been lower since the start of the session. Financial markets are pricing almost no chance of Labour coming to power with a majority after the December 12 vote.

Labour’s proposed oil and gas tax are part of ambitious plans to transition the UK away from fossil fuels towards green energy sources. Corbyn promised “one million new green jobs as part of a Green Industrial Revolution” and the manifesto outlined plans to build 9,000 new wind turbins, new nuclear power stations, and huge numbers of solar panels.

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Corbyn promised to help retrain oil and gas workers whose livelihoods would be affected by the proposals.

“North Sea oil and gas workers have powered this country for decades, often working under dangerous conditions,” Corbyn said. “We won’t hang them out to dry.”

The Labour leader said the funds raised from the fossil fuel ‘windfall’ tax would “safeguard a future for their skills and communities with new careers and secure, well-paid jobs.”