The Chancellor has doubled down on her decisions to hike the windfall tax on oil and gas producers and cut the universal winter fuel payment. Rachel Reeves said the increased Energy Profits Levy of 38% was here to stay despite hundreds of jobs being axed by the largest independent oil and gas firm in the North Sea. Harbour Energy announced on Wednesday that it is cutting a further 250 onshore jobs in Scotland. It said this was because of the UK Government’s “punitive fiscal position and a challenging regulatory environment.”
Speaking to STV News on Wednesday, Reeves said the windfall tax still stands. “It brings in substantial money for public services, and that’s why we were able to make a record settlement grant for the Scottish Government,” Reeves said. “My thoughts are with those people worried about their jobs at Harbour Energy.” She called Harbour Energy’s announcement a “commercial decision” by one company and added: “There are many other companies not laying off their workers.”
“Our plan for the North Sea was welcomed by Offshore Energies UK, the Confederation of British Industry in Scotland, and Energy UK. There’s an important role for oil and gas for many years to come, but that’s also why, as a Government, we’re investing in hydrogen, carbon capture storage.” Reeves maintained that it’s important for energy companies to pay up since they made record profits after the Russian invasion of Ukraine at a time when normal people saw their energy bills “go through the roof.”
In the same interview, Reeves also doubled down on her controversial decision to scrap the winter fuel payments for all pensioners. “We had to make a number of difficult decisions when we came into office last year to stabilize the public finances after the mess the Conservatives left them in,” Reeves said. “I do understand people’s concerns about the cost of living crisis.” She insisted that her Labour Government has brought in policies such as the national living wage increases, triple lock policies, and interest rate cuts to help people out. However, she said the winter fuel payment cuts are a policy that “stands.”
“It was necessary to put public finances on a firm footing, but I do get people’s concerns about the cost of living,” Reeves said. On another front, Reeves visited the Glenkinchie distillery in East Lothian on Wednesday to celebrate the “transformational” India trade agreement that will make a “massive difference” to the whisky industry in Scotland.
The UK Government struck the multi-billion-pound deal on Tuesday, May 6, 2025, which is to make it cheaper and easier for both nations to buy and sell goods and services to one another. British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as the UK cuts tariffs. The deal will also slash Indian tariffs on key UK exports such as whisky, cosmetics, and medical devices.
“As the Scotch Whisky Association has said, this deal is transformational,” Reeves told STV News. “It will more than half the tariffs applied to Scotch Whisky being exported to India, and India is the biggest market in the world now for whisky. Having that access for Scotch whisky to the Indian market will make a massive difference for good jobs paying decent wages here in Scotland and putting money in people’s pockets.”
The UK Government previously said the deal was the “biggest and most economically significant” trade agreement the UK had signed since leaving the European Union in 2020.
Meanwhile, Harbour Energy has expressed its frustration with the government’s “punitive fiscal position” as it announced plans to cut 250 jobs in Aberdeen. The London-listed company, which is the largest oil and gas producer in the North Sea, blamed the Energy Profits Levy and a challenging regulatory environment for the decision. It also noted delays in the ramp-up of carbon capture projects in the UK.
The Energy Profits Levy, also known as the windfall tax, was first introduced in 2022 under Boris Johnson’s government and imposed a 75 percent tax on oil and gas producers. The tax was hiked to 78 percent by Chancellor Rachel Reeves as part of the Autumn Budget last October. Scott Barr, Harbour’s UK managing director, said: “Harbour is launching a review of its UK operations, which we expect to result in a reduction of around 250 onshore roles in our Aberdeen-based business unit.”
He added: “The review is unfortunately necessary to align staffing levels with lower levels of investment, due mainly to the government’s ongoing punitive fiscal position and a challenging regulatory environment.” Harbour’s decision was described as a “devastating blow” by the Aberdeen and Grampian Chamber of Commerce (AGCC). It follows the slashing of some 350 of its UK onshore jobs in 2023.
Reeves, however, has shown no signs of reversing her decisions regarding the winter fuel payments. The Chancellor’s decision to means-test the payment has been blamed for contributing to Labour’s hammering at the ballot box in contests across England last week. The decision last July to restrict the winter fuel payment to the poorest pensioners was intended to save around £1.5 billion a year, affecting more than nine million people.
Anger about the policy on the doorstep has caused unease within the Labour ranks after Reform UK won hundreds of council seats and took the previously safe Runcorn and Helsby seat in last week’s parliamentary by-election. The Red Wall Labour group told the Prime Minister that “responding to the issues raised by our constituents, including on winter fuel, isn’t weak; it takes us to a position of strength.”
They called on the Government to “break away from Treasury orthodoxy; otherwise, we will never get the investment we desperately need.” Welsh First Minister Baroness Eluned Morgan, mindful of her party’s own electoral battles at next year’s Senedd contests, has also called for a “rethink” on the winter fuel policy.
The Business Secretary Jonathan Reynolds told Good Morning Britain that he understands “where people are coming from” and has heard concerns from his own constituents. He said: “You’ve got to be clear; sometimes you can’t do everything at the same time; sometimes there are difficult decisions, and means-testing winter fuel payments to the people who need it most, making sure every pensioner is better off by having the triple lock in place, I think is the right decision between those two key policy areas.”
It comes as new YouGov data suggests Labour are polling at their lowest level since the era of Jeremy Corbyn. The latest voting intention figures show Reform on 29%, with Labour lagging behind on 22% and the Conservatives on 17%. According to YouGov, this is the lowest the party has polled since October 2019 under Mr. Corbyn, as Mr. Farage’s party continues to out-poll the Government.
In another sign of discontent within Labour, former Cabinet minister Louise Haigh suggested hostile briefings appeared targeted at female ministers. After reports that Lisa Nandy and Bridget Phillipson could face losing their jobs in the next reshuffle, she said: “I was really angry at the weekend to see the response to the electoral defeat that we had suffered at the hands of Reform to be that we should sack two female northern cabinet ministers and two of our best communicators with those voters that we need to communicate with most.”
She told BBC’s Newsnight: “I only ever seem to read briefing against my female former colleagues.” The Prime Minister’s press secretary condemned any briefing against any member of the government, stating, “No one wants to see any briefing against any member of the government.”
