Labour should reverse ban on new oil and gas licences, says Blair

The think tank, chaired by former prime minister Tony Blair, has argued that current policies risk undermining investment, pushing the UK’s energy transition in what it has described as the “wrong direction”.

In its new report, policy adviser Tone Langengen said the Government should also rethink the ban on new exploration in order to “protect supply chains”.

The report also criticised the Energy Profits Levy — commonly known as the windfall tax — warning that repeated changes to the regime had increased policy uncertainty and deterred long-term investment.

The levy, currently set at 38%, was introduced by the previous Conservative government in May 2022 after oil and gas profits surged following Russia’s invasion of Ukraine, which drove up global energy prices.

The Government has since announced a consultation on plans to replace the levy when it expires in 2030, with a new framework intended to provide greater certainty for investors while protecting consumers from future price shocks.

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Industry figures have been lobbying hard for changes to the tax, which they say is crippling investment and leading to job losses.

Labour has also banned new licences for drilling in the North Sea, though ministers have said that oil and gas will remain part of the energy mix for years to come and extraction near existing fields will still be allowed.

The Tony Blair Institute report said: “A stable framework should bring the Energy Profits Levy to an orderly close and replace it with a predictable long-term fiscal regime, limiting ad-hoc changes to headline rates and providing certainty on capital allowances.”

It added that a managed decline in production required continued exploration to maintain economically viable output and prevent a faster loss of domestic capability.

The think tank also criticised the Government’s Clean Power 2030 strategy, arguing that it prioritised capacity targets and project milestones over affordability and long-term political support.

“In a country responsible for less than 1% of global emissions, that is not climate leadership — it is climate theatre,” the report said, calling instead for a greater focus on delivering cheaper and more abundant energy.

A spokesperson for the Department for Energy Security and Net Zero defended the Government’s approach, saying: “Our clean power mission is the only way to bring down bills for good. The alternatives leave Britain dependent on petrostates and dictators whose control of fossil fuel markets helped drive the cost-of-living crisis.”

The spokesperson added that becoming a “clean energy superpower” would strengthen energy security, lower bills and support job creation.

Meanwhile, the report has drawn criticism from campaign groups.

Simon Francis, coordinator of the End Fuel Poverty Coalition, said the proposals amounted to a defence of fossil fuels at a time when households continued to struggle with high energy costs.

He said: “For the Institute to call for the Windfall Tax to be scrapped, while energy giants post extraordinary profits and millions live in cold, damp homes, is staggering."

Francis argued that high bills were driven by exposure to volatile international gas markets rather than climate policies, and said accelerating renewable energy deployment and improving energy efficiency would offer a more durable solution.