PolicyLens

Methodology note

Restart new oil and gas licences: calculation note

Scenario assumptions behind the Restart new oil and gas licences estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Restart new oil and gas licences

Central fiscal result

+GBP 0.1bn - Net fiscal impact in 2028-29

Low case: -GBP 1.0bn. High case: +GBP 2.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model new North Sea licensing from 2026-27 onward.
  • Central fiscal effect is near zero by 2028-29.
  • Baseline is declining North Sea receipts and current tax rules.
  • Energy Profits Levy repeal is modelled separately.

Affected population

  • Affected population is oil and gas producers and supply chains.
  • Direct exposure includes licensed operators and contractors.
  • Indirect exposure includes emissions budgets and local workforces.
  • Household bill exposure is indirect and limited.

Gross impact

  • Central: licensing administration costs roughly offset early receipts.
  • Low case assumes some extra bonus, fees and investment receipts.
  • High case assumes tax reliefs and decommissioning exposure dominate.
  • No consumer-price saving is scored.

Fiscal build-up, central case

  • Licensing and administration: +GBP 0.1bn
  • Early tax and fee receipts: -GBP 0.2bn
  • Investment reliefs and allowances: +GBP 0.2bn
  • Decommissioning and monitoring: GBP 0.0bn

Central net impact: +GBP 0.1bn in 2028-29.

Behaviour and pass-through

  • Low case assumes commercially viable fields and higher prices.
  • Central case assumes long lead times and limited near-term output.
  • High case assumes tax reliefs exceed receipts by 2028-29.
  • Investment may be deterred by policy uncertainty.
  • Energy security benefits are not treated as fiscal receipts.

Phasing

  • 2026-27: GBP 0.0bn. Preparation or partial implementation.
  • 2027-28: GBP 0.0bn. Main ramp-up year.
  • 2028-29: +GBP 0.1bn. Target-year central estimate.
  • 2029-30: +GBP 0.1bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • epl-2024: Energy Profits Levy policy note; current levy rate and revenue effects.
  • obr-efo-oct-2024: OBR October 2024 forecast; fuel-duty, energy and oil-gas receipts.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • dechezlepretre-sato-2017: Regulation and competitiveness; informs behavioural and incidence assumptions.
  • goulder-parry-2008: Environmental policy design; informs behavioural and incidence assumptions.