Jeremy Hunt looks set to extend the windfall tax on the profits of North Sea oil and gas companies, despite the lobbying of senior Scottish Tories including Douglas Ross.

Money raised from the Energy Profits Levy will help fund a 2p cut to National Insurance.

The industry has warned the move will lead to more instability and leave Aberdeen “paying the price.”

READ MORE: Budget: Jeremy Hunt set to extend windfall tax to pay for NI cut

In his speech to the Scottish Tory conference over the weekend, Mr Ross described Aberdeen as “Scotland’s most important city.”

He claimed its future was “being put at risk by an anti-Aberdeen, anti-North East alliance – a partnership between Labour and the SNP determined to close down Scotland’s oil and gas sector.”

The party leader also warned that extending the windfall tax would be “an unacceptable blow” to the industry and workers.

He told journalists he had spoken to Mr Hunt, the Prime Minister and Energy Minster Claire Coutinho about the Budget a number of times over the weekend.

Mr Ross said an extension of the levy “would be an unacceptable blow to the confidence and the confidence of the jobs and the workers here [in the North East].”

Rishi Sunak first announced the windfall tax - set at 65% - back in May 2022 after Russia’s invasion of Ukraine led to a surge in wholesale and retail energy prices.

He always insisted it would be temporary and was due to end next year.

However, after Liz Truss’s mini-budget crashed the economy, Mr Hunt increased the rate to 75% and extended it for a further two years to 31 March 2028.

Last month, Labour announced plans for a “proper” windfall tax, saying they would raise the rate to 78% and keep it in place until 2029.

That led to them being branded “traitors” by the Aberdeen and Grampian Chamber of Commerce.

READ MORE: Douglas Ross warns Chancellor against Budget Windfall Tax plan

Ryan Crighton, policy director at the chamber, told The Herald: “The windfall tax needs to go. The North Sea is being used as a cash cow to plug financial holes created by the financial mismanagement of others – and Aberdeen, which now has the lowest growth of any UK city, is clearly paying the price.

“Businesses in the North-east are watching through their fingers as politicians of all parties fall over themselves to make things worse.

“After years of stagnation, the UK economy desperately needs investment to grow. North Sea firms are standing by ready to invest £200billion – but they need the right conditions. Jeremy Hunt has the chance to put that right on Wednesday.”

He added: “This saga again highlights why we need a seismic shift in how we draw up long-term energy policy in this country.

“Right now, we are at risk of the North Sea oil and gas industry being wound down through rhetoric, rather than strategic policy.

“If we simply tax it to death, it will be as chaotic as it will be economically damaging.

“We need a new body, entirely independent of government, to set a policy direction for the next 40-years.

“Like the Bank of England – which has maintaining monetary and fiscal stability as its central mission – the new body should be charged with developing recommendations which could command cross-party consensus and insulate the sector from political policy shocks in the future.

“If nothing changes, and we get more of the same muddled policy, discretionary capital will continue to move overseas, the transition will stall, and a world class supply chain built up over decades will go. We can – and must – do better.”

David Whitehouse, CEO Offshore Energies UK told The Herald: "The Chancellor should use this budget to send a clear signal that UK is open for business investment in offshore energy.

“The cost-of-living crisis has had a huge impact on many, the answer to this must be growing the UK economy and not making it smaller.

"If the energy profit levy is extended, it will be the fourth tax regime two years. The windfall conditions have gone and energy prices are now where they were before the invasion of Ukraine.

"This instability makes it impossible for companies to plan or set long term objectives which is stifling investment and the transition to clean energy.

"We are in a global competition for energy investment. With the right investment environment, we have shown there is £200bn of investment in oil and gas and the wider energy transition waiting for the green light.

"This investment will deliver economic growth, support jobs and energy security, and boost our world class supply chain.”

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Scottish Labour Net Zero spokesperson Sarah Boyack the Tories seemed unable to decide “whether to fearmonger about Labour’s windfall tax proposal or extend it themselves.”

She added: "This would be embarrassing for Douglas Ross, but also poses questions for the SNP who need to decide if they will back the extension of the windfall tax or side with the oil and gas giants making eye-watering profits as people’s heating bills rocket.”