The proposal, under discussion ahead of the upcoming Budget, would see the Energy Profits Levy scrapped in March 2029 rather than 2030, Financial Times reports.

However, Ms Reeves is seeking firm commitments from the industry that an early removal of the tax would directly lead to new investment and job creation in the North Sea. The UK government is understood to view the basin as crucial for stimulating the economy, even as it maintains its policy of banning new exploration licences for undeveloped fields.

Industry body Offshore Energies UK (OEUK) has advocated for the change, arguing that a stable fiscal regime could unlock £40 billion of investment. Its chief executive, David Whitehouse, recently warned the current tax system is costing 1,000 jobs a month and risks driving investment overseas.

While a final decision has not been made, Treasury officials are believed to be weighing the immediate loss of around £1bn in revenue against the potential for greater long-term economic growth and future tax receipts from a revitalised North Sea sector.