Windfall tax to be announced ‘as soon as Thursday’

UK Government plans to impose a windfall tax on energy companies are expected to be brought forward and announced “as soon as Thursday”.

Multiple news reports are citing the possibility that an announcement on the levy is imminent.

The Telegraph states that the Chancellor Rishi Sunak has concluded that a windfall tax on oil and gas companies is justified, given the surge in their profits.

In the same article, it is suggested the measure is being announced to draw a line under the Sue Gray report into lockdown-breaking parties in Downing Street, expected to be published today.

Boris Johnson has previously said he’s not attracted to the windfall tax measure in principle but said “nothing is off the table” to tackle the cost of living crisis.

Yesterday Ofgem announced that typical energy bills are set to rise to £2,800 a year – an increase of £800 from October – causing millions of people to be plunged into fuel poverty.

The Aberdeen and Grampian Chamber of Commerce (AGCC), which has campaigned against the imposition of the levy, wrote to Rishi Sunak yesterday once again urging him to resist calls to do so.

Chief executive Russell Borthwick said: “Ultimately this is a matter of whether you want a successful energy transition or not.”

© Supplied by AGCC

Mr Borthwick reminded Mr Sunak of his own comments in February, when he opposed Labour calls for a windfall tax, when Sunak said: “The obvious impact of a windfall tax would be to deter investment—it is as simple as that. At this moment I want to see more investment in the North sea, not less.”

Mr Borthwick added: “Ushering in a windfall tax, however populist or politically expedient, is a wrongheaded response to economic pressures which are already within your gift to mitigate, given increasing levels of return to the Exchequer from the energy sector.”

MPs voted down a Labour bid earlier this month to impose a windfall tax – prompting Keir Starmer to say a U-turn was “inevitable”.

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Business secretary Kwasi Kwarteng recently wrote to energy firms asking them to spell out investment plans for the UK in order to avoid the need to impose the levy – which companies including Shell and BP have responded to, setting out up to £25bn and £18bn respectively over the next decade.

The oil and gas industry used the OEUK conference on Wednesday to hit out at the windfall tax plans, with CEO Deirdre Michie warning that it would harm the sector’s ability to invest in projects critical to the energy transition and energy security.

She said the industry “has to think and invest in terms of years and often decades” placed against the “shorter pressures and deadlines” of politicians, the media and campaign groups.