Rishi Sunak will tomorrow outline a multi-billion pound package to help Brits with the cost of living squeeze, with rumours rife the chancellor will hit UK oil and gas firms with a windfall tax.
City A.M. understands that Sunak will deliver an “economy update” to the House of Commons, which will see up to £10bn handed out to help people deal with soaring energy bills and wider inflation.
There is widespread speculation that help given to households will be funded by a windfall tax on North Sea oil and gas producers, who have seen record profits over the past year, with The Telegraph reporting that the amount of tax owed may be linked to the amount of investment each firm promises.
Sunak’s deputy, Simon Clarke, told the BBC on Monday: “When it comes to North Sea oil and gas we have been crystal clear with the sector they are making extraordinary profits and we expect and need to see those profits reinvested in productive capacity in the North Sea in short order to unlock the next generation of North Sea oil and gas extraction.
“They very clearly have a duty to show that these extraordinary profits are going to bear fruit for the real economy… if we do not see that investment then the Chancellor has been really clear that we cannot rule out a windfall tax.”
It comes after energy regulator Ofgem yesterday estimated that the energy price cap will hit £2,800 in October, which would represent a £1,523 increase in energy bills for the average household since October 2021.
Boris Johnson refused to be drawn on a potential windfall tax during Prime Minister’s Questions (PMQs) today, but said that “the government is going to do everything we can to help people”.
Cabinet ministers Kwasi Kwarteng, Sajid Javid and Brandon Lewis have all publicly come out against a windfall tax on energy firms.
Offshore Energies UK boss Deirdre Michie today told City A.M. that an “unpredictable” tax environment would hit investment, with smaller operators most badly affected.